Selling
Selling with tenants in place
Buyers of tenanted buildings are buying the income. The leases, and how the tenants feel about the sale, can raise or lower the price. Have every lease, the rent roll and estoppel certificates ready, and tell tenants at the right time, usually when buyers need access.
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Seller representation
What selling with tenants in place involves
A plain explainer if you’re new to this.
- What it is
Selling a building that’s leased
The tenants stay and their leases carry on with the new owner.
- How it works
Leases transfer with the sale
Commercial leases bind the buyer. Residential tenancies follow BC’s residential tenancy rules, and ending them for a buyer is only allowed in limited cases.
- Tenant cooperation
Access and estoppels
Leases set out how much notice you give for viewings. Buyers often ask tenants to confirm their lease terms in writing, called an estoppel certificate.
- What I prepare
Clean lease files
I gather every lease, the rent roll and any disputes so buyers know exactly what they’re taking on.
General information, not tax or legal advice. Rules and rates change, and every situation is different. Talk to your lawyer and accountant before you act on anything here.
The leases set the value
A building with long leases at market rent is worth more than one with leases ending soon. If a big lease is coming up, it can pay to renew before you sell.
Check the tenants’ rights
Read every lease for a right of first refusal or option to purchase. If a tenant has one, it has to be handled correctly or the sale can fall apart.
Estoppel certificates
Buyers and lenders usually ask each tenant to confirm the lease terms, rent paid and any disputes. Get ahead of it; a surprise in an estoppel can cost you.
Showings and confidentiality
Leases set the notice for entry. I coordinate showings so tenants’ businesses aren’t disrupted.
Expect buyers to test the big leases
When one or two tenants make up a big part of the income, buyers model each outcome: the tenant renews at market rent, renews only with a discount, or leaves and the space sits empty while it’s re-leased and built out. They price the weaker cases in. Anything you can show about those tenants helps: renewal talks under way, how long they’ve been there, what they’ve spent on the space. If a major lease is close to expiry, renewing it before you list often does more for the price than any discount. I’ll help you decide which comes first.
Questions people ask
Do tenants have to be told about the sale?
Not always at the start, but buyers will need access and estoppels, so tenants usually learn about it during the sale. Read the leases for notice rules.
Does the lease continue after the sale?
Yes. A registered or properly granted lease generally binds the new owner. Ask your lawyer about your specific leases.
What should I gather, ask and watch for?
Documents to gather
- Title, property tax notices and assessment
- Rent roll, every lease and amendment
- Two to three years of operating statements
- Estoppel-ready lease files for each tenant
Questions to ask
- What would buyers pay, and why?
- Share sale or property sale, and what does each mean for tax?
- What will buyers find in due diligence?
- How long might it take to sell?
Common mistakes
- Pricing from the assessment or a neighbour’s sale
- Not having leases and statements ready
- Talking to your accountant only after the deal is signed
- Accepting the first offer without testing the market
Typical timeline
- Months 1 to 2Prepare documents and pricing
- MarketingOften 4 to 12 weeks
- Offer to conditions30 to 60 days typical
- Completion30 to 90 days
Typical ranges. Your lease, lender and the City set the real dates.
Go deeper
If you’re looking for more details
Tenanted sale checklist
- Rent roll and every lease and amendment
- Any rights of first refusal or options to purchase
- Deposits held and arrears
- Estoppel certificate drafts
- Notice rules for entry and showings
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Next step
Selling a tenanted building?
Send me the rent roll and the leases. I can tell you how buyers will see them.