Amendment to the Residential Tenancies Act and Notice of Termination #4

By Gerry Neely
B.A. LL.B.

The amendment to the Residential Tenancies Act (R.T.A.), which allows a vendor, on behalf of a purchaser, to give a Notice of Termination to a tenant before title has been transferred to the purchaser, has cured a problem for the purchaser who requires residential premises for occupancy for himself at the earliest possible date. However, this cure does have one side effect which could be harmful for the vendor's bank balance. By Section 18(1) of the R.T.A., a tenant who has received that notice may, at any time during the period of the notice:

1. Give to the landlord at least ten days' written notice of a termination date earlier than that specified by the landlord; and
2. Pay the landlord on the date he gives the notice of termination under Paragraph (a), the proportionate amount of rent due up to the date the earlier termination is specified to be effective.

If the tenant takes advantage of this section, the vendor will be deprived of rental which he would have expected to receive, unless he had been advised that this was a possible result of his complying with the purchaser's request to give the tenant notice to terminate. If the Offer to Purchase imposes upon the vendor this duty, the following clause will help to protect the vendor against a loss of rental income:

"At the written request of the Purchaser (and following removal of the condition precedent referred to hereinbefore) the Vendor agrees forthwith to give notice to terminate to the tenant. If the tenant then terminates the tenancy upon ten days' notice to the vendor, the purchaser shall pay to the vendor on the completion date an amount equal to the difference between the rental received by the vendor for the period referred to in the Notice to Terminate given to the tenant, and the rental to which the vendor would have been entitled had no notice to terminate been given to the tenant."

And to protect the vendor further, we could also add:

"The Vendor shall not be liable to the purchaser for the refusal of the tenant to deliver up possession, whether or not that refusal arises from a Notice to Terminate which is found to be defective, and the vendor shall not be required to take any action to evict the tenant."

From the questions and comments which have been received, there is still some confusion as to when the vendor can give Notice to Terminate on behalf of a purchaser. Section 16(1) lists the following conditions which must be met:

1. There must be a bona fide agreement for sale and the condition precedent within it satisfied;
2. The purchaser must certify in writing to the landlord that he or his spouse or a child or a parent of his or hers will occupy the residential premises;
3. The purchaser must ask the landlord in writing to give the tenant notice to terminate.

The period of notice is to be no less than fifty-eight (58) days.

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