When selling a tenant occupied property in BC, you need to know the tenancy rights in British Columbia and have a plan in place before selling.
Can You End a Tenancy to Sell Your Home in BC?
In BC a landlord cannot end a tenancy because they want to sell the home. If you want to sell a home that is tenant occupied, this is important to know. You cannot evict a tenant simply because you want to sell the rental unit.
How Does a Tenancy Agreement Affect Your Sale?
There are two main types of tenancies: month to month tenancies and fixed term tenancies (otherwise known as a “lease”). The type of tenancy affects when the buyer can take possession of the home. You need to consider this factor when trying to sell a tenant occupied property. Let’s break down what each tenancy is exactly and how this affects the sale of your home.
Month-to-month tenancies have no set end date. The tenancy continues month to month until the tenant gives notice to end the tenancy or the landlord has valid reason to end the tenancy. If you sell your home and the buyer plans to move into the home upon possession, proper written notice of two months must be given to the tenant.
Fixed-term tenancies do have a specific end date, most commonly after one year. You also need to keep in mind what the tenancy agreement says will happen at the end of the tenancy. There are two possibilities:
- the tenancy may continue on a month-to-month basis, or
- the tenant must move out, or sign a brand new tenancy agreement in order to stay
Many tenancies begin as one year fixed-term agreements, but then become month-to-month after the first year.
With a fixed-term tenancy, you must wait until the end of the tenancy to be able to evict the tenant. So depending on when you sell your home, there could be a few or multiple months left before the buyer can even move in and take possession.
A landlord cannot wait until the end of a fixed-term tenancy to evict the tenant for the purpose or re-renting or selling the property. They must have a valid reason to end the tenancy such as a buyer who will occupy the home.
Maintaining a Good Relationship with the Tenant
During the selling process of a home, it is a good idea to maintain the best relationship with the tenant. Good communication and respect is necessary to have a smooth sale of your home. You could even offer a gift or reduced rent to the tenant if they act in good faith during the process and help keep the home tidy for showings. This is not necessary but could serve as an incentive for the tenant to cooperate.
Tenants have the right to a peaceful stay during the listing process, so respecting their stay in the home is important. Talk to the tenants before listing your home and try to come to a mutual agreement on how you will operate the listing. For example, pre-determine who will be in contact with the tenant for showing requests. This could be the landlord or the landlord’s agent. Plus, determine what method is best to contact the tenant whether that be email, text or an alternative option. You can also decide if showings will be taken on a one off bases or will be grouped into certain time slots per week.
Always give 24 hours notice for showings as this is a right the tenant has. Make it clear on your listing that this is a tenant occupied home and notice is needed to show the place.
As we will discuss further below, proper written notice will also be needed when the home is sold.
Work with an Experienced Realtor with a Plan
Working with an experienced realtor helps to keep the selling process smooth. Most importantly, having a plan in place and a strategy to sell your tenant occupied home is key. When searching for a realtor, ask about their experience selling tenant occupied homes. Or ask them about their knowledge about tenant occupied properties and how they would go about the selling process.
Ultimately, choosing a realtor you feel confident in will help ease the stress that may come with selling your home. Oftentimes, choosing to work with an experienced realtor helps you sell your home faster!
Showing a Tenanted Property
So what happens when you need to show a home to sell and it is tenant occupied?
The tenant has a legal right to peace and quiet while the tenancy continues. The landlord or their agent must provide written notice to the tenant or have their permission to enter and show the unit to prospective buyers or to conduct an open house.
Showing a property that is tenant occupied is more complicated than showing a vacant or owner occupied property. You must provide 24 hours written notice to the tenant before each showing.
The notice must include the reason for entry and the date and time of entry – which must be between 8 a.m. and 9 p.m., unless the tenant agrees to another time.
If proper notice is given, the unit can be shown even if the tenant is not home. A landlord can also enter common areas of the property at any time without notice to the tenant.
