How a Buyer Can Occupy a Rented Apartment

You’ve just received an offer to buy your investment duplex. The buyer wants to use the 1st floor apartment for his home and continue to rent the 2nd. He agrees to assume the 2nd floor tenant and wants you to give the main floor tenant notice to vacate.

How Can You Achieve This?

On receiving notice, the tenant may:

  1. Luckily, the Residential Tenancies Act allows the landlord, on behalf of a buyer, to give a tenant notice to end the tenancy for properties with up to 3 residential units.
  2. Notice, however, can only be given if a buyer “in good faith requires possession” for occupancy by the buyer or his immediate family.
  3. The termination date must be “at least 60 days after the notice is given” and must be the day a tenancy period or a fixed term ends.
    Say your main floor unit is on a monthly tenancy from the 1st of each month. Notice to vacate has to be given before the required 60 days the tenant has to move out.

On receiving notice, the tenant may:

  1. Move at any time and “at least 10 days after” giving notice to the landlord.
  2. Agree to vacate in writing.

What if the tenant does not vacate?

In most instances the sale closes without a hitch and the buyer receives vacant possession. The Seller, however, cannot guarantee vacant possession as the tenant may not vacate. In this instance, the landlord would have to apply to the Landlord and Tenant Board within legislated guidelines for an order evicting the tenant.

The offer should guard against this possibility by stating that the Buyer will assume the tenancy if the tenant has not vacated within the notice period. Alternatively, the buyer and seller can agree to extend the closing date to allow the seller to apply for and obtain an eviction order.

What if the Buyer does not move in?

As well, what if the Buyer does not occupy the unit as stated? Instead he rents it to another tenant. The Seller has no control over the Buyer who in this instance has not acted in good faith.  Yet the Seller can be liable to the prior tenant in the event that the tenant took issue with this.  

So the Offer should further state that the Buyer agrees indemnify the Seller against all actions or claims that may occur in the event that the Buyer does not take possession of and occupy the property. 

Selling an investment property can be somewhat tricky and requires that your REALTOR® work closely with your legal advisor. This article is meant to be informational and should not be taken as legal advice. For more information contact your Century 21 REALTOR®

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