I’m well known around my office for knowing quite a bit about landlording and the laws that govern tenancies in Alberta, or at least knowing where to go to find answers. It’s not surprising that I get a lot more questions when it’s spring and leases are up for students or people want to sell. I’ve had the same basic question twice this week so I thought it’s blog post time. (Thanks to Bill, Doug, Oliver and Christian for the push to actually get typing.)
The essential question is two-fold. First, can I get rid of the tenant so I have a vacant property to market and sell? Second, if I’m selling with a tenant in place, how do I get in and how can I get vacant possession for the buyers? There’s a lot of Realtors out there who don’t understand the law in enough detail to help you decide if you can/should accept an offer that required vacant possession. Imagine you accept an offer that asks for 30 day possession and your tenant refuses. Your sale could collapse and you may end up with a lawsuit on your hands. These tips may help and I’m always happy to help you sell your rental property.
Access to Your Rental Property
An agent called my yesterday who has a property where the tenant is refusing to let the Realtors in for a quick look around. Here’s the first big rule which helps owners and Realtors: Tenants can’t refuse access. The only exception is on a day of Religious worship if the tenants have informed the owner in writing in advance. I’ll quote from Service Alberta’s website:
After giving the 24-hour notice, a landlord can enter between 8 a.m. and 8 p.m., but is not allowed to enter on a holiday or on the tenant’s day of religious worship. The landlord can enter on a Sunday if the tenant’s day of religious worship is not a Sunday and the tenant has provided the landlord with a written notice of that day.
My advice to the owner or agent. Post a notice, leave voice mails, text messages, or whatever, and then just go. I’m presuming you have keys, but just go. If nothing else the tenant who refuses access usually has committed a substantial breach such as having 5 roommates, having trashed the place or is otherwise contravening the lease.
Notice to Vacate (Fixed-term leases vs month to month)
If your tenant is on a fixed term lease you’ve got a double edged sword. First, you can’t break a fixed term lease, no matter what the purchase agreement or the lease says. You’ve got to wait until the lease expires however you’re not obligated to renew the lease or go to month to month. Your only other legal option here is eviction for substantial breach. There’s one more option I’ll talk about at the end.
If your tenant is on a month to month lease, you’ve got more options. I’m going to quote Service Alberta again (emphasis mine).
The only reasons landlords can terminate periodic tenancies are:
- the landlord or a relative of the landlord intends to occupy the premises,
- the landlord has entered into an agreement to sell the premises and all the conditions of the sale have been satisfied or waived, or the agreement is to sell one detached or semi-detached dwelling unit and/or condominium unit, and the purchaser requests in writing that the landlord give the tenant a notice to terminate the tenancy,
- the landlord intends to demolish the building in which the premises are located or make major renovations requiring the premises to be unoccupied,
- the premises will be used for a non-residential purpose,
- the landlord is an educational institution and the tenant is or will no longer be a student,
- the premises rented are subsidized public housing and the tenant is no longer eligible for such housing, has not reported income respecting eligibility or the public funding for the program is cancelled,
- the tenant is employed by the landlord and the employment is terminated,
- the premises are being converted to condominium use, or
- if a tenant has committed a substantial breach of the tenancy agreement.
Now please note that you still have to give 90 days notice when the purchaser has requested vacant possession. That’s 90 days from the end of the month they’re supposed to vacate, so it can be closer to 120 days in practice.
The smart reader who actually went down the list of reasons to terminate above will be asking if we can use family or renos as a reason. Yes, but you actually have to take the action required. The notice periods aren’t fun either. For condo conversion or substantial renos, you need a full year notice. For family or owner occupation you can get away with “just” 90 days. **Note that if you’re buying it for a rental you can’t use these reasons to terminate the old tenants’ lease and put your own tenant in. I’m not saying it doesn’t happen but if a well informed tenant wants to they can force you to rent to them.
The long story short is that fixed term leases seem more rigid but they’re actually easier if you have a difficult tenant because you can just not renew the lease and the tenant has no recourse.
It’s tough to do pictures and respect the tenant’s privacy. First, the entire process we undergo requires we be professional and above board. Tenants need to understand we’re respecting the law and trying to make the process as painless as possible for all parties. This is not the time to take out your frustration on your tenants.
Three tips for pictures:
- Get their permission in writing. Realtors have a form we can use (see AREA’s webforms), but just a simple written agreement will do in most cases.
- Do your best to protect their privacy and let them know that you’re doing it. Give them lots of advance notice of the date you or your photographer is shooting. Encourage them to do a quick clean for things like personal photos, utility bills, underwear or expensive possessions that can be easily moved.
- Be realistic with your photos. If you do a super-clean and make the property look too good, you’ll attract unqualified buyers who will just walk away when they see the mess that is reality for your tenant.
I have three great tips for managing showings and one thing that drives me nuts.
First, refer to my first point above – tenants cannot refuse showings except for holidays, showings after 8pm or on days of religious worship. It might suck, and they might decide to sit at home and be nasty, but they can’t stop you from coming in.
Second, I often get owners to buy a stack of $5 gift cards to Tim Hortons or Starbucks. Every time I show, I leave a gift card and a thank you note. You’d be shocked at how quickly tenants get onside when you give them treats. I guess they’re much like toddlers.
Third, give advance notice for showing windows. Imagine that instead of giving 24 hour notice and setting up a showing every time you get a request, you give the tenants a letter on Monday morning with notice for Tuesday, Thursday and Saturday afternoon between 2-6pm. That fulfils your legal requirement for notice, and then you follow up with a phone call or text for actually scheduled showings. I prefer to work out a good time with tenants ahead of time and keep everyone happy. Paper letters like this help keep tenants happy and cooperative because then they really see that you’re working hard to fulfil the legal obligations you’re all working under.
However, Realtors, please don’t have buyers agents contact the tenant directly. I might be polite but there’s a lot of morons out there who will harass your tenant with 1 hour notice attempted showings.
Ok, so you might have the perfect buyer who is paying $10,000 over market but needs possession in 45 days. Here’s a couple ideas to help.
First, help them find a new place. Call, email and post messages for other investors who might have a space. Maybe you even want to buy another property knowing you’ve got a great tenant.
Second, offer them cash. I’m usually a fan of paying their first month’s rent and security deposit. If you’re getting a premium or solving a problem a couple grand is less of a problem than a frustrated sale.
Owners, you need to read and understand the Residential Tenancies Act and the Ministerial Regulation. There’s other strategies we’ve learned over the years, but that’ll have to wait for another blog post. Give me a shout if you have any questions or if there’s any way I can help.