What agents need to know when selling tenanted properties in BC.

As a real estate agent in BC, you’ll likely become the listing agent for a property that’s not only occupied by its owner, but by a rental tenant as well. Mortgage helpers are common in this province, and while they make it easier for owners to pay their mortgages each month, they present some unique considerations for you and your client when it’s time to sell.

Be respectful of the current tenant’s home.

Because the property you are listing is occupied by a tenant, you’ll have to coordinate many moving parts with them as well. Some of these will be open houses and home tours. That is why it is important to start off on the right foot with the tenant and let them know what is happening.

After you do that, you can find times that are convenient for both your client and the tenant to schedule tours and open houses. Note the details of your agreement in writing and get it signed by everyone. If you cannot mutually agree to times during which open houses or tours may occur, you must schedule them with 24-hour written notice to the tenant before each showing.

“It is important to respect their spaces. It's still their home,” says Shelley Wittal, Vice President of Management Services at Tribe Management. Let potential buyers on tours and during open houses know not to touch or move the tenant’s personal items.

Get the timelines right.

For untenanted properties, the new owner has lots of leeway in occupying their new home. But if you’re selling tenanted property, you must provide ample notice to the current tenant. As we’ll discuss later, it is the seller’s and their agent’s responsibility to ensure the sale of a tenanted property happens properly.

And crucially, you cannot evict a tenant simply because a property is being sold. In BC according to the Residential Tenancy Act, you must provide tenants with at least three months' notice in writing to end their tenancy if the property is being purchased by a new owner who intends to move in without the presence of the tenant (whether overlapping or continuing), which is called vacant possession. Additionally, that tenant is entitled to one month’s free rent if they must vacate the property.

The “in writing” component of this notice is vital. A text message or email is not considered sufficient written notice to end tenancy. It must be the RTB-32P form supplied by the Residential Tenancy Branch on its web portal. You may leave that written notice in their mailbox, hand it to the tenant directly when they are at home (or to an adult over 19 years old that apparently lives at the address with the tenant; be sure to write down that person’s full name when you do), attach the notice to the door of their unit or send it via post to their address. You may not slide it under their door; this is not considered sufficient notice.

These details present some notable challenges for real estate agents. That’s why it’s essential to have open lines of communication with not only your client (the property’s current owner), but the tenant and the potential buyer as well.

“I would suggest being transparent about those things, because maybe the tenant would prefer to stay which could be beneficial to a purchaser. But, it’s important to be honest with them and let them know that if it's purchased by somebody who wants to take possession and live in the unit themselves, that a vacate notice would be provided,” says Wittal.

If your potential buyer is expecting vacant possession, BC courts have found it is the seller’s responsibility to ensure that the property is indeed vacant.¹ As a part of that, real estate agents must also ensure this happens. So, make sure all documents have been submitted well in advance of deadlines and been signed by all parties, plus ensure the tenant is clear when they should move out.

Additionally, after the property sells, the new owners or their immediate family (defined as a father, mother or child of the new landlord or the new landlord’s spouse) must move in within a reasonable time and use the property as their primary residence for at least 12 months. Otherwise, the tenant would be owed the equivalent of 12 months’ rent.

You can pass the tenant and their lease on to the new owners as-is, if the buyers agree.

You are not required to end a tenancy when selling a property if the new buyers agree to take on the tenant. In other words, if they do not demand vacant possession. They may find it convenient to have a trusted, long-term tenant occupying a laneway home or basement suite, for example. It could help them avoid the hassle of finding new tenants, interviewing them, drafting new contracts and various other headaches.

However, you cannot change terms of a rental contract merely because it is being passed on to a new owner. BC’s Residential Tenancy Act requires the lease agreed to by the current owner/landlord (your client as a listing agent) to be passed on as-is to the new owners – that includes the current rent, tenancy type (fixed-term or month-to-month) and other provisions. If potential buyers ask for any changes to the lease during negotiations or bidding wars, you will have to let them know you legally cannot do that without mutual agreement of the current landlord and tenant.

Of course, this depends on the buyers themselves. While mortgage helpers are convenient, not everyone wants to deal with tenants. To help sweeten the offer, you could have a list of property management companies they may contact at the ready. “I think professional management in every case is always going to be the best bet,” says Wittal. “It allows for peace of mind and return on investment, as professional management companies support lower vacancy rates and the handling of potential legal issues.”

Know before you go.

Selling a tenanted property is a common occurrence for agents in BC. And since it is a seller’s and their listing agent’s responsibility to ensure the transaction is handled correctly, knowing these basics before diving in will help protect you, your client and the tenant during these real estate transactions.

This article is intended for informational purposes only, has not been reviewed by a legal professional, and does not constitute legal advice or an opinion on any issue. You should not, in any circumstances, rely on the legal information without first consulting with your lawyer about its accuracy and applicability.