Compensation for Tenants When a Landlord Sells Property in Canada

When someone sells a rental property, it can lead to various concerns for the tenants. They may wonder what rights they have as tenants in such a case and if they are entitled to any compensation. In Canada, there is a difference in the laws related to tenants’ rights for each province. Places such as Ontario and British Columbia have specific regulations for the same. It is important that both the tenants and the landlords understand these regulations for smooth transitions and for legal compliance.

This blog has been written with the intention to help you understand compensation for tenants when a landlord sells property in Canada. We will be focusing mainly on British Columbia and Ontario in this blog. You will also find information related to certain legal principles and what tenants can do when faced with such situations.

1. The Legal Framework in Canada

   Different provinces have different laws related to issues surrounding tenants and their rights. It is good that tenants have some protections even if the rental property is being sold. British Columbia has the ‘Residential Tenancy Act’ while Ontario has the ‘Residential Tenancies Act’ and these acts outline the rules for tenants when landlords decide to sell the property. These acts define how the sale of property affects tenancy and compensation for tenants when they are asked to vacate.

    

   Tenant’s Right to Stay 

   Generally, tenants have the right to stay in the property until their lease ends even when the property changes ownership after a sale. The new owner must honor the agreement as it carries over to them after the sale. But there can be scenarios where the new owner wants the property to be vacant as they want to occupy the property themselves or for other reasons.                                                

2. Compensation Requirements in British Columbia
   

   The law in British Columbia is pretty clear in case a buyer wants to live in the property after sale or wants to have a family member live there. In such cases, tenants are entitled to compensation.

   As per the ‘Residential Tenancy Act’, the landlord must provide notice as well as compensation when asking tenants to vacate for the above reasons.

    

   Notice Requirements 

   A two month notice period must be provided to the tenants in such cases. This notice is legally required to be in writing. The tenant’s last day in the property should be on the day before the rent is due.

   Also Read: - Joint Tenants with Right of Survivorship in Canada

   Compensation for Tenants 

   If tenants are asked to vacate the property due to its sale, they are entitled to the equivalent of one month's rent as compensation in British Columbia. This amount must be given to the tenant on or before the last day of the tenancy. In case the landlord fails to pay this compensation to the tenant, the tenant has the right to stay in the rental property despite being asked to vacate it.

    

   Please note that compensation is separate from the security deposit. This security deposit needs to be returned based on the usual terms of the lease.

    

   Additional Protections 

   There is another protection provided to the tenants. If the landlord or the buyer gives false information related to their intention to occupy the property, tenants can seek further compensation. This is a bad faith scenario and in such cases tenants may be entitled to up to 12 months’ rent as compensation.                                                                                                    

3. Tenant Rights and compensation when a landlord sells property in Ontario
   

   In the province of Ontario, almost similar laws apply albeit the slight variations in the compensation process. As per the ‘Residential Tenancies Act', if a landlord sells the property and subsequently the buyer wants to occupy the property, tenants can be asked to vacate it but will have to be provided compensation.

    

   Notice Period 

   As per the existing laws tenants should be given at least 60 days notice if the buyer wants to live in that property. The notice must be delivered in the proper form, specifically ‘Form N12’, and must include details about the sale and the reason for the eviction.

    

   Compensation for Tenants 

   In Ontario, if the tenants are asked to vacate the property due to its sale, they are either entitled to one month's rent or an offer or another rental unit which must be acceptable to the tenant. The compensation has to be paid before the tenancy ends.

    

4. What Tenants Should Know About the Process
   
   • Reviewing the Lease Agreement:  Tenants should review their lease agreement when the rental unit is sold. If they have a fixed term lease, the new landlord is under the obligation to honor the terms of this lease until it expires. This type of lease provides more security to the tenants. In case of month to month leases, there is more flexibility. But even in this case, tenants have rights. They still need to be given notice and compensation.
   • What Happens After Notice Is Given:  If the tenant has been given proper notice and has also received compensation, then the property has to be vacated by the date mentioned in the notice. However, if the landlord does not fulfil legal requirements for notice or compensation due to any reason, tenants can explore legal options and dispute the eviction.
   • Disputing an Eviction: If the tenants feel that their eviction is not fair or without cause, they can file a dispute with their province’s residential tenancy branch or tribunal.
   • Additional Support for Vulnerable Tenants: Certain vulnerable tenants, such as seniors or individuals with disabilities, may be eligible for additional support services when asked to evict the property. This can be different for each province but often includes resources for finding alternative housing or financial assistance.                                                                                                                                                                                       
5. Landlord Responsibilities and Legal Implications
   

   It is necessary that the landlords follow the legal requirements when selling a property which still has tenants living in it. If the landlord fails to provide proper notice or compensation then they can attract penalties. They may have to pay additional compensation to tenants or the sale of the property will be delayed until legal obligations are met.

    

   Also Read: - What is Tenants in Common in Real Estate

    

   Bad Faith Evictions

   When a landlord or a buyer misleads the tenants with regards to their intention to occupy the property, such matters are taken seriously by the courts in Ontario as well as British Columbia. If a tenant feels the eviction is unfair or not legitimate, they can file a claim for additional compensation. For example, if a landlord in British Columbia falsely claims they need the unit for personal use, tenants may be entitled to up to 12 months’ rent as compensation.                         

6. Key Takeaways for Tenants and Landlords
   
   • Tenants’ Rights:  tenants can stay in the rental property until proper notice is given and compensation is provided.
   • Compensation:  tenants get compensation when the landlord sells property in Ontario and British Columbia if asked to vacate due to the sale of property. The compensation is equivalent to one month's rent.
   • Notice period: in Ontario, tenants must be provided a 60 days notice while it is two months for British Columbia if the new owner wants to occupy the property.
   • Bad faith evictions: if the landlord or the buyer gives false or misleading reasons to tenants to vacate the property for possession, tenants can ask for additional compensation.

Conclusion

Working out the sale of a rental property in Canada revolves around balancing the rights of both landlords and tenants amongst other things. Tenants need to understand their rights regarding notice, compensation after the landlord sells property, and eviction process. Only by having the right knowledge can they protect their interests. For tenants in Ontario and British Columbia, they are entitled to compensation if they are asked to vacate the property due to the sale of the property. In order to avoid disputes and for a smooth transition, both landlords and tenants should engage in proper communication and ensure legal compliance.

You can reach out to Houseclosing for getting the legal advice if you don't understand your rights as tenants. Landlords too need legal assistance to ensure they are following provincial laws otherwise they can attract penalties and the sales may be delayed.