What Landlords Should Know

What happens if you own a property and you decide to sell it? What happens with the tenant?

There are very defined rights and responsibilities for both parties, under the Residential Tenancy Act which is the governing act for all rental transactions in the province of British Columbia.
At Downtown Suites, we always rent our properties on a one year lease. The reason we take a one year lease is so we get some longevity with the tenant client, but after that we always go on a month to month basis. That gives flexibility to the owner, should they want to sell their property they then are able to do it. We’ve had a couple of instances where owners have asked us to get another lease from the tenant, and we have done that, and they decide the market is very strong, they want to sell it. The rental lease takes precedence over any sale. It is important to remember that.
It is almost impossible to sell a property with a long lease, even ten months left still on it, they wouldn’t be able to move in for 11 months. The other option is that sometimes you can buy the tenant out, but it’s not a very easy thing to do and of course you are very much in the tenant’s pocket then – they are writing the rules.
Once we have the flexibility of a month to month lease, the requirement is that should the property be sold, and the new owner wants to move in to it, (or should the existing owner wish to move back into his own property as well,) they have to give 60 days notice to the tenant that they want to move in, before the end of the rental period. The means of delivery of this notice is very regulated as well. If the notice is just posted on the door, I believe it’s three or four days notice is used up just by putting it on the door, so we have to be very careful about that.
So essentially, 60 days notice at the end of the month. The tenant then has the right to give 10 days notice to move out on any time within that period, and rent that has been paid for the time they are not going to be there is pro-rated and refunded to them.
So this can be quite complicated if you are expecting that rental stream and you won’t get it for two months if they decide to move out within 10 days of being served the notice. You would be without any rent for 50 days, so it’s something to bear in mind.
The other thing is they are required to receive one month’s rent for the inconvenience of having to move. Now a lot of owners balk at that, but the law is One Month’s Rent. I just had a situation with a gentleman from overseas, who didn’t want to pay this. A lot of overseas owners find this absurd in their mind and they want to get their own property back. The gentleman who was the tenant went to the arbitration court and, of course, he won. So be very careful. You are obliged to pay one month’s rent, plus once you serve the 60 days notice they can then give you 10 days notice and move out any time they want. And then the remaining rent is pro-rated and refunded to them.
I’ve had personal experience of this. I bought a house not so long ago and I had to pay out $6,000 in rents to tenants just so I could get the house back for myself. So it is quite painful. However looking at it from the other side, I can fully appreciate how tenants would feel if they’ve enjoyed living in their home – it is their home after all – and they are being forced to move. Of course now a lot of people are being forced to move so people can realize capital gains. We are not into the social issues here, but I’m just saying I’m sympathetic with both sides. But what really counts is the law, and what we have to administer.

(Video version posted below.)

(originally posted April 20, 2007)