Selling a Rented Property in Prince Edward Island

When you sell a rented unit in Prince Edward Island, the tenant stays. Under the Residential Tenancy Act, a landlord's obligations run with the rental unit and not with the tenant, so the new owner is bound by the existing tenancy.

A sale is a ground to end a tenancy only in a narrow case, described below. Without that case, the buyer is a landlord with a sitting tenant. Tell any buyer this early, because it affects price and closing date. If you are choosing between selling and keeping, what rights landlords have is a quick read.

• The lease. The existing terms continue. Terms can change only if both sides agree, or the Director orders it.
• The rent history. The 12-month rule counts from the last lawful increase. Nothing in the Act resets it on a sale, and the annual cap still applies. Rent cannot be raised just because the owner changed or between tenants.
• The security deposit. The landlord's deposit obligations pass to whoever acquires your interest in the unit.

The new landlord must give the tenant a written notice as soon as practicable. It must give the landlord's name and contact details, and state the amount of the deposit and the interest credited. Gather the deposit amount, the date it was paid and the interest so far, and give them to the buyer's side before closing. For the deposit rules themselves, see the landlord deposit guide for PEI.

1. Give written notice before any showing or inspection.
2. Give the buyer a copy of the lease and any condition inspection report on Form 5.
3. Pass on the deposit and interest details.
4. After closing, make sure the new landlord sends the tenant the written notice with the landlord's name, address and phone number and the deposit and interest held.
5. Keep proof of what you gave to whom and when.

The Rental Office says the new landlord must provide the correct name of the landlord or agent, plus an address and phone number, and the written statement about the deposit and interest.

A sale is grounds for a notice to end the tenancy only if the building has fewer than three units (or the unit is a condo unit), there is a signed agreement of purchase and sale, and the buyer personally needs the unit. A sworn affidavit is required.

The tenant is owed compensation of one month's rent plus reasonable moving expenses, or you can offer another unit the tenant finds acceptable. The Rental Office says the tenant has one month to dispute these notices, which use Form 4B. For a fixed term, the notice must end at the end of the term, so you cannot use a sale to shorten a lease. The notice forms are covered in the PEI landlord forms guide and the notice to end tenancy guide.

You may enter to let a potential purchaser view the unit if you give the tenant written notice at least 24 hours before. You can do this yourself, or through an agent with your written authorization. The same 24 hours of written notice applies to an appraiser, insurer or mortgagee.

The tenant may choose to be home, but you do not have to wait for them and cannot require them to be home or away. In a real emergency you can enter without notice. If the tenant refuses entry after proper notice, see tenant refuses entry in PEI.

Show consideration anyway. A tenant who is cooperative with showings is much easier to keep until closing.

• Do not tell a tenant they must leave simply because the property is sold. Without a valid notice, they can stay.
• Do not give a buyer's-use notice for a building with three or more units, or without a signed purchase agreement.
• Do not raise the rent in the sale year in a way that breaks the 12-month rule or the annual cap. See raising rent in PEI.
• Do not take back possession yourself. You may regain possession only if the tenant has vacated or abandoned the unit, or the Director has ordered it and the order has gone to the sheriff.
• Do not assume a court order in a foreclosure or estate case removes a tenant. Such an order cannot be enforced against a tenant who was not a party to the case.

If the landlord dies, the tenancy also continues. The estate takes over the landlord's rights and duties.

Disputes go first to the Rental Office. A tenant who disagrees with a notice can dispute it on Form 2A. If the tenant stays after a valid notice, you apply to the Director on Form 2B for an order, and the order can be sent to the sheriff. A party can appeal the Director's order to IRAC within 20 days, or 7 days for an order to vacate for non-payment or cause. For a quick overview of the process see how to evict a tenant.

This guide explains the rules in general terms; for a specific case, ask the tribunal or a licensed legal professional.