Recently, I’ve witnessed first hand an argument between the seller, the listing agent and the tenant where the tenant was right about the fact that the seller is required by the Residential Tenancy Act to give 2 full months’ notice and compensation equals to one month’s rent.
Effective January 1, 2004, the Residential Tenancy Act requires every tenancy agreement be in writing. There is a standard form developed by the BC government that properties owners can use: Residential Tenancy Agreement.
When selling your tenant occupied properties, provide a copy of the lease agreement to your listing agent so he or she can accurately determine if it is a fixed termed tenancy or periodic tenancy.
When writing up the tenancy agreement, you will choose whether the tenancy may continue on a month-to-month basis OR the tenant must move out of the residential unit at the end of the fixed term.
There are pros and cons for either choices, but let’s say your buyer wants to buy and live in the home that you are selling. The buyer will have to ask you to give notice to the tenant to vacate.
The seller can only give notice after all the subjects in the Contract of Purchase and Sale have been removed. The notice has to be in writing and it is best to deliver the notice to the tenant in person and get a receipt.
You cannot ask a tenant to vacate before a fixed term tenancy ends. In the case of a fixed term tenancy where you’ve chosen the option to let the tenancy continue on a month-to-month basis, two full months’ notice is required and compensation equals to one month’s rent is payable to the tenant.
If you’ve chosen the option that the tenant must vacate on the end date of the fixed term tenancy, the tenant has to move out and no notice or compensation is requires.
If it is a periodic tenancy (ie. month-to-month), two full months’ notice and compensation equals to one month’s rent is required from the seller to the tenant.
If the buyers or their close family did not occupy the property, the tenant may claim compensation equals to two months’ rent.
There was this buyer who said he’s going to live in the property and asked the seller to notify the tenant to vacate. After the transaction was completed, the tenant found out that the new buyer had torn down the property and built a new one which was for sale. The tenant then sued the seller/landlord for compensation.
Thankfully, here at Opus Realty, we have standard forms created by the renowned real estate attorney Mike Mangan to protect the seller’s rights. The tenant was not able to sue the seller successfully because we’ve asked the buyer to put in writing that he was indeed going to occupy the property.
This simple act has saved the sellers from having to pay for something they have no control over (the buyer not being truthful).
Therefore, when selling your tenant occupied property, seek the advice of a professional real estate agent to help protect your rights.