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Archive for January, 2018

5 things to know when selling a home occupied by a tenant

As a result of the latest changes to the Ontario Residential Tenancies Act, you need to have the right strategy when selling a home occupied by a tenant.

Here are 5 things you need to know:

1.        First review any lease

You cannot terminate a tenancy until the end of the lease. So if the tenant lease extends for another 6 months, they cannot be evicted before the lease ends. In addition, check to make sure the tenant does not have the right to renew the lease for an extra year. If so, then they cannot be evicted until the end of their renewal period.

2.        You cannot evict just because you want to sell your home

Even if the lease has ended, you cannot evict a tenant just because you want to list the home for sale. This means that you first have to sign a buyer to an agreement BEFORE you can send the eviction notice to the tenant. This also means no home staging without the tenant agreement.

3.        Once agreement signed, you need to give the tenant 60 days’ notice

Once the Buyer signs the offer, then you have to give the tenant the 60 days’ notice using form N12, You should schedule your closing date to match the notice date or to occur shortly after this date to ensure you can deliver vacant possession on closing. A penalty of $25,000 could be payable if the buyer or their family do not stay in the property for at least 12 months after closing. As such, the following clause, contained in my Ontario Guide for Landlords, should be considered:

·         “The buyer agrees that they or their immediate family intends to move into the property on closing. In this regard, the seller agrees to provide the applicable 60 days’ notice to the tenant using Form N12 under the Residential Tenancies Act, on behalf of the buyer. The buyer agrees to provide whatever support information may be required to demonstrate that the buyer or their immediate family will in good faith  be moving into the property on closing and to indemnify the seller for any damages the seller suffers if the buyer does not remain in the property for at least one year after closing. In the event that the tenant disputes the notice as given, then the parties agree to extend the closing of this transaction to a period not more than 30 days, in order to effect the eviction of the tenant.”

4.        Monitor the situation carefully

It is extremely important to monitor the situation if you are trying to evict a tenant before closing.

In a transaction I completed on October 2, 2017, the agreement was signed in July and the tenant was on a monthly tenancy. Notice was given by the seller/landlord for the tenant to leave on September 30, 2017, as required. However, the tenant indicated that they intended to challenge the notice. As such we arranged for a hearing before the Landlord and Tenant Board in late August, at which time the buyer attended as well and convinced the adjudicator that they in good faith intended to move in on October 2, 2017. The Adjudicator granted the eviction order for September 30, 2017 and with that order, the tenant moved out on that date and the deal was closed in time.

5.        Practical advice

If possible, try and arrange a new place to live for the tenant before you even put the property up for sale. You will not have any issues with home staging, notices or providing vacant possession on closing.

It is important to understand all of your rights and responsibilities when selling a home occupied by a tenant when your buyer wants to move in on closing.

By Mark Weisleder

Mark Weisleder is a Partner, author and speaker at the law firm Real Estate Lawyers.ca LLP. Contact him at mark@realestatelawyers.ca or 1.888.876.5529

 

 


Former Tory leader slams government

Tim Hudak, former leader of the Ontario Progressive Conservatives and current Ontario Real Estate Association CEO, says 2018 will be a jarring year if the government doesn’t change tack.

“My main wish—and I hope it is an accurate forecast for 2018—is that government will start looking out for the middle-class for a change,” Hudak told REP. “For most of 2017, they were working against the middle-class. A recent OREA survey showed the vast majority of people define ‘middle-class’ as being able to own a home, but, almost universally, people agree homeownership is becoming more difficult with all the government rules, regulations, restrictions and taxes.”

The government’s most recent intervention was in the form of Guideline B-20, which was updated to stringently stress test mortgages. Hudak believes it was an unnecessary piece of regulation that will ultimately put home purchasers at risk.

“I suspect a number of people will go into the grey market to borrow to pay for a home, so more people will be in higher-risk, higher-cost mortgages in the unregulated sector, but I think there’s no doubt the piling on impact of new taxes, higher interest rates and tougher mortgage rules will put homeownership out of reach for even more millennials,” he said. “Secondly, it will cause young families not to upgrade their home when kids come along. There’s no doubt that in 2017 governments were working against the middle-class dream of homeownership.

“I do hope, now that we’re heading towards a provincial election this year, a municipal election this year, and a federal election in 2019, that they’ll get in the corner of Ontario’s middle-class instead of fighting them.”

In spite of eviscerating the provincial government, Hudak gave it credit for the Fair Housing Plan—at least parts of it. He’s satisfied that Kathleen Wynne’s Liberal government has doubled the land transfer tax credit and committed to tackling the painstakingly slow approvals process.

“The single most damaging thing with the Fair Housing Plan was the strict rent control regime that looks more like the 1970s than 2017,” he said. “I think fewer mom and pop landlords will get into the business at all. Corporations will likely shift their investments to other states and provinces. You can’t move apartment buildings, but you can certainly move investment dollars by building new. The long-term impact will be a reduction in rental supply and deterioration of existing stock.”

Hudak called 2017 the year promises were made, and 2018 the year rubber needs to hit the road.
by Neil Sharma

January 8, 2018

 

www.repmag.ca