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Buying a Tenanted Property - Things to know
Dated: December 22 2020
You're actively looking for a home to purchase, find one that you like but the property is currently Tenanted. It's common especially in the GTA and while usually buying a home can usually be pretty straightforward, different rules apply when the home has Tenants living in it. Lets look at a couple of different situations.
1. You wish to keep the Tenants
This is the easiest situation and has the least amount of impact on the conditions of sale. Whether they are month to month or actively on a lease, you become the landlord when you take possession of that home. While it is not mandatory to sign a new lease, the rules of the Residential Tenancies Act still apply. If you are making a new lease, changes can only be made if the Tenant agrees and if the changes comply with the Residential Tenancies Act.
2. You wish to Occupy or rent to an Immidiate Family Member
When purchasing it's important to clearly state your intent as part of the Purchase Agreement as to whether it is you who is going to live there or you are going to rent to an immidiate family member (and I can't stress enough IMMIDIATE FAMILY MEMBER)
If the current Tenant is living with a fixed term than they remain protected till the term is over. If the Buyer assumes the Tenants for the remainder of the lease than they must comply with the current agreement. The Tenant than must be served notice no less than the minimum time required by law.
If you were to need vacant posession than closing should only occur on the last day of the Tenancy and the notice must be given within the time frame allowed by law.
If the Tenant is currently month to month than the same notice must apply but the notice can be served upon satisfying the terms of sale (Firm agreement of Purchase and Sale)
3. You wish to demolish or renovate
This is a tricky one. Due dilligence must really be done before ending the Tenancy, especially if the work is not completed within a reasonable time after the Tenancy is ended.
Whether the plan is to demolish or renovate but the plan requires the premisis to be vacant the notice period could be anywhere from two months to a full year depending on the Provincial Jurisdiction.
In some cases the landlord may be required to pay moving expenses or to compensate depending on the Province and the number of units.
These are just a couple of Cases and a couple of examples when it comes to purchasing a home with Tenants. Always consult your local professionals (REALTORS© Real Estate Lawyers) and seek advice from your local Landlord Tenant Board to make sure that you are operating within the guidelines.
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