Buying a Rental Property With Tenants in Alberta: The Buyer's Steps From Offer to First Rent

When you are buying a rental property with tenants in Alberta, the tenancies come with it. The Act's definition of landlord includes the owner's successors in title, you take on the security deposits, and you must serve each tenant a new notice of landlord and a deposit statement. Only a periodic tenancy can end because of the sale, and only on the conditions in the regulation.

This how-to follows the purchase from the buyer's side: what to ask for before you firm up, what to do on possession day, and what you can and cannot change afterwards. If you are on the other side of the deal, read Selling a Rental Property With Tenants in Alberta. Every rule here is from Alberta's Residential Tenancies Act (RTA) and the Residential Tenancies Ministerial Regulation (AR 211/2004); the rest of the landlord rules are in the Alberta Landlord Resource Center.

Step 1: Decide whether you want the tenants or the unit

An investor who wants the rent roll keeps the tenants. A buyer who wants to live there, or wants a vacant house, has one route. The regulation lets the landlord end a periodic tenancy (month to month, for example) when the landlord has an agreement to sell in which all conditions precedent are satisfied or waived, and either:

• the purchaser or a relative of the purchaser intends to occupy the premises, or
• the agreement is to sell one detached or semi-detached dwelling unit or one condominium unit,

and the purchaser asks the landlord in writing to give the tenant notice (AR 211/2004 s.2(2)(b)). "Relative" includes a relative by blood, marriage, adoption or an adult interdependent relationship.

A fixed-term tenancy is different. The prescribed reasons apply to periodic tenancies only (RTA s.6(1)), and a fixed-term tenancy ends on its own end date without notice (s.15). Buy a unit on a one-year lease and you wait for that date.

Step 2: Time the notice to your possession date

The seller, as the landlord when conditions are removed, serves the notice. For a monthly tenancy it must be served on or before the first day of a period of three consecutive tenancy months and takes effect on the last day of that period (s.8). A yearly tenancy needs notice at least 90 days before the end of a tenancy year (s.9). The notice must be in writing, signed, give the reason, identify the premises and state the termination date (s.10).

Because notice cannot go out until conditions are removed, a short closing will usually leave the tenant in place for some weeks after you take possession. Build that into the possession date rather than the other way round.

Step 3: Get the paperwork before you firm up

• A copy of every written tenancy agreement, with the term, rent and due date.
• The amount of each security deposit and the interest owing on it.
• The move-in inspection reports (s.19). Without reports, no deduction for damage can be made from the deposit later (s.46(6)).
• The date of each tenant's last rent increase.
• Any notices already served.

Step 4: Take over the deposits on closing

A person who acquires a landlord's interest has the rights and obligations of the previous landlord for the security deposits paid to that landlord (s.47(1)). Because that obligation passes to you, make sure every deposit and its interest are adjusted on the statement of adjustments. Hold it as the Act requires: in an interest-bearing trust account at a bank, treasury branch, credit union or trust corporation in Alberta (s.44(1)). The details are in Alberta Security Deposits.

Step 5: Serve the notice of landlord and the deposit statement

Within a reasonable time after you acquire the interest, and at no cost to the tenant, serve each tenant (s.47(2)):

1. A notice of landlord. A dated, signed written notice giving the name of a landlord and a postal address and physical location in Canada (s.18(1)). In a building with common areas it can be posted there instead (s.18(3)).
2. A deposit statement. The amount of the security deposit and interest standing to the tenant's credit on the date you acquired the property.

Tell tenants in the same letter where and how to pay rent from now on.

Step 6: Leave the rent alone until the rules allow a change

Buying the property does not reset the rent clock. For a periodic tenancy, at least 365 days must pass since the tenancy began or the last increase (AR 211/2004 s.3(1)), and a monthly tenancy needs at least 3 tenancy months' written notice (RTA s.14(1)). Rent cannot go up during a fixed term of one year or more (AR 211/2004 s.3(3)), and not at all on a periodic tenancy once a notice for major renovations or a condominium conversion (RTA s.12(2)) has been served (s.3(2)). See Alberta Rent Increase Rules.

Key takeaways

• The tenancies and deposits pass to you with the property (RTA s.1, s.47(1)).
• Only a periodic tenancy can end for the sale, after conditions are met and on the buyer's written request (AR 211/2004 s.2(2)(b)).
• Serve a notice of landlord and a deposit statement within a reasonable time (s.47(2)).
• The 365-day rent rule keeps running through the sale.

For every other rule in one place, see the Alberta Landlord Guide.