I purchased a condo a few months ago as an investment and finally found a tenant to rent the property three months ago. Recently, I was promoted and I am being relocated to another city and want to consolidate my finances. I am considering selling the investment condo but I am not sure how having a tenant will affect the potential sale. What do I need to know?
Generally, when a person rents an apartment, they do so for an initial term of one year. I assume this is the case with your condo. If so, you will have to disclose to any potential purchaser that you are in a binding rental contract and they will have to either assume the tenant or you will have to work something out to have the tenant agree to vacate before the end of the term. This will generally involve some form of cash settlement.
The other issue that is of greater concern to all owners who rent out investment condos is that once you have a tenant in place, they are entitled to an ongoing tenancy even after the initial one year term and can only be displaced if the owner, or an immediate family member requires the use of the property, the property is being sold and the new owner is personally taking occupancy (or an immediate family member) or the property is being substantially renovated. Landlords should be aware that tenant protection extends to ongoing rentals and that if you need further information, there is a resource at your disposal of the Landlord and Tenant Board.
Jeffrey Cowan is the principal of Cowan Taylor & McGee and can be reached at firstname.lastname@example.org.