WHAT ARE THE POSSIBLE SCENARIOS?
You wish to keep the tenant. This has the least impact on timing and conditions of the sale. No matter if the tenant has a fixed-term or periodic tenancy (month-to-month), once the sale closes they will fall under your responsibility as the new landlord, and you may need to sign a new lease agreement. It’s a tenant occupied property at the closing date.
You wish to occupy the home or rent to a family member(parent, spouse or child). There are two ways this works, but in both scenarios it’s important to clearly state your intent to occupy the home as part of your purchase agreement.
- The tenant has a fixed term lease: The tenant’s lease remains protected until the end of the fixed term. The buyer must assume responsibility for the tenant and serve notice to end the tenancy no less than the minimum period required by law before the end date of their fixed-term lease.
- The tenant’s lease is month-to-month: The same minimum notice requirements apply in this case, though notice can be given by the Seller immediately once the terms of sale have been satisfied. If you require the unit empty, the sale can only close after the day on which the tenancy ends.
The property is a multi-unit building and you wish to demolish or renovate the property. This is often where things can get difficult as there are substantially more onerous requirements upon you. Much longer notice times can be required. The tenants must be offered the right of first refusal to move back into the unit upon completion of the work. The landlord may be also be required to pay moving expenses, or to compensate the tenant.
The tenant is paying below market rent. When a tenant has been residing in a home for many years, rent often falls below market. As years pass, property values, taxes, and mortgage rates rise, increasing the overheads for landlords and narrowing profit margins.
Most provinces set annual limits for rental increases. A landlord must follow a minimum notice period, and if they have good reason to increase the rent beyond the guidelines, they can apply for permission from their provincial landlord tenant board. Rent may also be increased beyond the guideline amount if it’s justified by investing in improvements or renovations to the property.
Check the Useful Links on our website for more information in regards to housing, landlords and tenants (tenant occupied property).