PEI Landlord Compensation When Ending a Tenancy: What You Owe and When

When Compensation Is Required

Not every termination ground triggers a compensation obligation. Fault-based terminations — non-payment of rent, cause, disturbance — don't require you to pay the tenant anything. For certain no-fault grounds, the Residential Tenancy Act requires compensation or another rental unit acceptable to the tenant.

Here's which grounds require compensation or an acceptable alternative rental unit:

What "Reasonable Moving Expenses" Means

For compensation under Sections 70–72, the Regulations cap reasonable moving expenses at the lesser of the actual expenses of the move or one month's rent. For a mobile home moved under Section 70(3), the specified amount is the actual cost of moving the home, and the Act caps the award at the lesser of one year's rent or that amount. Common moving costs can include hiring movers, renting a truck, and similar expenses.

It doesn't cover things like a security deposit on a new apartment or the difference in rent between the old and new place.

In practice, expect the Rental Office to look at whether the claimed expenses are proportional to the move. Two-person household moving within Charlottetown with a rented truck and a few hours of hired help is reasonable. A claim for $5,000 in moving costs for a one-bedroom apartment warrants scrutiny.

Payment Timing

Compensation must be paid to the tenant on or before the effective vacate date stated in the notice. Not "within a reasonable time after" — on or before the date the tenant is supposed to leave.

Section 73 sets this deadline. If the landlord does not provide the required compensation by the termination date, the tenant may apply to the Director. The Director can determine the validity of a notice and make orders under Section 85; the Act does not say late payment automatically invalidates the notice.

The Renovation Exception

For major renovation evictions (Section 70), the formula depends on whether the tenant exercises the right of first refusal. If they do, the rent portion is the lesser of:

• One month's rent, OR
• Rent for the actual duration of the repair period

Plus moving expenses in either case. If the tenant does not exercise the right of first refusal, Section 70(1) instead requires one month's rent plus reasonable moving expenses, or another acceptable rental unit. If the tenant does exercise it and the renovation takes two weeks, the rent portion is two weeks; if the work takes three months, the rent portion is one month.

Renovation tenants also have a right of first refusal to return to the unit (Section 68), with rent governed by provincial rent-control rules.

Documenting Compensation Payments

Keep a clear paper trail. When you pay, record:

• The amount paid (broken down: rent portion vs. moving expenses)
• The date of payment
• The method (cheque, e-transfer, bank draft)
• Confirmation of receipt — ideally a signed acknowledgment from the tenant

This documentation protects you twice: it proves you met your compensation obligation, and it establishes the record for any later Section 65 bad-faith claim where the tenant alleges you didn't follow through.

What Happens If You Don't Pay

If a tenant who was owed compensation files Form 2A or, after the fact, a complaint with the Rental Office, the Director can order you to pay what's owed — potentially with additional damages. And the failure to pay feeds into a bad-faith narrative under Section 65 if the tenant later claims the termination wasn't genuine.

The Ending a Tenancy in PEI guide includes a compensation tracker that calculates what you owe for each ground and logs payment dates and receipts for your records.

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