| Once again, it’s that time of the year when owners of rental properties may consider selling their rental investments for various reasons. This year, we are seeing a higher percentage of owners considering selling over other years, due to the strain on the rental market conditions in Saskatchewan.Regina’s vacancy rate has increased over the past couple of years, but is still holding at a very reasonable average rate of 5.6%, which is much better compared to Saskatoon’s average rate of 9.5%. In my opinion, 5.6% is still a very good rental market. At this vacancy rate, good properties WILL rent in a timely manner if the unit is a very good product for a fair market price.As your licensed property manager, I would like to take this opportunity to go over some of the Saskatchewan laws of WHEN and HOW a landlord may terminate a lease agreement for the purpose of selling. It is important for you to know the proper information before making any decisions. I have seen too many owners make decisions based on what their realtor friend or their lawyer friend told them, only to find out that the realtor NOR the lawyer is well-versed in the laws of the Office of the Residential Tenancies: more commonly referred to as the ‘ORT’ or the ‘Rentalsman’. #1 FAQ from Our Owner Clients: “Can I evict my tenants so I can list my property for sale? “NO, sorry, you can’t, as per Section 60 of the Residential Tenancies Act, 2006. #2 FAQ from Our Owner Clients: “Can I LIST my property for sale with a tenant living in it?” Yes. Although an owner CANNOT EVICT a tenant during the term of their lease agreement, they CAN LIST their property for sale at any time during a locked-in long-term lease or during a month-to-month open lease. The crucial and tricky part to doing this is that real estate agent must be 100% aware of the terms of the lease and the buyer must be informed of the dates where it is eligible to give the tenants notice to vacate. A locked-in tenant can be sold with the property but the buyer must honor the existing lease agreement. If the agent fails to disclose that there is a long-term lease agreement on the property and the buyers do not realize this when they purchase the property, they cannot evict the tenant upon possession date and a legal battle will most likely ensue. There are additional drawbacks to listing your rental property with another agent from another real estate company also. One of the major drawbacks is that if the tenant is currently on a month-to-month lease, they will often choose to move out right away once the property is listed (usually at the end of the next full calendar month). If the realtor does not know how to negotiate showing times and other various details, they can create instant friction with the tenants causing them to want to move out as soon as they can. This can create an unexpected and sudden vacancy that the landlord did not count on. If one of our agents lists the property, we usually can convince the tenant to stay until there is a firm sale because we recommend to stay “just in case the house doesn’t sell for a while”. This helps the owner out because the owner continues to receive rental income while the house is listed, and in some cases, if the house does not sell, we keep our good tenants in place. I assume all real estate agents mean well, but they can cause major disruptions between us, the owner, the tenants and themselves! Realtors who don’t understand tenant’s rights often annoy the tenants and cause friction. We have seen situations like this happen many times. Often times, upon entering the house, the agent immediately reports to the owner that the house does not ‘show well’ or that the place is filthy telling the owner that the tenants are ‘hoarders’ or that the place has been ‘trashed’. It’s happened more than once where we drop everything we are doing and run over in a panic to check out the realtor’s claims, only to find out that they are completely untrue. Yes, the tenants may not be the neatest people in the world, and yes, they may have little to no furniture or old outdated furniture, but they definitely don’t fit the definition of ‘hoarders’ or have ‘trashed the place.’ (As a property manager, I just hate that term: ‘trashed’). Tenants typically don’t trash places. Sometimes they don’t clean well and they don’t mind living amongst their own clutter, but we’ve almost never seen a house trashed in 18 years of being in property management. The worst-case scenario we have seen is really messy and dirty and a hole or two in the wall, which can easily be cleaned and fixed. I know this sounds nonchalant, but owners have to understand that a rental property is a business, and must be viewed from a business perspective: and the truth is that there are costs associated with doing business. Cleaning and painting are normal expected expenses when dealing with rental properties. Owners have to be aware that selling a rental property is definitely more difficult than selling your own personal home. Tenants will not go out of their way to keep your house smelling like freshly-baked bread when there is a showing. They probably won’t be super flexible with showing times and they will definitely not allow a lockbox to be installed at the front door. However, you have to remember that THEY have ‘possession of your rental property’ and possession is nine-tenths of the law in Canada. Under their lease agreement, they have more rights as a tenant than you do as the owner! #3 FAQ from Our Owner Clients : “Can Regency Prop. Mgmt & Real Estate continue to show my property for rent while it is listed with another brokerage and whichever comes along first (a tenant or a buyer) is the choice I’ll go with?” The answer is no! We won’t enter into this deal. Why don’t we allow this? It’s simple. Because the agent could be out signing a contract to sell the unit at the same moment as we may be signing a lease agreement in our office. (This scenario has actually happened to us before, but thank goodness, it got resolved without a big legal battle. We got lucky on that one!) The tenant in that case was a nice family who moved out to accommodate the buyer without a big fight and at no expense to the owner or the brokerages involved. But we learned that renting and selling (with another brokerage) is just not worth the risk to us. The only way Regency Prop. Mgmt & Real Estate will continue to show the property for rent while it’s listed is if one of our own agents lists the property. Then we know for sure that the agent is not selling the property at the same moment that we are signing a new lease. Our agents know when there is a pending application on the property and that we are in the screening process of renting it, so our agent would not present an Offer to Purchase Contract without first checking to see if there is an existing lease at that moment. It’s a very time-sensitive matter. There are so many details to know in property management. The better a landlord knows and follows the proper laws when dealing with tenants, the fewer the issues in court. As a side note, Regency Prop. Mgmt & Real Estate is not in court very often, however, if we do find ourselves at a Rentalsman hearing, 9 times out of 10, we win because we know the rules and have followed them to a T. That’s all it takes to stay out of the Office of the Residential Tenancies courts. Know the rules and follow them! If you would like to sell this year, please give our real estate agent Pat Abel a call at 306-537-7677 for a market evaluation or call our office to find out the status of the current lease agreement on your property. Our landlord line phone number is 306-359-0386. Selling a rental property is totally doable, but there is a right way and a wrong way to do it so please stay informed. This newsletter was written by Kathy Berner, Broker of Regency Property Management and Real Estate Inc.. We appreciate your business and we hope that you do not sell your rental property any time soon, but we would like to be of any help if and when you choose to sell – to make the transition simple, speedy and painless. Until next time, many blessings! by Kathy Berner |
