What is a Tenancy At Will?
Tenancy at will is the situation where a buyer receives possession of the property prior to payment of the full purchase price to the seller.
Sometimes, for a number of different reasons, the buyer may not be able to pay the purchase price to the seller on the possession date. One example is where the buyer’s mortgage lender is late sending the mortgage funds to the buyer’s lawyer which results in the buyer’s lawyer not having the money to pay the seller the purchase price on the day of closing. Another example, is where the seller has not provided the buyer with a document required to close and therefore the payment of the purchase price must be delayed.
The seller may still allow the buyer to move into the property on the possession date if (there may be other requirements):
the buyer’s lawyer has the down payment in trust;
the buyer’s lawyer has submitted the transfer of land to the land titles office for registration;
the buyer has signed all their mortgage and purchase documents;
the buyer has property insurance in place; and
the buyer has signed a tenancy at will agreement which generally says that the buyer is a tenant only, must vacate the property on very short notice, the buyer can’t make any changes to the property; and the buyer must pay interest to the seller up until they pay the purchase price.
When the buyer takes possession of the property on a tenancy at will basis, the buyer is responsible for the property. They must have insurance place and they must pay for all utilities and property tax. However, the buyer does not yet own the property so they cannot cause any damage to the property and they cannot start any renovations. The buyer usually has to pay a daily charge to the seller.