Blog by Andrew Peck

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"Are there assurances in the tenancy clause?"

"Are there assurances in a tenancy clause?"

"A question was raised by one of our realtors which is a bit too long to repeat here, so I will give you the basics of the question. This was a first time buyer and they are giving notice at their rental apartment where they live. The subject property is tenant occupied and the buyer was assuming the tenant with standard wording in the contract. The buyer intended to complete at the end of September then give notice to the tenant in October for the buyer to ultimately moving into the property at the end of December. One of the subjects in the deal was “subject to the buyer confirming the tenancy information of the current tenant”. The listing salesperson delivered that information right before the subject removal date. The buyer was satisfied with the information and went ahead and removed their subject. The day after subject removal, the listing agent told our agent that the tenant had given them notice and would be moving out at the end of September (the same time as the completion). The buyer is angry because they can’t afford to pay a mortgage payment and rent in their existing home."

There are no assurances in the tenancy clause that the tenant will remain in the property. The clause simply lays out the terms of the tenancy so the buyer is aware of the terms of the tenancy and when it may be either terminated or a rental increase can be made. In this situation, the buyer has two choices – move in early or find another tenant for the short period of time before they intended to move. This may be difficult. If the tenant had already given their notice prior to the buyer removing their subject, particularly when the deal was subject to confirming tenancy information, it would be incumbent on the listing agent to reveal that information to the buyer as it was material to their deal. This buyer might be successful in seeking restitution from the seller for the loss of rent for those few months, and they could also make a complaint to the Real Estate Council. If, however, the listing agent did not know of the tenant’s notice to vacate, then there is very little the buyer can do. A prudent buyer’s agent should discuss with the listing agent and the tenant what their intentions might be, in particular if they were intending to move out any time soon as the buyer would be relying on that income for those few months. 

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