What To Know When Buying or Selling a Tenanted Property.

Practical Tips for You and Your Clients

Author

Eli Zbar
September 25, 2023

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Buying a tenanted property in British Columbia poses many risks, both for buyers and their agents. Use this info to help avoid battles on closing day, and a sour client.

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The law surrounding ending tenancies is nuanced, the tenants can decide to end their tenancy early during the 2 month notice period, triggering an immediate payment to the tenant, or, they can live the 2nd month rent free.

❗Consider This Common Situation:

Sally makes an offer on a tenanted property, the contract requires the seller to issue 2 months’ notice to vacate.

The seller serves the notice, and the tenant plans to move out shortly before possession.

The contract doesn’t say anything about who pays the tenant their 1 month free rent, which is required under the Residential Tenancy Act.

Unless the contract says otherwise, the seller must pay the tenant’s 1 month compensation. Most sellers assume it’s the opposite, after all it’s the buyers who made the request, and the buyers who are getting the benefit of vacant possession.

Communication is a great way to avoid problems. Before making an offer, discuss who pays the tenant’s 1 month compensation, and put it in the contract.

Either the seller:

🤝Passes on the cost to the buyer by an adjustment on closing day or

📝Explicitly agrees to pay the compensation.

🧠Other Things To Keep In Mind:

  • Buyers of a tenanted property must (with limited exceptions) comply with the requirements of the 2 month notice by in fact doing what the notice says the buyers will do. Failure to do so could result in a penalty of 12 months’ rent against the buyers.

  • “Family” has a narrow definition under the Residential Tenancy Act – it doesn’t include siblings, only spouses, children, and parents.

  • As of 2023, rental deposits gain interest – make sure the seller returns the deposit including interest. Use the BC government’s calculator. 

Did You Know?

I offer real estate agents and mortgage brokers complimentary short phone consultations. Message me on WhatsApp, or book a call.

We are super transparent about pricing, check out our app at www.pricemyconveyance.com - it calculates property transfer tax, too!

Contrary to what people think, a lawyer is not more expensive than a notary. Remember that all lawyers are notaries, but notaries are not lawyers. In my experience, most notaries refer clients to a lawyer as soon as there’s a problem with a deal. Why not start with a lawyer?

A reminder that Arora Zbar LLP has 3 lawyers offering services in real estate transactions, corporate law, commercial litigation, tenancy/strata disputes, and estate planning.

Sincerely,

Eli Zbar

Lawyer