III. Trading Services
Tenant Occupied Properties
(a) Application of the Residential Tenancy Act
The Residential Tenancy Act applies to residential tenancies in British Columbia. The Residential Tenancy Act contains exemptions for tenancies such as not for profit housing cooperatives, accommodation provided to students or employees, and living accommodation occupied as vacation or travel accommodation. The Residential Tenancy Act does not apply to commercial tenancies or to tenancies in a manufactured home park unless the tenant is renting the home and the home site from the same landlord. Tenancies in a manufactured home park are regulated by the Manufactured Home Park Tenancy Act.
The Residential Tenancy Act provides for a number of approved forms which must be used, such as the Condition Inspection Report, Notice of Rent Increase, Notice to End Tenancy and Application for Arbitration.
Licensees should contact the Residential Tenancy Branch at 1-800-665-8779 or www.gov.bc.ca/landlordtenant for more information and the required forms.
(i) Key Provisions
Written Tenancy Agreements
Every tenancy agreement between a landlord and tenant must be in writing. The Residential Tenancy Act requires that the tenancy agreement set out the standard terms which are included as a schedule to the Residential Tenancy Regulation, as well as other relevant details, such as legal names of the landlord and tenant, the address of the rental unit, the date the tenancy agreement is entered into and the agreed terms regarding the start date of the tenancy, the amount of rent, the date the rent is due and the services that are included in the rent.
Condition Inspections at Start and End of Tenancy
Tenants and landlords must inspect the rental unit and sign condition reports at the start and end of each tenancy. A failure to do so will result in the landlord losing the right to claim damage against the security deposit or the tenant losing the right to the return of the deposit.
The Residential Tenancy Act requires that, if requested to do so by a tenant, the landlord must re-key or alter the locks so that previous tenants do not have access to the rental unit. The cost of re-keying or altering the lock must be paid by the landlord.
Deposits and Rent Increases
Landlords may require a tenant to pay a security deposit but only at the time that the landlord and tenant enter into the tenancy agreement. Landlords may also require the tenant to pay a pet damage deposit if the landlord permits the tenant to keep a pet. The security or a pet damage deposit may not be greater than the equivalent of one-half of one month’s rent.
The security and pet damage deposits must be repaid to the tenant, subject to the ability of the landlord to withhold certain amounts, with interest, within 15 days after the date the tenancy ends, or the date the tenant provides a forwarding address in writing, whichever is later.
The interest that must be paid on a security or pet damage deposit is prescribed by the Regulations to the Residential Tenancy Act. A deposit interest calculator can be accessed at www.gov.bc.ca/landlordtenant.
Landlords may also collect deposits for access devices, such as garage door openers.
Landlords may not charge a tenant for accepting or processing an application for a tenancy, investigating the applicant’s suitability, or accepting the person as a tenant.
Landlords are permitted to increase the rent annually after giving three months’ notice. Rent may be increased by a percentage equal to the Consumer Price Index plus 2%. If the landlord increases the rent in accordance with the Residential Tenancy Act, a tenant may not dispute the increase at arbitration.
A landlord may prohibit pets or restrict the size, kind, or numbers of pets. The Residential Tenancy Act also permits a landlord to create rules governing a tenant’s obligations in respect of pets. A pet damage deposit may be charged either at the time the landlord and tenant enter into the tenancy agreement or during the tenancy if the landlord permits a pet after the commencement of the tenancy. The landlord may only require one pet damage deposit, regardless of the number of pets that the landlord permits.
A landlord may end a tenancy for illegal activity carried out by the tenant or a guest of the tenant if the illegal activity has caused or is likely to cause damage to the landlord’s property, has adversely affected the quiet enjoyment, security, safety or physical well-being of another occupant, or has jeopardized the lawful right or interest of another occupant or the landlord.
Quiet Enjoyment and Landlord’s Right To Enter
The Residential Tenancy Act provides that a tenant is entitled to reasonable privacy and the freedom from unreasonable disturbance. However, under the Residential Tenancy Act, the rights of the tenant are balanced with the landlord’s right to inspect the rental unit. The tenant may simply give the landlord permission to enter the property at the time that the landlord is seeking entry. Alternatively, the Residential Tenancy Act permits the landlord to provide written notice giving at least 24 hours’ and not more than 30 days’ notice to enter the property. The purpose for entering must be reasonable and must be provided in the notice. The Residential Tenancy Act specifically permits a landlord to inspect the rental unit monthly.
