Question of the week:
The tenant won’t move out and the Seller is in breach of contract. What do I do?
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I don’t know if I’m needing to vent or I need advise or I need to hear from others that have experienced something similar but I don’t know what to do so I’m just posting this to see what people say in the morning.
Basically my wife and I bought a detached house, and sold our condo. We were really excited as it’s a cute little century home in our most desired area, and bought it as a forever home, I’m done moving and I just want to settle down into a place until I die. It is owned by a landlord however, and they have tenants. The tenants were given and agreed to an N12 and received compensation for the termination of their lease, and were given 3 months to find a new place. Now, about 1 month out from closing, they have just informed the landlords, which was relayed to us, that they changed their minds and are refusing to move.
Our lawyers basically said we have two options: 1. Extend the closing date so the tenants can keep looking for a place (assuming they’re even looking for one). or 2. Terminate the agreement of purchase due to the sellers breach of the contract.
Regardless of either option, because we sold our condo, we’ll be homeless in a month and will need to put all of our belongings into some kind of storage, and find a place to rent or something.
Since finding out my wife has slumped into a depression, she’s barely eating, laying in bed crying and trying to sleep the days away, and I’m just filled with so much rage I can’t sleep. Just how screwed are we?
Nick Answers Reddit
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Nick's Response
Sorry to hear that you’ve ended up in this situation. It’s obviously no fault of your own here, but hopefully this and some other advice that others have given will help you navigate this successfully.
I’m giving this advice as a Realtor who’s had to navigate a very similar situation this year, and am familiar with what each party’s rights and responsibilities here:
The facts
Based upon your mention of an N12, I’m going to assume that you’re in Ontario. If not, let me know.
The tenant does have a right to make an appeal to the Landlord Tenant Board. In this case it’s unfortunate and it sounds like the tenant may have changed their mind in bad faith, but that’s not really worth debating. It’s frustrating but not worth losing sleep over something that you can’t control when there is other work to do.
The Landlord Tenant Board is underfunded and backed up several months, which means that any hearing that might rule in your favour (and it should assuming the N12 was served in good faith) will happen after the closing.
If the Seller has agreed to wording that the property will be delivered vacant to you on closing, then they will be in breach of contract on closing day. I’m assuming that there is vacant possession wording in the Agreement of Purchase and Sale. If not, please let me know as that will change things.
If sounds like you are quite excited about this house, and I’m going to assume that your desired outcome is to close on the home and move in, whenever that happens.
Recommendations
Hearing – Ask your lawyer whether a hearing can be requested now with the LTB, or if has to wait. If it can be requested now, that gets things going a month earlier than waiting for closing.
Lawyer – Your lawyer is recommending extending the closing date by mutual agreement with the Seller, or terminating the agreement. Based upon my experience, these are not the only two options, and I would be inclined to use legal options to exert pressure upon the Sellers to close, even if this is delayed. If your lawyer is unwilling to go this route or cannot satisfactorily explain why it’s not an option for you, get a second or third opinion from another lawyer. Although you want to maintain a collaborative atmosphere with the Seller (they’re not any happier to be in this situation than you are), it should be clear that you’re willing to pursue them for specific performance of the contract, and for reimbursement for damages (your costs of renting, moving twice, etc) due to the delay. They should be seriously weighing the cost of upping their offer to the tenant against what it will cost them to breach the contract.
Renting – Regardless of the result on closing day, it would be wise to secure someplace to rent. This is going to be a headache and a hassle, but it’s wise to start looking now while you still have some runway. Plan for the worst-case scenario, where the tenant remains in the home while awaiting their hearing, which will be under a year but likely more than six months.
Be Pragmatic – As another Redditor has mentioned, there may be a scenario where the Tenant agrees to leave with sufficient compensation and appropriate forms signed (an N11). This could potentially come from the Seller and one or both of the Realtors involved, but you might kick in a certain amount too. Is it fair for you to have to pay extra in this case? No. Is it potentially cheaper and less hassle than everything that I’ve mentioned above? Probably. If I were in the same situation as you it would be tough to swallow my pride when I felt wronged, but I would try to focus on the long-term benefit of avoiding legal action and moving into the home I’m so excited about.
TL:DR – You’re not screwed here, but there is some pain in the future. At the end of all of this, you’ll be able to move into your home and you won’t lose it just because the tenant didn’t want to move out. Keep legal pressure on the Sellers and don’t give them an “out” by extending closing without compensation. They’re in potential breach in this Agreement and you’ll need them to be part of the solution.
Lastly, as much as it’s tempting to be frustrated with everyone from the Tenant to the Provincial Government and everyone else involved, don’t waste time on it (but do keep it in mind in the next Ontario election). Focus your energy on getting everyone involved moving on what they can do to get this solved.
Good luck! I’m sure that all of us in this post would love to hear how it works out.
Source: I’m a Realtor in Ottawa, Ontario.
3 Things to do when buying a tenanted property
1
Meet the tenants – If you can, meet the tenants of the property as part of the conditions of placing an offer. You’ll get a much better idea of the tenant and potential red flags, such as someone who doesn’t want to move, if you are able to speak with them face to face.
2
Include Appropriate Wording – Don’t ever take verbal assurance that a tenant will move out of a home if you need to move in yourself. Make sure that vacant possession of the home is written into your Agreement of Purchase and Sale, and that there is clear wording over what happens if this is not provided.
3
Have a Plan B – Buying a tenanted property can be unpredictable. If you’re planning on moving into a tenanted home, make sure that you have a place to live arranged for yourself if things don’t go smoothly.
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