In 2024, as Ontario’s real estate market continues to evolve, landlords and property managers must stay informed about tenant rights and property sales.
Understanding Tenant Rights When Selling a Property in Ontario
With the ongoing surge in housing prices, many landlords are seizing the opportunity to sell their rental properties. However, this situation can complicate the sale if the property is occupied. New buyers often prefer vacant properties to avoid dealing with current tenants, leading landlords to consider various strategies to ensure the sale proceeds smoothly.
When a landlord decides to sell a property with tenants in place, it’s crucial to understand the legal framework. Tenants have the right to remain in the property even after their lease ends. If the landlord has promised vacant possession to a buyer, they must follow a strict legal process.
The process typically involves the seller completing and delivering the N12 form and may require filing the notice with the Landlord and Tenant Board. If tenants believe the notice is issued in bad faith, they have the right to contest it at a hearing. Its best to take legal advice before your actions.
Exploring ‘Cash for Keys’ Agreements
When faced with difficulties in terminating a tenancy to facilitate a property sale, landlords might consider negotiating a ‘cash for keys’ agreement. This approach involves offering tenants a financial incentive to vacate the property voluntarily.
It’s crucial that landlords engage a legal professional to draft and negotiate these agreements to ensure they comply with the law. Negotiations should not be handled by real estate agents, as they are not authorized to provide legal advice or services without proper licensing. Failing to follow legal protocols can result in disputes and potential claims from tenants.
Advantages of ‘cash for keys’
- ‘Cash for keys’ can expedite the process of regaining possession of a rental property compared to formal eviction proceedings, which can be time-consuming and costly.
- By negotiating directly with tenants, landlords may avoid the legal fees associated with court proceedings and other eviction-related expenses.
- Offering a financial incentive can lead to a more amicable resolution, reducing the potential for conflict and stress between landlords and tenants.
- Maintaining a positive relationship with tenants, even when parting ways, can be beneficial, especially if the tenant might be a future reference or if there are any remaining obligations.
- With tenants agreeing to move out voluntarily, landlords can quickly prepare the property for new tenants or for sale, minimizing periods of vacancy and loss of rental income.
- The cost of a ‘cash for keys’ agreement is predictable and can be factored into the landlord’s budget, unlike the variable costs of legal proceedings and potential property damage.
Disadvantages of ‘cash for keys’
- The landlord must provide a financial incentive, which can be a significant expense, especially if the tenant is offered a substantial sum to vacate.
- If multiple tenants or properties are involved, the costs can add up, potentially affecting the landlord’s return on investment.
- There is no guarantee that tenants will accept the ‘cash for keys’ offer, especially if they are financially secure or unwilling to leave.
- Tenants may negotiate for a higher amount, which can increase the overall cost and complicate the process.
- If not managed correctly, ‘cash for keys’ agreements may lead to legal disputes, particularly if the offer is not handled in a fair and transparent manner.
- If tenants feel pressured or if the agreement is not properly documented, they may dispute the terms, leading to potential legal challenges.