(b) Unauthorized Accommodation
Real estate licensees are to avoid advertising illegal suites as a possible source of revenue for homeowners. Section 4-7 of the Rules prohibits false or misleading advertising as follows:
A licensee must not publish real estate advertising that the licensee knows contains a false statement or misrepresentation concerning real estate, a trade in real estate or the provision of real estate services.
In order to avoid any confusion, licensees should use the following clause:
Properties Containing Unauthorized Accommodation Clause
The Buyer is aware that the property contains unauthorized accommodation and has been informed of the consequences of such ownership and the potential loss of income should the rental use be discontinued.
NOTE: Licensees should be aware that issues involving unauthorized accommodation often include construction or improvements to the property which could result in an order for demolition of the structure, a requirement by a municipal/city authority to upgrade to present bylaw requirements or for the removal of the addition and changes since the last inspection, the nullification of insurance, and a potential difficulty to mortgage the property.
(c) Sale of Rental Properties
It is recommended that the amounts of security deposits held on behalf of each unit, whether that unit is authorized or not, be specified in any Contract of Purchase and Sale. Information as to the date of the last rent increase for each unit should be included.
Confirmation of Tenancy Details Clause
The Seller warrants that (tenant’s name) is a (type of tenancy); the monthly rent is $ (amount) including (utilities included); payable on (day of the month rent is due) a security deposit of $(amount) was taken on (date) and the last rental increase was (date) .
A licensee who is listing or selling a tenanted property should ask for a copy of the tenancy agreement, if available. After January 1, 2004, the tenancy agreement must be in writing; however, tenancies entered into prior to that date may not have a written agreement. If a tenancy agreement is available, the licensee should attach a copy of it as part of the Contract of Purchase and Sale.
(d) Showing Rental Properties and the Use of Lockboxes
The Residential Tenancy Act permits a landlord to enter a rental unit either with the tenant’s permission or upon written notice of no less than 24 hours and no more than 30 days. If a tenant is unwilling to voluntarily agree to showings, it will be necessary for the landlord to comply with the specific terms of the Residential Tenancy Act in order to gain access to the rental unit.
The Residential Tenancy Act gives the landlord the right to enter with written notice between the hours of 8 a.m. and 9 p.m. Although not specifically provided for in the Residential Tenancy Act, presumably the listing agent falls within the definition of landlord as an agent of the owner. As a result, either the landlord or the listing agent may give notice to enter the property and must be present when the property is entered. A selling agent does not have the authority to enter the rental unit without the landlord or the landlord’s agent unless the selling agent has the permission of the tenant.
The tenant is permitted to have exclusive possession of the rental unit subject to the landlord’s right to enter. As a result, the landlord cannot require that the tenant vacate the property when it is shown.
The presence of a lockbox would permit access to people other than the landlord and the landlord’s agent. The entry of such individuals, if not accompanied by the landlord or landlord’s agent, may only occur with the permission of the tenant. As a result, lockboxes may only be used with the permission of the tenant.
(e) Terminating Tenancies
The Residential Tenancy Act permits a landlord to terminate a tenancy for a variety of reasons, including the late payment of rent and illegal activities. Additionally, a landlord may terminate the tenancy if the landlord or a close family member intends to occupy the rental unit, if the landlord intends to demolish the rental unit, or renovate or remodel the rental unit in a manner that requires the rental unit to be vacant.
Of importance to licensees is the ability of the landlord to terminate the tenancy when the rental unit is sold. A landlord may terminate the tenancy if the landlord has entered into an agreement to sell the rental unit and the purchaser asks the landlord to give notice to end the tenancy because the purchaser intends to occupy the rental unit. It is important to note that until the title has transferred to the purchaser, the only person entitled to give notice to the tenant is the seller/landlord.
Before a landlord can give written notice to a tenant on behalf of a purchaser, all conditions on the contract must have been removed.
If the rental unit is purchased by an individual, the notice to terminate the tenancy may be given because either the purchaser or a close family member wishes to occupy the rental unit. If the purchaser is a family corporation, the notice to terminate the tenancy may be given if a person owning voting shares in the corporation or a close family member intends to occupy the rental unit.
The Residential Tenancy Act requires that two months’ notice be given to terminate a tenancy or in the case of a fixed term tenancy, the date of termination may not be earlier than the specified end of the tenancy.
