The Tenant Who Wants to Buy
A salesperson represents a landlord who owns a tenant-occupied duplex. The landlord wants to sell the property vacant, and the tenant has been on a month-to-month lease for three years. The tenant has told the salesperson, in conversation, that they would like to buy the property but cannot qualify for a mortgage for at least a year. The landlord instructs the salesperson to serve notice to terminate the tenancy so the property can be shown empty and sold to an owner-occupier. The salesperson knows the tenant has a young child and is on a fixed income. The salesperson also knows that a buyer might want to keep the tenant, and that the tenant's interest in buying could be a selling point. The salesperson has not yet listed the property. The landlord says: 'Just tell the tenant we need vacant possession - don't get into the legal stuff.'
1. What are the salesperson's obligations regarding the tenant and the landlord's instruction?
Read the worked answer
The salesperson must not simply relay a termination notice or give legal advice about tenancy law. Residential tenancy termination is governed by statute (in Ontario, the Residential Tenancies Act, 2006), and the valid grounds and notice procedures are legal questions. The salesperson should tell the landlord to obtain legal advice on whether and how the tenancy can be terminated, and should not serve or draft the notice themselves unless permitted and competent to do so.
The salesperson also owes the tenant basic fairness and honesty. The tenant has disclosed an intention to buy and a financial situation; the salesperson should not use that information against the tenant, and should not mislead the tenant about the landlord's plans. The salesperson can explain that the landlord intends to sell and that the tenant's tenancy may be affected, but should direct the tenant to the Landlord and Tenant Board or legal advice for their rights.
The landlord's instruction to 'not get into the legal stuff' is not a licence to mislead. The salesperson should document the landlord's instruction and the salesperson's advice to seek legal advice. If the landlord insists on an improper termination, the salesperson should decline to participate and consider whether to continue the listing relationship.
2. The tenant asks the salesperson whether they can buy the property. How should the salesperson respond, and can the salesperson represent the tenant?
Read the worked answer
The salesperson can tell the tenant honestly that the landlord intends to sell and that the tenant is free to make an offer, but the salesperson cannot act for both the landlord and the tenant without full written disclosure and informed consent - and here the conflict is acute because the salesperson has confidential information about the landlord's plans and the tenant's finances.
The practical path: (1) tell the tenant that the salesperson represents the landlord and cannot give the tenant buyer-side advice; (2) suggest the tenant get their own representation and legal advice; (3) if the tenant wants to make an offer, the salesperson can present it to the landlord like any other offer, but must not use the tenant's confidential financial information to the landlord's advantage or vice versa; and (4) if the salesperson wants to represent the tenant too, obtain full written disclosure and consent from both, and be prepared to withdraw if the conflict cannot be managed.
The salesperson should also be careful not to discourage the tenant from bidding in order to preserve the landlord's plan for a vacant sale. The tenant's offer must be presented fairly. Document the conversation and the referral.
3. The landlord wants to market the property as 'vacant possession available.' What must the salesperson verify before using that phrase?
Read the worked answer
'Vacant possession available' is a representation about the legal status of the property on closing. The salesperson must verify that the landlord can actually deliver vacant possession - which depends on validly terminating the tenancy under the applicable legislation, not just on the landlord's intention. If the tenant has not been validly terminated, the phrase is misleading and could expose the seller and the salesperson to claims.
Before using the phrase, the salesperson should: (1) ask the landlord for confirmation, preferably from legal counsel, that the tenancy has been or will be validly terminated by closing; (2) confirm the notice period and any tenant rights; (3) avoid the phrase if the tenancy is still in place and termination is uncertain - instead describe the property accurately (e.g., 'tenant-occupied; buyer to verify tenancy status'); and (4) disclose the tenancy to buyers, because it is a material fact.
The salesperson should also consider that a buyer may prefer the tenant, and marketing solely for vacant possession may narrow the buyer pool. The salesperson should present options to the landlord and document the advice. If the landlord insists on 'vacant possession' without a valid basis, the salesperson must refuse to make the misleading statement.