Every property owner that leases it that property has fears, and many have experienced. The problem tenant, the nightmare tenant. The one that doesn’t pay their rent. Yes, there is legal protocol to evict them. Although what if that tenant is family?
Having a bad tenant that refuses to pay their rent is a nightmare, but when there is another element to the relationship, it can get terrible. How does a landlord handle this type of situation when that bad tenant is family? What is the law in Calgary when it comes to landlord versus a tenant is family of the landlord and the landlord wants to sell the property occupied by the tenant?
How Could This Happen?
Joe and his wife bought a house to fix up and flip, starting a side business to build up the egg nest. Just as they completed it, Joe’s younger brother, Steve, and his wife needed a place to live after losing their jobs. So, Joe and his wife Sally offered their recent fixer upper to them at a rent below market value, and even keep the utilities on in their name for the first month.
Joe and Sally had put a lot of work into the house, including upgrades to the appliances, HVAC system and electrical wiring. There was still more to be done before they were ready to sell it, but they felt helping family was more important, so they put those plans on hold.
Sometimes Even The Best Laid Plans Derail
The agreement between the brothers was for Steve and his wife to finish up some upgrades, like laying new floors, painting, while they lived there at the below market rent. The rent covered most of the mortgage payment, and the work they were to do would add value to the house when it would be sold. The arrangement seemed like a win-win all the way around for everyone, but the strategy didn’t go as planned when Joe died.
So, What Went Wrong?
Unexpectedly, Joe passed away, leaving everything to his wife Sally. At first, Sally wasn’t sure what to do with the house, and didn’t want to kick Steve, his wife, and newborn daughter out. The money was getting tight for Sally, so selling the house Steve was renting seemed the best option for her.
However, Sally would soon find out that Steve’s wife allowed a friend and her daughter to stay with them. They said nothing to Joe or Sally, nor had they ever switched the utilities into their name after the first month as agreed. Steve and his wife quit paying rent.
Months went by with no rent, no utility changes, and before Sally realized, it was over a year since Steve and his wife moved into the house, and over 6 months paying no rent.
Sally filed eviction process on Steve, his wife and their guests. However, because Joe and Steve verbally arranged, there wasn’t enough proper legal paper word to process the eviction.
The Legal Point of View?
For renters, Calgary, AB is the best place to live in all of Alberta because it is a pro-tenant jurisdiction. The laws are complex and intricate from the landlord side of things. The best thing a landlord can do is hire a lawyer, but in Sally’s case, she didn’t have the means to do that.
So, What Finally Happened?
Sally heard our commercial on the radio and saw one of our billboards. While she wasn’t 100% sure what we did, she called us, scheduled an appointment, and we discussed her options.
We could give her a cash offer for the house, and we handled the unpaying tenant and his guests. Sally didn’t have to do anything – we handled it all for her. Including going to the house the next day and introduce ourselves as the new owner of the property. Our visit wasn’t a welcome visit, Steve, his wife, and their guest were surprised and defensive.
Things A Landlord Should Know
When you rent a property out in Calgary, AB, no matter who you’re renting the property to, get a completed, dated, and signed a lease with all the details listed. When we pulled the title work to the house, we discovered that it didn’t have to be probated before we could buy it from Sally.
Unfortunately, because tenants have Tenant Opportunity to Purchase Act in their favor, meaning they had to be given a first right of refusal before we could complete our purchase. Since they never got their credit fixed, they weren’t able to get financing approved.
So, the tenant was still difficult to get evicted, and we had to wait the required 30 days to complete our purchase, but that is one of our services when we purchase tenant occupied property. We take that headache for the seller.
Do you own a property that you’d like to sell but have that kind of tenant that won’t pay rent, utilities or more? Call us and visit today at 5Days Sold and let’s discuss your options!