Lawyer’s Corner: Tenants’ Rights in the Sale of a Property

You’re renting a place when your landlord informs you that they’re putting the property up for sale.  What is your right as a tenant?  What is their responsibility as a landlord?  Lubos Pesta, Q.C  (Walsh LLP) has written the following article, and while addressed to agents, it outlines the rules as set forth in the Residential Tenancies Act in Alberta.

Tenants’ Rights in the Sale of a Property

A correct understanding of the rights of landlords and tenants is essential in representing both the sellers and prospective buyers of renter-occupied properties. Without understanding the applicable laws and inserting effective clauses in the relevant agreements for sale, you may be left with a disappointed buyer who is unable to move into their new home on closing day.

First, you must recognize that the default provision in our standard AREA Residential Real Estate Purchase Contract is for existing tenants to remain in the property being sold. Clause 4.1 of the agreement states that vacant possession will be granted by 12 noon on the closing day “subject to the rights of the existing tenants, if any.” This means that, if there are tenants in the property, then they can remain in the home upon its sale and the seller is not obligated to either terminate the tenancy or evict the tenant prior to closing unless the parties agree otherwise. The onus is on the buyer’s agent to insert appropriate terms/conditions in the agreement if the buyer would like to secure vacant possession on closing.

A correct understanding of the Residential Tenancies Act (Alberta) is critical if the buyer wants vacant possession. The law is different for the two types of tenancy:

Fixed Term Tenancy
It is not possible for a landlord to terminate a fixed term tenancy for any reason (including the sale of the property) short of non-payment of rent or some other material breach of the tenancy by the tenant. As a result, if the existing owner signed a lease for a specified term (such as six months or a year), the lease cannot be unilaterally terminated by the landlord until the term expires. If the owner is desperate to terminate the tenancy to accommodate a sale, then a financial incentive may have to be provided to the tenant to secure a mutually-agreed early termination of the lease.

The upside of a “fixed term” tenancy is that no notice of termination needs to be provided at the end of the lease. When the term expires the tenant is expected to move out unless the lease is renewed.

Periodic Tenancy
If the tenancy is periodic in nature (most commonly month-to-month) then a different set of rules applies. A month-to-month tenancy can only be terminated for one of the reasons prescribed in the regulations. Intending to sell a home and listing it for sale is NOT a valid reason for terminating a tenancy.

A sale of the property can only be given as a reason for terminating a tenancy after all conditions in a binding sale agreement have been waived and only if the purchaser or a relative of the purchaser intends to occupy the premises. In that instance a full three months written notice must be provided (the notice must be served before the first day of a tenancy month in order to be effective on the last day of the third month). This means that where tenants are in possession of a home being sold and the tenancy is month-to-month the EARLIEST that prospective buyers could legally move into the home themselves is three full months AFTER all conditions are waived.

In instances where the buyer wants to either demolish the home or conduct substantial renovations (which have to involve more than just painting the walls or replacing the carpets) a full 365-day notice of termination has to be given.

Industry members should be careful not to obligate their clients to unrealistic terms inserted in agreements for sale (such as the early termination of a fixed term tenancy) that their clients will be unable to perform. This could result in extra costs and claims for damages against both the client and the industry member.

Lubos K. Pesta, Q.C.
Walsh  LLP

2800, 801 – 6th Avenue SW
Calgary, Alberta T2P 4A3
Phone: 403-267-8432
Fax: 403-264-9400

The comments expressed in this article are for information purposes only and serve to highlight general principles. REALTORS® must remember to work in the client’s best interest, whether representing a buyer or a seller client. Each situation is different and you should seek legal counsel before pursuing any particular course of action. These articles do not create a client/lawyer relationship and do not constitute legal advice. The opinions expressed herein are those of the author and not of AREA.

Copyright Alberta Real Estate Association. Reprinted with permission. AREA makes no guarantee as to the accuracy or completeness of this information.

10 responses to “Lawyer’s Corner: Tenants’ Rights in the Sale of a Property

  1. Hi Mike,

    Thanks for the posting the info.
    its been awhile since i read it the Alberta Tenancy’s Act and i certainty remembered it slightly differently for the sale of a home
    take care

  2. I have run into MANY issues with the landlord through the past 5.5 months of my 1 year lease, with the apparent mishandling of this issue being the most recent. What would my best recourse be? I’m finding it all a bit overwhelming.

