How to sell your home, without moving out
Published Tuesday, April 5, 2016 9:13AM EDT
In the hot housing markets of Toronto and Vancouver, homeowners may be looking to cash in on the value of their homes, but they might not necessarily be ready to move out.
In these situations, a lease-back agreement could potentially be a "win-win" for both the previous and new owners, according to real estate lawyer Mark Weisleder.
"It's a real problem for people," Weisleder told CTV's Canada AM on Tuesday. "They would love to sell their home and cash out in this great market…and realize all that value, most of which is tax-free. But they have a problem downsizing."
Lease-back agreements have recently made headlines thanks to the likes of Conrad Black and Hugh Hefner. The agreement sees a homeowner sell their property and then lease it back from the new owners.
Black will continue to reside in his 23,000 square-foot mansion in Toronto's prestigious Bridle Path neighbourhood after it was sold to new owners last month. Black's spokesperson reported that the former media mogul sold the home with a lease-back agreement, and the possibility of a buy-back.
Playboy Enterprises put its famed Playboy mansion up for sale for in January, however, the company's founder Hugh Hefner will continue to live in the property and lease the mansion back from the new owner.
Weisleder said it's likely that, when a homeowner is looking for a lease-back agreement as part of their property's sale, they may have to settle for a lower selling price.
"I'm not sure Conrad Black sold for as much as he possibly could have, maybe to a family that was actually going to move in," he said. "Perhaps he took a little less in order for the ability to stay there for a number of years."
But Weisleder pointed out that lease-back deals do not appeal to the ultra-rich exclusively, and that the "average homeowner" may consider a similar agreement.
"As long as the lease is enough to pay the investor's mortgage or the amount of interest they might have earned in the bank on that money, it's a win-win for both sides."