Buying a Tenanted Home!

You’ve made, or want to make, a cheeky little purchase in the Real Estate Market! But at the last minute your Realtor hits you with ‘This unit is tenanted’. What are you to do?!?!

In a city like Vancouver, we come across this A LOT! It’s a highly desirable area and unlike London or LA, a large amount of people can afford to rent in our city - from your Cactus Club server to your Financial Planner. Because of this, a large amount of homes in Vancouver are currently tenanted. So what does that mean to you Mr and/or Mrs Buyer?!
Well this can vary, dependant on the current agreement in place with the tenant and landlord. Let’s take a look at what these two agreements can be:
  1. Fixed Term Agreement
  2. Month-to-Month Agreement.

The one you’re most common with i’m assuming is the ‘Fixed Term Agreement’. Most of us have been there and got the t-shirt. You rent a property from May 1st 2018 and your lease expires April 30th 2019. The fixed term is usually 12 months and they can lease the apartment for the agreed upon time.

Fixed Term Solutions
Before buying the property, you should be aware you cannot kick out the tenant before the end of the fixed term (unless you make a private arrangement with them, even then we would advise against kicking them.) Further to this, dependant on how close the fixed term is due to expire, you can’t kick them out with a weeks notice.
Using the above example, if you buy the property February 20th. The lease is not due to run out until April 30th. So you would have to give them notice you will be moving into the property. The legal amount of notice you MUST provide is two full calendar months. It’s important to know it is 2 full calendar months, not 60 days from the date you give notice. So if you give notice on March 2nd, that doesn’t count as 2 full calendar months. You would have have to give ALL of March and ALL of April! That there, is your 2 full months.   
So back to the above example. You purchase the property on February 20th, give the two months notice of March and April, meaning you can move in from May 1st onwards. 

If the lease expiry is say a month away after you buy the home, you will STILL have to give 2 full calendar months. So again, using the above example, if you buy the home March 15th, your 2 month notice period will be ALL of April and ALL of May. Although this extends beyond the original fixed term end date, these are the rules. On top of this, the second month must be free to the tenant!

Month-to-Month Solutions
This is the preferred means when buying a tenanted home. Typically a month to month agreement is a fixed term lease that has come to an end, and automatically renews as a month to month lease. Meaning the lease agreement renews each month.
The solution to this is just like the above. You must give the 2 full calendar months notice, with the second month being free. Once this has been given, you can look to move in after the second full month. The difference between the two agreements being, Month-to-Month notice immediately begins from the next month and you are not held to a date potentially further in the future like fixed term agreements.

Important Note:
It’s extremely important to be clear on how you want to proceed, before you actually proceed. You can simply purchase the home vacant and arrange for the seller to give the two months notice, or you can purchase the home sooner and assume tenancy; doing this, you will deal personally with giving the tenant notice, repaying security deposits and any damages caused by the tenant and finally not forgetting the second month of free rent.

You are also not allowed to kick out a tenant, to then rent it to someone else. You have to live in the property for 6 months at least to do this. If you are caught doing so, the tenant can come after you for a full 12 months worth of charges.

Hopefully this helped shed some light on this subject for all you buyers and sellers out there. Thank you to Jay (great name) for reaching out and asking this question.

Enjoy the sunny cold weather everyone!

Jay Mcinnes
T: 604.771.4606

Ben Robinson
T: 604.353.8523