January 5th - 2006

Merv’s column: Tenants have rights

The landlord who was also the seller agreed to sell this rented residential premises to the buyer who was also the landlord's real estate agent as well as the agent for the buyer.

The landlord who was also the seller agreed to sell this rented residential premises to the buyer who was also the landlord's real estate agent as well as the agent for the buyer. The landlord/seller gave the required notice to the tenant to vacate since the buyer was going to move into the premises. The tenant moved; the deal closed; the buyer did not move in. The unit was then rented for 50 percent more than the rent the original tenant had been paying.

Should the Rental Housing Tribunal order the buyer to pay monies to the first tenant when the buyer never was the landlord during the tenancy? The Tribunal said no. Then should the landlord/seller be held liable for the dishonesty of the buyer? Whether her dual agent knew or not, she did not know the true intentions of the buyer. Nevertheless she was found to be liable under the Tenancy Protection
Act.

Macko v Waslik 2004, 22 RPR(4th)225

MERV'S COMMENTS
The Tribunal said that, "It is up to the landlord/vendor to protect herself when the purchaser enlists the landlord/vendor for service of the notice of termination. Perhaps some sort of warranty that survives closing should be obtained from the purchaser to the effect that the purchaser shall save harmless the vendor from the consequences of applications such as this. There may be other approaches. The real estate bar will figure something out."

The message is that it is not enough to use a clause such as OREA's VAC-1 in cases like this. The buyers should be made aware that the tenant may not vacate and that further proceedings may be required. The sellers should be made aware that the good faith of the buyers may be an issue that exposes everyone to potential liabilities. As the Tribunal Member suggested, those who draft contracts dealing with tenanted residential properties in Ontario should "figure something out."

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