elling a tenant-occupied property in British Columbia involves navigating a specific set of rules and considerations to ensure a smooth and legally compliant transaction. Understanding the dos and don'ts is crucial for both landlords and prospective buyers. In this guide, we'll explore the key factors that can help you successfully navigate this process, from respecting tenant rights and adhering to legal obligations to optimizing the property's market value while maintaining positive tenant relations.
This applies if the tenancy has passed the initial term and has rolled over into month-month (periodic).
The RTA states that a landlord may end a tenancy if the landlord enters into an agreement to sell the rental and all the conditions on which the sale depends have been satisfied. Therefore, a landlord cannot give notice to end tenancy until the “conditions precedent” have been removed.
For any offer, especially unconditional offers, the notice to end tenancy should not be served until after the Homebuyer’s Rescission Period (3 business days) has ended.
The buyer can ask the landlord to, in writing, give notice to end tenancy if the buyer or a close family member intends in good faith to occupy the rental unit. This form must now include the buyer’s name and address. After purchase, the new owner must make use of the property quickly, for a minimum of six months, and not just re-rent it to new tenants. Failure to comply could result in the tenant being awarded 12 months rent compensation.
At present, the written notice is required to be at least two months, and served in accordance with the rules and regulations of the RTA. See below about adhering to procedures and timelines for serving notice.
It is important for the Sellers to always remember that under the RTA, month-to-month tenants have the right respond to this notice, and give the current landlord a 10-Day Notice to leave early. Landlords who receive a 10-Day Notice from their tenants will lose rent until the date of completion, and it is important for realtors to remind their clients of this risk factor. The tenants will pay the proportion of rent due to the effective date of that notice. Ending the tenancy early does not affect the tenants entitlement to the one-month compensation
As outlined in the RTA, tenants have the right to give this 10-day notice only after they have been served a legal Notice to Vacate by either the owner or the property manager.
The listing agent should keep a close watch for this possibility. it is of great importance to not only the sellers but also the new buyers. Once the 10-Day Notice has been served by the tenants, both parties may want to add an addendum to the standard Contract of Purchase and Sale that changes the relevant dates. By moving up the possible possession/completion date for the buyers, a greater rental loss for the sellers is avoided.
Effective December 11, 2017, new and existing fixed-term tenancy agreements can no longer include a vacate clause requiring a tenant to move out at the end of the term, unless:
1. The tenancy agreement is a sublease agreement (when permitted); or
2. The tenancy is a fixed term tenancy in circumstances prescribed in section 13.1 of the Residential Tenancy Regulation. This Regulation specifies situations where a landlord or landlord’s close family member plans in good faith to occupy the rental unit.
This must be declared and indicated at the time of executing the lease agreement, and be initialed by both landlord and tenant, with Section 13.1 checked off, and the reason filled out.
It is possible to sell a property with fixed-term tenancy in place. Some buyers may want to occupy the premises but are willing to wait and collect rent until the lease expires. The new Buyer will still be required to serve the two-month Notice to Vacate prior to lease end date. It is important the Buyer obtain details about any previous rental increases, condition inspection report, security deposits, pet deposits, any items that belong to the tenant (appliances, cupboards, window coverings, etc). Also for properties with multiple tenants, any understandings about use of the rear yard, driveway, garage, storage areas.
If the Buyer’s can not wait until the fixed-term tenancy expires, then the current Seller could try to negotiate a mutual agreement to end the tenancy. Depending on the circumstances and willingness of the tenants, it would likely require a cash incentive. These can range anywhere from 3 months to 12 months rent. That failing, the new buyer would either decide not to proceed or have to compromise, become a landlord, and inherit the tenants.
Given that fixed-term tenancy agreements could no longer include a vacate clause, the legislation around rent increases changed as well. A rent increase for a tenant remaining in a rental unit is limited to the maximum annual allowable amount (currently 3.5% for 2024) and can only be increased once every 12 months. Rent cannot be increased above that amount between tenancy agreements with the same tenant. In addition, landlords cannot apply for an additional rent increase on the basis that the rent is significantly lower than other similar rental units in the same geographic area.
