Tenancy at Will

🏠 Tenancy-at-Will: What REALTORS® Need to Know

🔎 Common Scenario

A buyer’s mortgage funds can’t be drawn on the scheduled closing day. To avoid canceling the move-in, the parties agree to a tenancy-at-will arrangement, letting the buyer take possession temporarily before ownership officially transfers.

The Alberta Real Estate Purchase Contract includes provisions for tenancy-at-will and outlines some of the basic rules.

📝 Requirements for Granting Tenancy-at-Will

Before the seller’s lawyer grants tenancy, the buyer’s lawyer must confirm:

✅ Insurance is in place
✅ A fully executed transfer back (returning title to seller if needed)
✅ The mortgage is unconditional and fully signed
✅ The buyer’s lawyer holds the buyer’s cash portion of closing funds
✅ A tenancy agreement has been signed by the buyer

🔍 Why Mortgage Funds Might Be Delayed

Seller’s fault (tenancy usually granted automatically):

• Missing or outdated Real Property Report (RPR)

• Estate sale delays or inability to transfer title

• Dower rights issues

• Seller unable to sign closing documents
  
  

Buyer’s fault (seller may refuse tenancy):

• Mortgage not finalized or unconditional

• Outstanding mortgage conditions

• Buyer unable to sign closing documents

• Buyer cannot access down payment funds
  
  

⚖ Key Terms of Tenancy-at-Will

Most tenancy-at-will agreements in Alberta include:

1. Interest Payment:

   • If buyer at fault: Prime rate + 3%
     
     

   • If seller at fault: Typically, no interest is charged unless otherwise agreed by the lawyers.  Due to the seller paying carrying costs, it is typical that this is considered the penalty. 
     
     
     

2. Eviction Notice:

• Seller can terminate tenancy with 24 hours’ notice.
  
  

3. Title Remains with Seller:

• Legal title remains in the seller’s name until full payment and registration at closing.

✅ During tenancy-at-will, the buyer does not receive title.

✅ Title stays in the seller’s name until the transaction fully closes and funds are paid.

✅ The transfer of land documents might be signed in advance and held in trust by the lawyers (called a "transfer back" or "undertaking" to transfer), but the actual registration at Land Titles does not occur until closing.

🔑 Why REALTORS® Should Understand This

• Tenancy-at-will can save deals but carries risk.

• Your role: Understand when tenancy might be needed, set client expectations early, and know the basic terms so you can assist clients and lawyers efficiently.

• Advise caution: Tenancy should be a last resort, not a fallback plan for financing delays.