How to Sell a Home with a Tenant In It

Do you have tenants? Are you thinking of selling your home? If so, then this blog might be useful for you.

To start, we are not licensed in property management, so the information below is only things that I have learned while being a REALTOR®, not advice for being a landlord. For more information on the Alberta laws for landlords and tenants, feel free to visit https://www.landlordandtenant.org/.

Many of us in Fort McMurray have tenants...either living in our basement, in a room in our home or in a rental property that we own. Tenants can be a great source of income, right? Well, they can also be a headache if you want to sell your property.

It all depends on their cooperation, and how well you treat them can have a big impact on whether or not you sell your home for as much money as possible.

I will talk briefly about the following items: Repairs Notice to Terminate Keeping Tenants Notice for Showings

1. Repairs

Tenants can be really respectful and take care of your home really well, but if they don’t, then you may need to do some work to your home before selling it. See our previous blog for suggestions on what to do to get your home ready to sell. If there is work that is half done or there is damage to your home, such as holes in the walls, then I recommend fixing these before selling your home. That doesn’t mean you have to fix them before calling us to let you know what the value of your home is, but I would recommend doing it before we have photos taken.

2. Notice to Terminate

Depending on whether or not your tenants are on month-to-month leases or fixed leases, you may want to consider giving them their notice to move out of the property before selling. For example, it is difficult to sell homes if they are smoked in, so if your tenant smokes in the home, then I would recommend serving them their notice to leave so that you can get rid of the smoke smell. It is hard to ensure tenants will keep your home in a clean state for showings, so if they normally leave it in a poor state, then I would consider serving their notice to terminate so that we can ensure your home will show in the best light possible.

For more information about serving this notice, check out https://www.landlordandtenant.org/notices/terminate-periodic-tenancy-allowable-reasons/

You may need to give notice to your tenants to move out if the offer from a buyer says you need to do so. If so, then I recommend checking that you are not going against your lease agreement with the tenant (for example, if it is a fixed lease, then the tenant has the right to stay until the end of that fixed period). If you serve notice at the buyer’s request, then it is best to also send that notice to your REALTOR® so that they can share it with the other side of the transaction (the buyer’s side) to show that you have satisfied that term in the purchase contract.

3. Keeping Tenants

If you decide to keep your tenants while listing your home for sale, or if they must stay due to a fixed lease, then it is best to keep your tenants happy as you will be bugging them with showings. If you want to ensure your tenants will keep your home clean for showings, I recommend offering to have a cleaner go in on a regular basis to ensure the level of cleanliness is up to your standards (or should I say, the buyers’ standards).

If you keep your tenants in place while listing your home for sale, then one suggestion is to give them gift cards to go to Starbucks or something for showings so that they have somewhere to go. In the summer, it is easier to ask tenants to leave for showings as they can go for a walk or something, but in the winter, it is more difficult. That being said, according to my understanding of the Alberta Tenancy Act, the tenants don’t have to leave for showings. They have to give access to the REALTOR® and the buyers if proper notice is given, but my understanding is that they don’t necessarily have to leave. This is something you will want to discuss with your tenants up front as some tenants don’t want to be home during showings and some do.

If your tenant gives you permission to give their contact info to your REALTOR®, then your REALTOR® can give them notice for showings in order to save you time (so you don’t have to be the “middleman”). Again, you may want to get the tenant’s permission in writing to give out their contact information.

4. Notice for Showings

The Alberta Tenancy Act states that the tenant must be given 24 hours notice for showings. (See link: https://www.landlordandtenant.org/notices/notice-to-enter-the-property-by-the-landlord/)

If your tenant agrees to grant showings with less than 24 hours notice, then I would recommend getting it in writing.

For any showing, I recommend posting a notice on the tenant’s door to ensure the proper notice is given. If you do so, then I recommend taking a photo of the notice on the door for proof that you posted it with sufficient notice. If something goes wrong with the tenant later, then you will want this backup documentation to fight your case.

For standard Fort McMurray notices, please visit this site: http://asset.rmwb.ca/LTAB-Forms/

If your tenant agrees to receive notice by text or email, then you may also want to get their agreement in writing.

If your tenant stays home for showings, it isn’t ideal, but I recommend asking them not to speak with the buyers as the buyers might ask questions to the tenants that could give away your motivation (reason) for selling, which might give the buyers an advantage in negotiation should they place an offer on your home. Again, this is why it is so important to have a good relationship with your tenant!

Summary

At the end of the day, I have had many sellers sell their home with tenants and it has worked out just fine. However, there have been times when my clients have had added stress because of their tenants. Even when you think your tenant is “easy going”, it is best to follow the rules in case they aren’t as easy going as you thought and decide to complain to the tenancy board later or give you trouble when asking for showings. Feel free to get in touch with us if you have any questions!