Purchasing a property in British Columbia (BC) can be an exciting venture, whether it is for investment purposes or your personal use. However, if the property you are considering already has tenants living in it, there are certain legal considerations and obligations that you must be aware of before moving forward. The rules governing tenants in BC are designed to protect both landlords and tenants, and as a buyer, you need to be prepared for these responsibilities.

Here's what you need to know about buying a property with an existing tenant in British Columbia.

1. Be Prepared for Legal Obligations

When you buy a property with tenants, you step into the shoes of the previous landlord. As such, you inherit all the legal obligations that come with being a landlord. The Residential Tenancy Act (RTA) governs rental agreements in BC, and it outlines the rights and responsibilities of both landlords and tenants. This means that you will be responsible for:

• Ensuring the property meets the health and safety standards.
• Maintaining the rental property in good repair.
• Adhering to all tenant protections under the RTA, including providing proper notice for things like rent increases or eviction.

Before purchasing, make sure to familiarize yourself with these legalities to avoid running into issues later on.

2. Existing Rental Agreements Must Be Honoured

One of the most important things to know when purchasing a rental property is that the existing rental agreement must be honored. Regardless of the terms of the lease, the tenancy agreement will remain in effect when you take ownership. This means that the tenant is entitled to remain in the property until the lease term expires, unless there is a legal reason for eviction.

It is crucial to review the current rental agreement to understand:

• The length of the lease.
• The rental amount.
• Any specific clauses or provisions that may affect your ability to make changes to the property.

In some cases, the tenant may have a month-to-month agreement or a fixed-term lease, so make sure you know the details before you finalize the purchase.

3. You May Not Be Able to Raise Rent as You Like

If you are considering buying a property as an investment and are hoping to raise the rent to align with current market rates, there are restrictions you should know about. In BC, there are strict guidelines around rent increases. The maximum allowable rent increase is regulated by the provincial government, and there are specific rules that dictate when and how much you can raise the rent.

In addition to these limitations, rent increases can only be made once every 12 months and must follow a prescribed process, including giving the tenant written notice. If you are purchasing a property with tenants, you cannot simply raise the rent whenever you want, even if the current rental rates are below market value. Be sure to check the most recent rent increase guidelines issued by the government to ensure that you are in compliance.

4. Evicting Tenants Require Proper Cause and Notice

If you are planning on evicting the tenants of the property, it's important to understand that you cannot simply evict a tenant at will. The Residential Tenancy Act outlines the legal grounds and procedures for eviction, and the process can be lengthy and involved. You must have a valid reason for eviction and provide proper notice to the tenant.

Some acceptable reasons for eviction may include:

• The tenant failing to pay rent.
• The tenant violating the terms of the rental agreement.
• You need the property for personal use (for example, to move in yourself).

If you wish to evict a tenant, you must follow the required notice periods (typically two months or more, depending on the reason) and provide clear documentation of the cause. Failure to adhere to these rules could lead to legal complications and potentially prevent the eviction from proceeding.

Final Thoughts

Buying a property with tenants in British Columbia comes with a range of legal obligations that you must be prepared for. It's essential to understand the tenant's rights under the Residential Tenancy Act and to follow the proper procedures for anything from rent increases to evictions.

Before you buy, take the time to thoroughly review the rental agreements, familiarize yourself with the relevant laws, and ensure that you are ready to manage the property accordingly. Doing so will help you avoid potential pitfalls and ensure a smoother transition into your new role as a landlord.

If you are unsure about any aspect of purchasing a tenant-occupied property, contact us at Metrotown Notary and we can guide you through the process.