The landlord or the landlord’s agent must ensure the safety of the tenant’s possessions during showings.
A tenant can refuse entry if it is unreasonable or unlawful. They must put an Application for Dispute Resolution in this case and this requires a hearing with the Residential Tenancy Branch.
If the tenant has unreasonably refused access to the unit, the landlord can take steps to resolve the problem.
Tenant rights and responsibilities
If a landlord gives proper notice to enter to the tenant, then the tenant must provide access.
The tenant has the choice to be present for the showing or not. They are not required to leave and cannot be forced to leave. However, the tenant must not impede on the landlord finding a purchaser for the home by making comments on the landlord or condition of the property. The landlord has the right to sell the property so the tenant must not interfere with it.
The landlord or the landlord’s agent must be present when the unit is being shown. Landlords cannot use a lock box without permission from the tenant. In this case, the landlord or agent must still be present for the showing.
Open houses are a bit different from regular showings as they are more disruptive and can have multiple groups or purchasers or agents in attendance. Tenants have a right to quiet enjoyment so best practice is to avoid holding multiple open houses in a short period of time.
To avoid any issues, it is best to provide written notice to the tenant in advance and come to a mutual agreement on scheduling an open house. If a mutual agreement cannot be made, the landlord is still entitled to hold an open house provided they give proper notice to the tenant and are not scheduling an unreasonable number of open houses.
If a tenant unreasonably refuses access to show the unit or provides misleading or inaccurate information to prospective buyers, the landlord could:
- Discuss the situation with the tenant
- Invite them to contact the Residential Tenancy Branch
- Serve a One Month Notice to End Tenancy for Cause (PDF, 2.1MB)
A tenant can choose to dispute the notice within the allotted dispute period of time. If not they must move out by the effective date of the notice.
What Happens When You Sell a Tenanted Property?
When a Tenanted Property is sold, the buyer becomes the new landlord. Unless the buyer and tenants agree to a new tenancy agreement, the existing tenancy continues with the same terms.
If the buyer plans to occupy the unit or use it for other purposes, they must serve proper notice to the tenant and end the tenancy in good faith.
How to End a Tenancy in Good Faith
A buyer can end a tenancy in good faith if they plan on occupying the unit or use the property for another purpose.
Occupying the Unit
Occupying the unit means that the unit will be lived in by the buyers or one or more close family members. Acceptable family members include the father, mother or child of the landlord or the landlord’s spouse. It does not include the brother or sister of the landlord or the brother or sister of the landlord’s spouse.
Use the Property for Another Purpose
The buyer can also end a tenancy for using the property for another purpose if they intend to:
- Demolish the rental unit or do major repairs or renovations that require the building or rental unit be empty
- Convert the rental unit to a strata property unit, a non-profit co-operative or society, or a not-for-profit housing co-operative under the Cooperative Association Act
- Convert the rental unit to non-residential use, such as a shop
- Convert the rental unit into a caretaker’s unit
How to End a Tenancy
To end a tenancy, the tenant must receive proper written notice. There are two options for the buyer to do so.
The buyer submits written request to the seller to end the tenancy before the buyer takes possession of the property. In which case the existing landlord must give the tenant a Two Month Notice to End Tenancy for Landlord’s Use of Property.
Otherwise the buyer takes possession of the property with the tenancy in place. Then they can serve the Two Month Notice to End Tenancy for Landlord’s Use of Property at that time.
Either way the two month notice must be given to the tenants or the terms of the original tenancy agreement stay in place.
Again, the tenant has 15 days to dispute the notice if there is reason.
Compensation for Ending a Tenancy
When serving a Two Month Notice to End Tenancy, the landlord must compensate the tenant with an amount equal to one month’s rent – paid on or before the effective date of the notice period. Or the tenant can choose to not pay rent in the last month of the tenancy instead. Compensation is owed even if the tenant gives notice to leave earlier.
To learn more details about housing and tenancy in BC, check out the Government of British Columbia’s website.