Selling a rental property in British Columbia just got harder. Know your rights.
Selling a rental property in British Columbia can be tricky for landlords who have a tenant currently living in the rental unit.
In a perfect world, the lease would be up, and the tenant would be moved out before the property went on the market for sale; unfortunately, things don’t always line up so neatly, and occupied rental properties are often harder to sell.
When you plan on selling a rental property in British Columbia, the lease remains in effect, and the tenancy will continue. Unless an agreement has been reached between the tenant and the landlord, the landlord cannot end the tenancy early merely because they want to sell the property.
However, you do have certain legal rights as the seller to facilitate showings, open houses, and generally get through the selling process without impediment from an uncooperative tenant.
You have the right to conduct showings while the property is occupied
Selling an occupied rental property will require the landlord and tenant to cooperate when it comes to showing the property to prospective buyers. Obviously, the landlord can not enter the property as he or she pleases without notice for any reason, and this includes to accommodate showings.
When a landlord or owner has a positive relationship with a cooperative tenant the steps that must be taken to legally show a tenanted property are similar to those required for a landlord to enter the property under most other circumstances.
The landlord must give the tenant 24 hours notice in writing before each showing of the property and must include in that notice both the reason for entering the property and the time of entry to the property. Showing an occupied rental property must be conducted between the hours of 8:00 am and 9:00 pm unless the tenant agrees in writing to a different time.
This 24-hour notice must be served for every showing that is scheduled by the landlord. For example, if you wish to show the property to Buyer A on Tuesday at 10:00 am, and Buyer B on Wednesday at 4:00 pm you will need to draft and serve two separate notices. Buyer A’s notice must be served by Monday at 10:00 am, and Buyer B’s must be served by Tuesday at 4:00 pm.
This can become arduous depending on the number of showings expected to take place, so landlords and tenants may agree in writing to a predetermined schedule of viewing dates and times to avoid the redundancy of paperwork.
Once the paperwork has been served and the time has come to show the property, you are legally permitted to enter the property with or without the tenant present.
If the tenant chooses to remain in the home during showings, they can not interfere with the landlord’s legal right to show the potential purchaser the property. If a tenant makes comments about the condition of the property or the landlord, they are infringing on that to pursue a buyer.
Tenant’s right to refuse entry
The landlord or the landlord’s agent is assuming responsibility for the safety of the tenant’s belongings during the viewing by doing so, and the tenant may refuse entry if it would be unreasonable to expect the landlord to be able to ensure that safety. Be mindful of the tenant’s right to peace and quiet when scheduling showings of the property; they do have the right to refuse entry if they feel that it is being infringed upon.
Open houses conducted on a tenanted property are much more likely to be considered situations where the safety of the tenant’s belongings is unreasonable to be expected due to the volume of prospective buyers. You do have the right to conduct open houses; however, be mindful of the tenant’s right to refuse entry as you consider your options.
Selling a rental property with uncooperative tenants
Sometimes tenants interfere with the landlord’s ability to show their property to prospective buyers. After the landlord has served the required 24-hour notice, if the tenant unreasonably refuses entry for the showing; or if the tenant provides misleading or inaccurate information to the prospective buyer, you have the right to take corrective action.
Depending on the circumstances, you may choose to take one of three avenues to remedy the interference. The first and most straightforward way to correct the uncooperative tenants' behaviour would be to talk with them and advise them to stop what they are doing.
If the situation is not amicable and the landlord is still unable to exercise their right to pursue a buyer, the next step to take is to advise them to contact the Residential Tenancy Branch for a more official explanation of their wrongdoing.
As a last resort, if the tenant remains uncooperative, the landlord can serve them with a One Month Notice To End Tenancy For Cause. The uncooperative tenant will have a period of time to dispute the notice to the Residential Tenancy Branch. If there is no dispute filed by the tenant they must move out on or before the effective date on the notice and if they do not comply the landlord may apply to the Residential Tenancy Branch to intervene and assist with taking possession of the property.
You may have the right to end the tenancy if it is month to month
If you’ve reached a firm deal with a buyer, who plans on living in the property (buyer’s close family member(s) are included) and the current tenant is occupying the property under a month to month agreement, you will need to do the following to end that tenancy.
Your buyer will need to submit a written request to you (the seller) to end the tenancy before taking ownership of the property. After receiving the notice, the landlord needs to serve a Two Months Notice to End Tenancy before the day that rent is due and at least two months before the buyer plans to take occupancy of the property.
It is important to note that the tenant must acknowledge their receipt of this notice and that it is from the date of acknowledgment that the two-month countdown begins. If no proper notice to end tenancy is served, the tenancy will continue under the original agreement.
When serving the tenant with a Two Month Notice to End Tenancy, the landlord must compensate the tenant with an amount of money equal to one month’s rent. This amount must be paid on or before the effective date on the notice and is owed regardless of when the tenant moves out of the property. Selling a rental property doesn’t have to cost you one month’s rent in all cases.
It is possible to avoid this compensation if you and your tenant sign a Mutual Agreement To End Tenancy form. In other words, you will not owe the tenant compensation if they serve you notice to end tenancy or state that they are moving out on a specified date.
Selling a rental property with a fixed tenancy
In situations where a tenant has a fixed length tenancy, the buyer will be required to honour the terms of the pre-existing lease agreement between the seller and the tenant. The buyer will not be able to move into the property until the lease has expired or unless they come to a mutual agreement with the tenant to amend the terms of the lease.
This is why homes that are occupied by a tenant are sometimes the longest properties on the market for sale. Of course, it’s possible to sell your rental property even while it’s leased. You will need to work closely with your tenant to ensure the property is in the best condition for viewings. This will require a good rapport with your tenant, and it is entirely within your right to offer some form of incentive such as a discounted rate on the rent as motivation.
Selling a rental property in British Columbia has gotten a lot harder in the last few years. However, if you know your rights as the property owner, you’re much more likely to set yourself up for success even in the face of uncooperative tenants and fixed tenancies.