If a landlord has terminated the tenancy because the rental unit is to be occupied by the landlord, or a family member, or a purchaser or a family member, or because the landlord intends to demolish, renovate, or convert the premises to strata lots, not-for-profit housing, a caretaker’s suite, or to non-residential use, the landlord must pay the tenant, before the effective date of the notice, an amount equivalent to one month’s rent. If steps have not been taken to accomplish the stated purpose for ending the tenancy within a reasonable time or the rental unit is not used for that stated purpose for at least six months, the landlord or purchaser must pay the tenant an amount that is the equivalent of two months’ rent.
Licensees must ensure that the compensation that must be paid to a tenant if the landlord is required to provide a notice to end the tenancy on a purchaser’s behalf is negotiated between the buyer and the seller at the time the contract for the purchase and sale of the rental unit is entered into.
(f) Notice To Tenants
The Residential Tenancy Act permits a landlord to end a tenancy if the landlord has entered into an agreement to sell the rental unit, all conditions on which the sale depends have been removed, and the purchaser asks the landlord in writing to give notice to end the tenancy. A buyer may request that the seller give notice to end the tenancy if the buyer or a close family member of the buyer intends to occupy the rental unit, or, if the buyer is a family corporation and a person owning voting shares in the corporation, or a close family member intending to occupy the rental unit.
Notice to Tenants Clause
The Seller will give legal notice to the Tenant to vacate the premises, but only if the Seller receives the appropriate written request from the Buyer to give such notice in accordance with the requirements of section 49 of the Residential Tenancy Act.
Ώ NOTE: The Seller cannot give notice to the tenant until all the subject clauses have been removed.
(g) Seller To Remain as Tenant
In some cases, a seller wishes to remain as a tenant after the title has transferred to the buyer. The Residential Tenancy Act requires that all tenancy agreements be in writing and, additionally, that certain standard clauses be included in the tenancy agreement. As a result, the tenancy agreement should be a separate document from the Contract of Purchase and Sale. In addition to the clauses required in the tenancy agreement, the buyer and seller should also consider clauses relating to:
- what is included in rent;
- buyer access to premises — storage
- garden maintenance;
- insurance; and
However, in order to make it clear when the buyer may occupy the premises, the termination date should be settled at the time of the purchase negotiations. A clause such as the one below may be used, or for greater clarity, a tenancy agreement may be attached as a term of the offer. The benefit of attaching a completed tenancy agreement is that it leaves neither party the option of backing out of the transaction at a later date due to any uncertainty of terms.
Seller To Remain as Tenant Clause
Subject to the Seller and Buyer entering into a tenancy agreement on or before (date) for the Seller to occupy the premises as a tenant until (date) .
This condition is for the benefit of the Buyer and the Seller.
Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal’
(h) Proper Handling of Security Deposits
Pursuant to section 19 of the Residential Tenancy Act, a landlord may require a tenant to pay a security deposit equivalent to one-half of one month’s rent. There is no requirement that a landlord holds the security deposit in a trust account but the landlord is required to pay the tenant interest on the security deposit at the rates specified in the Regulations.
Section 28 of RESA provides that when a security or pet damage deposit is paid to a licensee and deposited into the brokerage’s trust account, the funds are not held by the brokerage as a stakeholder.
It is, therefore, possible for the security or pet damage deposit to be paid to or on behalf of the landlord, without the need for written consent on the part of the tenant. Such consent would otherwise be required if the brokerage held the funds as a stakeholder.
Under the Residential Tenancy Act, the landlord must return the security or pet damage deposit, with interest, within 15 days of the end of the tenancy agreement or the date the landlord receives the tenant’s for warding address in writing.
The Residential Tenancy Act requires that the rental unit be inspected at the start and the end of the tenancy. If the tenant has failed to participate in the inspection, either at the beginning or the end of the tenancy, the tenant’s right to the return of the security or the pet damage deposit is extinguished. Correspondingly, if the landlord fails to inspect the rental unit or prepare a condition inspection report, the right of the landlord to claim against a security or pet damage deposit is extinguished.
A landlord may only retain an amount from a security or pet damage deposit that is agreed to by the tenant in writing, at the end of the tenancy, or is awarded by an arbitrator. In order to make a claim against the security or pet damage deposit, the landlord must file an Application for Arbitration. The application must be made within 15 days of the end of the tenancy.