You may have a wonderful tenant, but when it comes time to sell the tenanted property, you may find out that the buyer actually intends to use the property for him or herself.
What is your legal recourse to evict a tenant because you’re selling your house or condo?
According to the Residential Tenancies Act all covenants concerning things related to a rental unit or the residential complex in which it is located “run with the land,” whether or not the things are in existence at the time the covenants are made. In simple terms, this means that a tenant cannot be evicted just because that the building, in which his/her rental unit is located is sold to another owner.
However, the buyer may very well want the property for herself and her family, i.e. s/he wants the property to be free of tenant. In these cases, an agreement or purchase and sale of the real estate property would usually include a provision that the property must be “delivered to the buyer” free of tenants. In these situations, The Residential Tenancies Act does permit eviction of the tenant, to ensure that the buyer is able to use the property as he or she wishes. At the same time, there is a procedure for eviction that must be followed to the dot, since the Act is designed to make sure the tenant isn’t evicted “frivolously,” i.e. so the landlord doesn’t use sale of the property as an excuse to get rid of a tenant s/he doesn’t like.
In general, the Act will require the landlord to prove that the property is, in fact, being sold, and that the new owner does, in fact, need for his or her own needs.
What the landlord must prove to evict a tenant because the property is being sold
- First, a tenant can be evicted from the rental unit only after the landlord has entered an agreement of purchase and sale. It is not enough for the landlord to just have an intention to sell the property
- A tenant can be evicted after the sale of the property only in case the purchaser of the property requires it for his own needs. In other words, the buyer must be acquiring the property to for use by him or herself or members of his/her immediate family. If the purchaser requires the rental unit for any other purpose, for example he/she is going to have other tenants, the current tenant cannot be evicted based on this ground.
Process for evicting a tenant because the property is being sold
- The Residential Tenancies Act regulates the procedure how the tenancy can be terminated if the purchaser needs the rental unit. The process begins with the landlord serving the tenant with a proper eviction notice. The Act says that after the agreement of purchase and sale, this notice is deemed to be given by the landlord to the tenant on behalf of the purchaser.
- The tenant has to be given 60 days to move out, and must be told to move out at the end of the rental period, or two months after receiving the notice if the tenancy is month to month. S/he has no obligation to move out if s/he believes the notice is groundless or given in “bad faith,” i.e. if the tenant essentially believes the landlord isn’t being honest. It is essential that the notice is filled out properly so it is approved by the Board. Otherwise, you may find yourself in a situation where you come to an eviction hearing, the Board member doesn’t recognize the improper eviction notice, and you are forced to start over, which is especially problematic given that your closing date is coming up and a new notice has to give the tenant another two months to move out!
- If the tenant does not move out within the time set in the notice, the landlord can file an application to evict the tenant with the Landlord and Tenant Board. The application must be accompanied with a copy of the eviction notice and additional documents certifying that the notice was properly served and that the purchaser needs the property for his/her own needs. Upon receiving a properly completed application, the Landlord and Tenant Board sets the date of hearing of the application and issues a Notice of Hearing.
- The hearing is the most complex part of the procedure. The Landlord and Tenant Board does not issue an eviction order unless it is proven that the Notice to Terminate the Tenancy because the purchaser requires the rental unit for his or her own needs is issued in good faith, i.e. unless it is proven that the property is being sold and the buyer intends to use it for his/her personal needs. The evidence to be used to prove this will vary depending on each situation, and it is crucial that the best possible case is made at the hearing.
The eviction process based on the grounds that the buyer needs the property for his/her personal needs is fairly complicated – strict procedural rules must be followed, and the landlord’s case must be very persuasively presented at the hearing. There is a high test the landlord must meet to prove that his/her eviction request isn’t frivolous. In addition, the stakes are high – if the tenant isn’t evicted, the closing date is delayed or the deal is off altogether, which, I’m sure you can appreciate, leads to significant hassles and expenses. Given the complexity and importance of the situation, we recommend retaining a paralegal. Please feel free to contact us for a an assessment of your case.