    Hello Linda, I’m sorry to hear about the issues you’re running into with your landlord. The Service Alberta website has great tenant/landlord resources that I hope you will find useful.
    -Mike Fotiou

  3. I have a question about this. What happens if the tenants said they were going to buy the house, and then 3 months later, they decided not to? I didn’t list the house because the tenants said they were going to buy it.

  4. Hi Jessica, are you located in Alberta? Was the agreement in writing?

    The Statute of Frauds states agreements for interests in land, which includes the buying and selling of land, must be in writing and the parties to the agreement must sign the agreement. This applies to real estate purchase contracts.

    I recommend that you speak with a real estate lawyer for actual legal advice.

  5. Quick question here.

    Our landlord has called my partner to state that his ex wife suddenly wants ownership of the property we are living in. He has already provided us with a notice to vacate in three month’s time, even though he is not sure she will be able to own or buy. The funny thing is, the notice to evacuate states that the “landlord” intends to move into the premises, (including only his name and signature) in three months. But his ex wide is not the landlord, and obviously, the ‘sale’ (or whatever is necessary legally in this case) has not even started, much less been finalized.

    I want to contact the landlord with this information. The only thing I am concerned about is the potential of having an exorbitant rent increase tacked on to our rent in response to ensure we are out of here–potentially that would only buy us one more month. He has never given us a rent increase and we’ve only been here a bit less than 1.5 years.

    Any information is greatly appreciated. What would you suggest at this point?

    Thanks!


    Hi there, sorry to hear about the situation you’re in. I recommend that you speak with a real estate lawyer so you know exactly what your rights are at this point. I hope it all works out.
    -Mike Fotiou

  6. My landlord and I agreed a lease Nov 2013 to 2014…she received 122 months checks but avoided bring Ĺove. She then changed things up to pay water bill in april she won’t sell house…then put house up in August for sale….giving me 3 month notice…she refused to give me lease and then said we were not òn lease all along
    Now I’m not believing anything she says….have not had a stove working for 3 was and am expected to accommodate realtor anytime w 24 notice and open houses on Saturdays. …I cannot be home. Landlord still stores stuff there and I am worried about my damage deposit being returned…as well compensation for not having stove…and leaving when realtor comes and goes

  7. My landlord is selling the house but when we began renting, neglected to tell us we were renting an illegal suite, do we still have the same rights as a normal month to month renter?

  8. We are currently renting a duplex and our landlord has listed it for sale. We were made aware of the sale. My question is – How compliant do we have to be with the Realtors wanting to show the place to potential buyers? We have been as helpful as we can, but they are asking to show the house at least once a day. I know they must give a minimum of 24hrs notice, but is there anything else we should know? Can we refuse some showings?
    Thank you in advance.

    With any landlord/tenant questions, please contact your lawyer or the Service Alberta Consumer Contact Centre at 780-427-4088 (Edmonton and area) or 1-877-427-4088 (toll-free in Alberta
    -Mike Fotiou

  9. Marilyn Colley

    I am having a hard time finding tenants rights specifically it seems to be 95% landlords rights and 5% tenant rights even in your above information its all about the landlords rights even though the heading says. Tenants Rights? I am being bullied and harrassed by landlord and realtor agent every right listed for tenant laws of disturbance of peace have been violated by them and I am told I have no rights. I have Multiple Sclerosis and Post Traumatic Stress Disorder and all this undue hardship and stress is taking a tow and I am at risk of being made homeless and feel no one will help and protect me.


    With any landlord/tenant questions, please contact your lawyer or the Service Alberta Consumer Contact Centre at 780-427-4088 (Edmonton and area) or 1-877-427-4088 (toll-free in Alberta). I cannot provide any legal advice.
    -Mike Fotiou

  10. my sister is the exector of our dads estate and has burnt through all monies left to the estate save $500.00 she gave to me shortly after dads funeral 41/2yrs ago.I am on permanent disability and am faced with my young daughter having medical issues/development issues of her own and will be a dependent her whole life.My daughter and I moved into dads home after his passing and have been there ever since but we have been paying my sister 600.00 a month rent plus ultilities and and and repairs or minor renos I have also paid for.Now my sister has sold the family home that my father always told me would be there for a home for me and my daughter and was not to be sold.I was forced to sign a paper by the new owners to vacate Feb 1/2016 and not sure if I have any rights.My sister has never shown me dads will and didnt even tell me she had sold until she called me the day before the ‘new owners’showed up with a letter I was told I had to sign.The letter was not from a layer or real estate agency.Any direction to point me in? Thank you for your time


    I can’t provide any advice other than you should speak with a lawyer asap.
    -Mike Fotiou