Selling a home when there are tenants living in it has its own challenges in normal times let alone a pandemic. You’re likely wondering what you need to know about selling a tenanted property in general and if there are additional things you need to know about due to COVID-19. In this article, we will answer the top 7 questions that people have asked in recent months when selling a home with tenants.
1. Are you still allowed to sell a home with a tenant in it during the pandemic?
Yes, you are allowed to sell a tenanted property as long as real estate transactions, lawyers, the land registry office, banks and other parties involved with closing the purchase and sale of property are still deemed as essential businesses. Though you may find that there will be fewer investors in the market due to the uncertainty in real estate moving forward.
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2. Since COVID-19, what do Ontario’s laws say about selling a home with a tenant in it?
Regarding the impact of COVID-19, the Ontario government has not banned in-person showings completely it has been strongly recommended that all real estate agents suspend in-person showings. They are also encouraging landlords not to sell during this time as the Government wants people staying where they are, at home to help with the spread of COVID-19. Premier Doug Ford has also suspended evictions while Ontario is under a state of emergency meaning if a tenant cannot pay their rent a landlord cannot evict them during this time. As well, because of this if you do plan on selling tenanted home it is best to give your tenants as much notice as possible and to also confirm with them that this is not an evection.
3. Do I have the right to ask my tenant to leave during a showing?
The short answer is that you cannot force your tenant to leave during a showing if they wish to stay. Potential buyers will be more comfortable viewing the property on their own and most, if not all, real estate agents would advise that it’s best to view without tenants. However, the reality is that tenants can choose to stay home during the showings or go out and is entirely at their discretion. Keep in mind that many tenants are protective of their belongings and privacy. That is usually the reason they choose not to allow showings without them being present. Under normal circumstances, a landlord must give their tenant 24 hours written notice before any showings and the showing can only be arranged between 8 am and 8 pm so to not disturb the tenants. Special arrangements are permitted but it is recommended that you get that in writing from tenants to avoid any future conflict.
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4. Can my tenant refuse to allow people to come into the home?
According to the law in Ontario, tenants can’t refuse to let potential buyers into their home under any circumstance provided they received proper notice. Since declaring a state of emergency in March, the province has only released guidelines stating they recommend only virtual tours and to practice social distancing. This means that landlords are still permitted to enter a tenant’s home if they provide 24 hours written notice. However, landlords still need to comply with the Human Rights Code and Healthy and Safety Standards. For example, an immunocompromised tenant could argue that an in-person showing poses a significant health risk and file a complaint. No matter the situation, always communicate with your tenants and make sure you are only showing homes if it is safe for everyone.
5. If my tenant is immunocompromised, how can I do showings?
This is where things can get tricky for Landlords as Ontario does not have any laws in place around not entering a tenanted home and only are strongly recommending not to so. If you must do showings and have a tenant who is immunocompromised a few suggestions are to put up your tenants in a hotel for the week during showings and have the home professionally cleaned before and after the showings have been completed. Another suggestion if the tenant is willing is to have them stay with a relative and offer a discount on their rent for the time they will be away. It is also important to notice that your tenant has a legal right to stay in their home and could file a complaint saying showings of their home could be a violation of their Human Rights according to the Healthy and Safety Standards.
6. What can I do if my tenant refuses to leave the property for showings?
In general, you cannot force your tenant to leave the property for showings if they insist on staying. There may be underlying concerns and we recommend that you communicate with them to find out what their concerns are. These are generally the top concerns that tenants have:
- They don’t want buyers looking in their cabinets and other belongings.
- There’s nowhere else for them to go.
- It’s inconvenient for them. They are paying rent and if there’s a lot of showings, they believe it’s unreasonable to leave for every one of them.
To make it more comfortable for your tenants when you need to schedule showings, communicate and figure out if there are better times that work for them. To make it more encouraging for tenants, you may want to offer them to stay in a hotel or Airbnb at your own expense so that you can schedule many showings. If they are worried about their belongings, ask your real estate agent if you can place cameras in the home so see potential buyers come through. Keep in mind that you will have to check the rules on this according to your local real estate board and you will need to disclose this to everyone who comes into your property if you choose to do this.
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7. Can I ask my tenant to leave if a buyer wants to bring a new tenant in?
It is important to note that you must still honour any lease agreement you have with a tenant. This means that if your tenant has signed a one-year lease agreement you must still honour this agreement and if you sell the property the new buyer must still honour the lease agreement. However, if your tenant is on a month-to-month lease agreement, the buyer will have to give them 60 days notice to move out if they want to live in the property for personal use or if their family member wants to move in. These practices were implemented to protect tenants from being evicted so that landlords to bypass rent control to get a new tenant that would pay higher rent.
Because we are in a pandemic when this article was written, a challenge that landlords face right now is that the Landlord and Tenant Board is closed. This means landlords are unable to deliver an N12 form to tenants (A Notice to End your Tenancy Because the Landlord, a purchaser or a Family Member Requires the Rental Unit form). This also means that if a tenant wishes to contest it, there is nowhere they can go to contest it. Because of this, and because the tenant is still already in the home, landlords will not be able to end the tenancy even if a purchaser or family member wishes to stay in the home. This means closing dates may have to be purchased back as there is no governing body left to police any of these things.
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Here are what 3 of our Fivewalls Certified Agents have to say about selling a tenanted home during the pandemic.
“Unless the Tenant has given the Landlord notice that he/she is intending to move out of the property, I have advised Sellers owning Tenanted properties that it is not the appropriate time to sell while Ontario is under a state of emergency - if Tenants cannot pay their rent, a Landlord cannot evict them at this time. Alternatively, if the Tenant has given notice to the Landlord, then COVID-19 protocols must be followed and the Tenant's wishes for viewings respected - for example, if the Tenant has a compromised immune system - they may have concerns about Buyers entering the property while they are still residing in the property.”
“This has been a tough one to navigate. Patience and understanding are key when listing and selling a tenanted property. We recommend doing as much over video as possible, we will let people view one unit before submitting a conditional offer, once an offer is accepted then we show the whole property, as the same time we get the home inspection done, so we only have to enter the tenanted units once. Instead of giving 24 hours notice we are giving the tenants 48-72 hours notice and asking them to leave the unit when we enter. Everyone who enters the units must wear a mask and gloves. We have asked everyone to refrain from touch anything other than the inspector.
Appraisals have changed as well, appraisers are no longer entering the tenanted home, instead, they do a drive-by appraisal of the property and ask the tenants to take pictures of the interior and exterior of the house. It’s not ideal, but it keeps everyone safe.”
“Following COVID-19 protocols and taking care of everyone's safety is of prime importance. Tenants should be taken into confidence that their safety will not be compromised. Safety kits with masks, gloves and shoe covers should be provided to every potential tenant visiting, it should be limited to only 2 visitors, no kids and only 15 minutes appointment. Tenants should be advised to switch on all the lights and provided cleaning products and sanitizers to protect themselves and family. With everyone's cooperation and understanding, showings can be made safe and conducted.”
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For more information about the impact of COVID-19 on the real estate market, we have gathered a list of frequently asked questions that get updated as the situation changes. You can find the FAQs about COVID-19 and the real estate market here.
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Disclaimer: given that the Coronavirus (COVID-19) has caused shocks to how real estate is operated, please note that the information above could change at any time given that companies are constantly updating their policies in response to the pandemic. Intended to Solicit Buyers or Sellers that are not currently under contract with another real estate brokerage.