There are a lot of people that have bought a second home for investment purposes. This can be for short-term as well as long-term investment purposes. The short-term is the opportunity to rent the house out and enjoy the immediate benefits of the rent received for it. There are also many homeowners that have a basement apartment that they rent out for extra income. But, what happens to the tenants if the homeowner decides to sell the property in either one of these cases?
Can Landlord Sell House While Renting?
Landlords often get confused as to what responsibilities they have to the tenant when they want to sell the property that is rented to them.
As the owner of the property, the landlord does have the right to sell their property any time they wish. However, they do have some obligations to the tenants occupying the property. In Canada, each province has their own rules when it comes to tenants which includes the tenant’s rights when the house is being sold. In Ontario, this is the Residential Tenancies Act.
If the tenant has signed a lease or some form of tenancy agreement they are protected concerning being evicted because of the sale. In this case, the owner of the property can sell the house. The deal cannot close unless the new buyer of the house agrees to assume the responsibility of the tenancy agreement. The tenant has the right to remain in the home until the agreement expires.
The Residential Tenancies Act
This Act was created in April 2007 to help set rules and regulations for both tenants and landlords in Ontario. Then it 2017 the Rental Fairness Act was created to amend the Residential Tenancies Act.
How Much Notice Do You Need To Give A Tenant When Selling?
There are various notices that have to be given to a tenant when the homeowner is selling.
There is the notice to tenants to show the house to a potential buyer, and then the notice to vacate.
Notice to Tenants With Leases
There is the notice to vacate the premises because of the sale of the property. Sixty days notice is required once the lease has expired. If the lease is not expiring by the closing date, the new purchaser has to agree to take over the lease.
Notice to Tenants With No Lease
The landlord must give sixty days notice to the tenant.
There are a lot of homeowners that are reluctant to give leases to their tenants and prefer to go by a month to month basis. However, as of April 2018, there is a new ruling that landlords must provide their tenants with a standard lease. There are some exemptions to this, but homeowners are compelled to now issue a standard lease.
Can A Landlord Show A House While Occupied?
A landlord that is selling the property has the right to ask the tenants to give access for showing the home to prospective buyers. But there are some rules attached to this.
- At least 24 hours advance notice of the showing should be made
- Showings should be between 8 AM and 8 PM
- There is no law that says that the tenant has to be present during the showing
- Pets have to be secured, so they do not interfere with the home showing
Any tenant who does cooperate with a showing is at risk of not abiding by the tenancy agreement which then gives the homeowner the right to evict the tenant.
- The homeowner could potentially sue the tenant for hindering a potential sale of the property.
- The same rules apply if the landlord’s real estate agent wants to take photos of the house for advertising.
Notice of Eviction Before House is Sold
Some homeowners want to fix up the home before they put it on the market. Some of these repairs are major and require a building permit. In this case, the unit has to be empty before renovations can start. The landlord must give the tenant 120 days notice. Keeping in mind that once the work is done the tenant can then move back into the home. This applies to those tenants who have a lease.
What Happens When a Landlord Sells Property?
It is only natural that tenants are going to be concerned when the property they are renting is sold. Their concerns will be based on what their rental agreement is. If they have no lease and they have been given the proper notice to vacate, then it is straight forward. The landlord has complied with the law, and the tenant must do the same by vacating.
There are times when the situation is a little more complex as a result of the sale.
If the purchaser has agreed to assume the lease, then the buyer has to abide by the terms of the lease. However, circumstances may change after the sale has closed. The new owner may decide they don’t want to rent the property and want to evict the tenants.
The N12 Notice:
This notice cannot be served on tenants who have a lease. The lease must be honoured by the new owner. Also, if there is an option to renew the lease at its expiration date, then the new owner must honour this as well.
If the new owner has agreed to keep the no lease tenants on then after the sale changes their mind they can issue an N12 notice. This notice has to give the tenants a minimum of sixty days notice that they need to vacate.
This notice to vacate cannot be used to remove current tenants simply because the new owner wants to rent the property out at a higher price. There are specific rules that come with using the N12 notice.
- The new owner can use the N12 if they have decided that they want to live in the rental property themselves. Or, if there is a family member who is going to provide care to the purchaser needs the property to live in. In this circumstance, the new tenant has to occupy the premises for no less than one year. For complexes, the rules are a little different.
- The landlord must also compensate the tenant with an amount equal to one month’s rent.
- Provided the form is served on the tenant in the proper format and is being served according to its proper legal use the tenant must comply with it. If the tenant refuses, the Landlord can apply for a termination ruling from the Landlord Tenant Board.
There are variations in the landlord-tenant rules based on the type of property being rented. For example, there could be differences between a rental unit, or a house. Both parties should review these rules carefully themselves.