It is possible to sell a property with fixed-term tenancy in place. Some buyers may want to occupy the premises but are willing to wait, and collect rent, until the lease expires. The new Buyer will still be required to serve the two-month Notice to Vacate prior to lease end date.
If the Buyer’s can not wait until the fixed-term tenancy expires, then the current Seller could try to negotiate a mutual agreement to end the tenancy. Depending on the circumstances and willingness of the tenants, it would likely require a cash incentive. These can range anywhere from 3 months to 12 months rent. That failing, the new buyer would either decide not to proceed or have to compromise, become a landlord, and inherit the tenants.
The two safest legal methods of serving notice to vacate are:
1. posting the notice on the tenants’ door (deemed received 3 days later if tenant does not say or show otherwise), or
2. delivering the notice by hand directly to the tenants (deemed to be received the same day).
For e-mail, it must be to the e-mail address provided by the tenant specifically for service. It is deemed received 3 days later when the tenant does not say or show that they received it on an earlier date
Text messages or sliding a copy under the tenants door is not acceptable, and will not be considered served.
If there is a signed lease in place, the tenants have the right to the premises until the end of the lease term. If the owners wish the tenants to vacate at the end of the lease, a two-months’ notice can be served at the end of the tenth month of the lease. But must be before the start of the eleventh month, in accordance with various timelines regarding official receipt, based on the method used to serve.
For Example:
For a lease ending on September 30, the Notice to Vacate must be served in writing and posted on the tenants’ door a minimum of four working days prior to the end of the day on July 31. The rationale is to create the full 72-hour notice period (three days) as cited under section 88 of the RTA. The document can also be hand delivered, in person with a witness if possible, and served directly to the tenants, placing it in their hand, no later than the last day of July, in order for the tenants to be required to leave by September 30.
More information timelines, dates, and procedures serving notices during tenancy can be found directly on the RTB website.
While rare and unlikely, tenants have a right to dispute any eviction notice served by the landlord. This will cause a significant delay and could jepoardize a sale. Once a dispute is submitted, it will take at least 2 months to get assigned an arbitrator and scheduled for a hearing date. In the interim, you can do nothing other than collect rent, and will need to delay completion of the sale and/or seek legal advice.
There are varying deadlines for dispute resolution applications, depending on the nature of the dispute. For example, here are the time limits to dispute eviction notices:
This scenario is most likely to happen if the tenant believes either the Seller or Buyer of the property is not acting in good faith. This can be as simple as hearing a conversation from the buyer, landlord, realtor that they plan to rent out the unit or that they discover the incoming occupant is not a close family member. The definition of a “close family member” means the landlord’s parent, spouse or child, or the parent or child of the landlord's spouse. A landlord cannot end a tenancy under section 49 so their brother, sister, aunt, niece, or other relative can move into the rental unit.
1. Buyer forced to pay 12-months rent after entering into a binding unconditional contract of purchase and sale, but failed to complete at closing day. The Buyer requested the Seller serve 2 month notice, prior to the anticipated closing. Tenants moved out, and found out after from a neighbour that the Seller had re-rented the unit as he needed to continue to pay off the mortgage. More info from CBC News article.
2. A B.C. woman fails to move-in and ordered to pay $22,140 in compensation (12 months rent) to former tenant, after acquiring the vacant property and re-renting within 1 month. More info from CBC News article.
If you're considering selling a tenanted property, contact 8X Real Estate to discuss your situation and goals.
We have templates and procedures ready to go for the following situations:
Dustin Miller is the managing broker of 8X Real Estate. When he's not on the road, he is on his computer looking at real estate. You can often find Dustin at his office enjoying a bowl of won-ton soup.
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