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Mar 14, 2017

Landlord and Tenant Matters: A Case Study

“Peter” owns a rental house that has as its tenants a family. Originally, the tenant family had a 1 year lease, but they have now been in there for 2 years. Peter has an opportunity to sell the house, together with the current tenant family still residing there.  However, the potential buyer would like Peter to fix up the house a little before he buys. The tenant family is not too keen on that, and the house is rather cluttered and in a state of disrepair. Peter is concerned that the lack of co-operation from the tenant will affect the sale value of the house.

The tenant family pays rent but typically pays it 2-3 weeks late every month.

What can Peter do?

Answer:

Peter is facing a bit of a conundrum. The Residential Tenancies Act only allows landlords to evict tenants if certain conditions are met and, unfortunately, the expiry of the original lease is not one of them. The tenants have become “month-to-month renters” and are entitled to stay indefinitely until Peter finds a legal reason to evict them. Some of Peter’s options include:

Option 1

  1. To move back into the home himself;

  2. Give 60-days’ notice to vacate (N12 Form); and

  3. Bring an application to evict if the tenants do not vacate.

Option 2

  1. Sell the home as is (but with an agreement with the buyer to fix after the tenant leaves, if necessary) ;

  2. Obtain confirmation from the purchaser that the purchaser intends to move in once the sale closes; and

  3. Give 60-days’ notice to vacate (N12 Form)

  4. Bring an application to evict if the tenants do not vacate.

Option 3

  1. Give notice of eviction (60 days) based on persistent late payment of rent (N8 Form); and

  2. Bring an application to evict if the tenants do not vacate

Although Option 3  sounds like an ideal option, we have seen these applications fail repeatedly. The Landlord and Tenant Board often sides for the tenant and it will almost always give tenants another chance. The most likely outcome if Peter brings this kind of application is an order stating that the tenancy can continue and Peter can bring a second application if the tenants are consistently late paying in the future. In other words, this option will not see the tenants evicted for at least half-a-year, if at all.

We cannot recommend Option 1 outright unless Peter (or a family member) is truly moving back into the home. A landlord can be fined thousands of dollars for evicting a tenant based on this reason if the landlord does not actually move in.  Encouragingly, there is an interesting precedent decision where the Landlord and Tenant Board considered temporary\intermittent occupation by the owner (i.e. an owner temporarily moves into the home in order to carry out the required repairs and renovations), and deemed it acceptable for use of this option, but a lawyer would not guarantee the same outcome every time.    

Option 2 is probably the best option (aside from a negotiated solution noted below), but it not perfect. This option requires a signed agreement of purchase and sale before it can be put into effect and it can be difficult to find a buyer with tenants aggressively asserting their rights. Essentially, Peter needs a buyer who understands the situation and is willing to have a long closing period (to allow Peter time to remove the tenants) or take over the eviction process after closing. This option will succeed in the long run, but the tenant can refuse to leave after 60 days and “overhold” for another few weeks while awaiting the eviction hearing.

The commonality between each of these options is the amount of time it takes to remove a tenant.  It will generally be at least 60 days and perhaps 3-4 months if the tenant refuses to leave. 

Negotiated Solution: 

An option not noted above is this 4th one, which is outside the ambit of the Residential Tenancies Act, but effective in reality: the owner makes a deal with the tenant wherein the tenant provides his\her notice to terminate the tenancy, in writing, at a future certain date and, in return, the landlord foregoes rent during that period.

 

Related Team

James Prosser

The content of this article is intended to provide a general guide to the subject matter and is not legal advice. Specialist advice should be sought regarding your specific circumstance.