Carroll v. Allen

Even though a property is rented to tenants, that property can be sold. Sometimes the buyer is willing to accept the current tenant and become their new landlord. Sometimes, however, the buyer wants to move into the property and, thus, requires that the tenant vacate the property. Section 49(5) of the Residential Tenancy Act allows this where the buyer has a good faith intention of occupying the property. The onus of removing the tenant, however, is put on the seller. This is accomplished by including a clause in the contract between the buyer and seller that the latter will provide “vacant possession” of the property on the closing date. But what happens if the tenant does not vacate the property on the closing date? This is what happened in the case of Carroll v. Allen, 2022 BCCRT 1021.

In Carroll, the parties entered into a contract of purchase and sale with respect to a residential home. At the time of the sale, the home had two sets of tenants; one living upstairs and the other living downstairs. A term of the contract was that the sellers would provide the buyers with vacant possession of the entire property on closing.

Unfortunately for the sellers, neither tenant had moved out by the closing date. This meant that the buyers were not able to take possession of the property as expected causing them to incur a number of expenses. While the upstairs tenants moved out within a week of closing, the basement tenants didn’t move out for 4 months!

The buyers sued the sellers to recover the expenses they incurred as a result of not being able to take possession of the entire property on the closing date.

The sellers admitted that they had breached the contract by not providing the buyers with vacant possession, but argued that the matter was not within their control. Rather, they blamed the housing crisis on their tenants not moving out when they were supposed to.

The Civil Resolutions Tribunal (CRT), which heard the claim, did not accept the seller’s excuse, stating that:

[15] The problem for the respondents is that they agreed to provide the applicants with vacant possession on September 1, 2021 and failed to do so. The respondents breached the CPS, which they admit, and a community housing crisis does not relieve them of their responsibilities under the parties’ contract.

As a result, the CRT awarded the buyers damages of over $2,500.

This case serves as a warning for sellers of tenanted property who agree to provide vacant possession on closing. Just because a tenant is supposed to move out by a particular date doesn’t mean that they will.

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