- there is no tenancy (if the possession is characterized as a mere license or other interest);
- no rent is due; or
- rent is due, but:
Where there is an existing tenancy and your client wishes to move into the property, the existing tenancy will have to be terminated in accordance with the provisions of the Residential Tenancy Act.
For the new Buyer to move into the property the Seller must file a “Two Month Notice to End Tenancy”, Form RTB-32. The sequence of events is:
1. All Subjects must be removed first.
2. Buyer must request the Seller to serve notice in writing.
3. Seller then serves 60 day notice and must immediately pay 1 month rent as compensation.
4. Tenant may then give a 10 notice to move out without penalty.
5. Tenant may dispute note.
Time lines are important here and often get Realtors into trouble. Take into account all the notice period time lines when drafting dates. The 60 days applies only after after the “effective date of notice” [which means the day before rent is payable],
Notice on Oct 5th
Rent Payable on 1st
Effective Date Oct 31st
Move out Date Dec 31st!
Realtors should add the following language to the standard contract of purchase and sale when terminating a rental agreement:
A. Upon Subject Removal, the Buyer hereby irrevocably instructs the Seller to terminate the tenancy on the Property.
B. Upon Subject Removal, the Seller shall serve the RTB-32 Form upon the Tenant and pay the Tenant compensation according the Residential Tenancy Act and regulations.
C. Within 48 hours of service of the RTB-32 Form, the Seller shall provide the Buyer with a copy.
Investors are often looking to buy property which generates rental income. Many investment advisors see property as a key component of the financial portfolios for high net worth individuals.
Realtors should ensure that their investor clients have all the information they need to make a decision on a rental property. In addition to the considerations of resident buyers, investors need to know:
1. The Current Monthly Rent
2. Date Tenancy Commenced.
3. Due Date for Rent.
4. Date of Last Rental Increase.
5. Prepaid Amounts on Deposit.
6. Payment History with the Tenant.
7. Damage/ Complaint History with the Tenant.
8. Obtain a copy of the written tenancy agreement between the parties
When working with investors, the Realtor should add the following clauses to the standard contract of purchase and sale:
A. The Seller represents and warrants to the Buyer that the Residential Tenancy Agreement with ____[Tenant]_________ attached to this Contract is in good standing, and has not been modified or amended by the parties.
B. The Seller represents and warrants to the Buyer that the rent roll for this property is as follows:
Current Monthly Rent:
Date Tenancy Commenced:
Due Date for Rent:
Date of Last Rental Increase:
Prepaid Amounts on Deposit:
Buying a home with existing tenants involves a few additional obligations on buyers and sellers as 1) there is another party involved (the tenant), and 2) there are additional provincial laws that appy (the Residential Tenancy Act).
Prior to considering the purchase of a rental property buyers should ensure a) that the suite is a legal suite (as opposed to the commonly marketed “inlaw suite”) and b) that there are no strata bylaws which prohibit the rental.
If the new Buyer is planning to Move In to the Property:
**** Ensure the Tenant is given property notice to vacate – the notice can only be given a) once the Purchase Contract is subject free, and b) the tenant must have 60 days from day before the next rental payment date. This means, if rent is due on the 1st for a periodic monthly tenancy, and you give notice to the tenant on April 15th, the tenant does NOT have to move out until June 30 (60 days following April 30, the effective date of notice)
If the Tenant is staying resident on the Property
*** the Buyer should review the residential tenancy agreement to ensure that a) it is valid and enforceable and b) that the rent and damage deposit is properly adjusted on closing (note interest adjustment is required here under the Residential Tenancy Act)