Buyers of B.C. rental property not on the hook for $65K payment to evicted tenants: judge

This stock image shows an eviction notice. (Credit: Shutterstock)

A B.C. landlord who sold a rental property failed to convince a judge the buyers – who never moved into the home – should be on the hook for compensating wrongfully evicted tenants, according to a recent decision.

Justice Anita Chan ruled on the dispute Friday, upholding a decision of B.C.’s Residential Tenancy Branch awarding $65,000 in compensation to the former renters.

In 2022, Mohan Sull, the landlord, was renting the North Vancouver home to Thomas and Rozette Trevitt for $5,650 a month, the court heard.

Sull entered into an agreement to sell the property and served the tenants with a two-month notice of eviction because “the buyers intended to occupy the property,” according to the decision.

But the buyers never moved in.

“The buyers undertook extensive renovations. The city in March 2023 issued a stop-work order. The buyers did not obtain the proper permits until May 2024. I understand the property is still fully gutted with no one residing there currently,” the judge wrote.

The ousted renters successfully challenged their eviction on the grounds that the “stated purpose of the notice to end tenancy was not accomplished,” the decision said.

Buyers were not ‘purchasers;’ sale was conditional

Sull was seeking a judicial review of the arbitrator’s decision on a number of grounds, including that it was the buyers – not him – who should have to pay.

“The buyers had possession of the property and did not occupy it. The landlord argues he has no control over the property and he ought not to be held liable,” Chan wrote, summarizing the crux of Sull’s submission on that point.

The judge’s decision explained that the arbitrator had already considered and dismissed this argument, finding that the buyers did not “meet the definition of purchasers” in the Residential Tenancy Act.

The legislation defines a purchaser as someone who has agreed to purchase “at least half of the full reversionary interest in the property” and the arbitrator found that criteria was not met in this case, according to the judgment.

That was because the deal was a five-year “option to purchase” agreement. The buyers put down $100,000 and agreed to pay a monthly interest fee of $5,800 for the next five years or until they decided to complete the purchase of the property.

“If there was an agreement to terminate the contract, the down payment and any additional payments were to be returned to the buyers,” the decision explained.

Even if the buyers were “purchasers,” the arbitrator found the landlord was not legally entitled to evict the tenants.

A landlord who has sold a property can end a tenancy but only if “all the conditions on which the sale depends have been satisfied,” the decision explained. Because of the nature of the agreement, the sale of the property was “at its core” a conditional sale unless and until the option to purchase was exercised.

“The arbitrator emphasized that the wrongful act was not that the buyers had not occupied the property, but rather that the tenants ought not to have had their tenancy terminated in the first place,” the decision said.

The judge agreed on this point.

“The landlord was not entitled to provide the two-month notice to end tenancy, as there was no unconditional sale of the property,” Chan wrote.

Unenforceable clause

Sull also argued to the arbitrator and again to the judge that the eviction was legal and justified because of a clause written into the lease that read “tenant and owner both agree to give two full calendar months written notice, when they plan to end the lease.”

The problem with that argument, the judge noted, was that it was an “impermissible opting out of the mandatory provisions of the (Residential Tenancy Act) because “a landlord cannot end a tenancy by providing two months’ written notice for any reason.”

The legislation lays out specific circumstances in which a landlord can end a tenancy and leases which “attempt to avoid or contract out” of those legal obligations are “of no effect,” according to the decision.

“The arbitrator found that (the) clause was an attempt by the parties to increase the circumstances by which the landlord can end the tenancy,” the decision said.

The judge agreed with this assessment and found the arbitrator’s decision, as a whole, was reasonable in the circumstances.

Wrongfully evicted tenants in circumstances like these are generally entitled to compensation equivalent to 12 months of rent. In this case, that worked out to $67,800 but the judge noted an award of $65,000 as the maximum allowable for a dispute settled by the Residential Tenancy Branch.