RESIDENTIAL TENANCY ARBITRATIONS

Residential Tenancy Branch (“RTB”); Compliance and Enforcement Unit (the “Unit”)

Tenancies of Manufactured Homes

-Tenancies at manufactured home sites and manufactured home parks in British Columbia are not regulated by the Act and are instead governed by the Manufactured Home Park Tenancy Act (“MHPTA”) and its regulation.

-Disputes between landlords and tenants in manufactured home parks are still referred to arbitrators at the RTB

-under section 30 of the Manufactured Home Park Tenancy Act Regulation (“MHPTAR”), landlords are permitted to establish rules to regulate manufactured home parks. However, those rules must be reasonable or they will not be enforceable

THE KEY RIGHTS AND OBLIGATIONS OF THE PARTIES IN A TENANCY RELATIONSHIP

Rent: a sum that a tenant promises to pay to the landlord in return for possession of the premises during the term of the lease

Rent (Commercial)

-Gross lease: the amount of rent paid by the tenant is inclusive of all operating expenses that the tenant must contribute to.

-Triple net lease: the tenant pays a base rent plus all applicable operating expenses, including any increases that occur from time to time.

-payment of operating expenses is highly negotiable and there are many other arrangements which may fall somewhere between these two extremes, e.g. A double net (net-net) lease implied payment of base rent, property taxes, and building insurance.

-the tenant is protected to the extent that the landlord cannot raise the rent beyond what may be provided for in the lease for the duration of the term.

-Rent can be paid in goods or in services. It does not include all payments which a tenant is required to make under the terms of the lease, unless the agreement provides otherwise.

-When the rent becomes due on a specific day, the tenant has the whole of that day to pay it.

-Remedies of a landlord for non-payment of rent:

• the landlord can bring a court action for the rent either by suing for the sum as would any creditor, or by reclaiming possession of the property through an expedited hearing process under the Commercial Tenancy Act;

• the landlord can re-enter the premises and cancel the balance of the term of the tenant; and

• the landlord can distrain for arrears of rent. Distraint or distress means a seizure and sale of the tenant’s personal property to pay the arrears.

Rent (Residential)

Rent increases are regulated by Part 3 of the Act. A landlord may increase the rent in only two circumstances.

1. First, a landlord may increase a tenant’s rent if at least 12 months have passed since that tenant’s last rent increase for those premises, or since the tenant started to rent the premises.

2. Second, a landlord may raise the rent any time the premises are re-rented to new tenants, even though it may have been raised less than 12 months prior to the re-rental

-Written notice of an increase must be given to a tenant at least three months before it becomes effective.

-Under the Residential Tenancy Act Regulation, landlords may increase rent on an annual basis up to an amount equal to the Consumer Price Index (CPI) for British Columbia

-a tenant may agree to a rent increase greater than the prescribed amount. If a landlord collects a rent increase that does not comply with the Regulation, a tenant may deduct the increase from future rent payments or otherwise recover the increase (section 43(5)).

-Rents can no longer be increased above the maximum annual allowable amount between fixed-term tenancy agreements with the same tenant.

-landlords are no longer able to apply for an additional rent increase on the basis that the rent is significantly lower than other similar rental units in the same geographic area.

Security Deposits (Commercial)

-no legal restrictions regarding security deposits for commercial tenancies; left open for negotiation.

-According to the common law, return of the deposit is a personal obligation of the landlord; therefore, someone who purchases the property from the landlord is under no duty to the tenant to repay

-the parties to a sale of a commercial tenant-occupied property often make it a term of the sale that the buyer of the property will be responsible for the return of the security deposit to the tenant and the buyer will be given a monetary credit on the statement of adjustments prepared at the time of closing the deal.

Security Deposits (Residential)

-Section 17 of the Act provides that a landlord may require a tenant to pay a security deposit as a condition of entering into a tenancy agreement or as a term of a tenancy agreement

-A landlord may only collect a security deposit at the time the tenancy agreement is entered into.

-the deposit may not be more than one-half of one month’s rent

-Landlords may collect extra deposits for such things as keys, access cards, and garage door openers.

-A landlord must pay interest (compounded annually) on both the security deposit and the pet damage deposit accrued on it to the tenant within 15 days after the termination of the tenancy.

-if a landlord refuses to return a deposit to a tenant, and does not apply for Dispute Resolution, a landlord must repay the tenant double the security deposit, pet deposit, or both, as applicable

-a security deposit and the obligations of the landlord run with the land;

-Section 23 of the Act requires that at the start of a tenancy, the landlord and tenant together must inspect the condition of the rental unit.

-The landlord must offer the tenant at least two opportunities, as prescribed, for the inspection and must complete a condition inspection report, to be signed by both the landlord and tenant

-a tenant’s failure to participate extinguishes the tenant’s right to the return of a security or pet damage deposit, and a landlord’s failure to participate or to comply with the section extinguishes the landlord’s right to claim against either a security deposit or pet damage deposit.

Distress

-a legal term for a landlord’s right to seize and sell a tenant’s personal property in order to recover arrears of rent

-Commercial: A commercial landlord can exercise the common law remedy of distress by seizing a tenant’s goods and eventually selling them to satisfy a claim for rent owing

-Residential: Residential Tenancy Act abolishes the remedy of distress in residential tenancies.

Mitigation

-a principle requiring that a party who has suffered loss take reasonable action to minimize the amount of loss suffered

-Commercial: If a tenant improperly abandons the premises, the landlord may be able to sue the tenant for each month’s rent. However, once a landlord is held to have surrendered the lease, they will lose any claim for rent against the tenant after the surrender.

-2 types of surrender:

1. First, surrender can occur by an act of the parties; when the tenant offers to terminate the lease early and the landlord accepts.

2. Second, it can arise by operation of law; the landlord does some act which is inconsistent with the continuation of the tenancy.

-Residential: Section 7(2) changes the common law by imposing an express duty on residential landlords and tenants to mitigate their damages or loss that results from the other’s non-compliance with the Act or Regulation, or from a breach of the tenancy agreement.

Delivery or Service of Documents under the Residential Tenancy Act

a notice has been given by:

• mail, it is considered received on the fifth day after mailing;

• email, it is considered received on the third day after it is sent;

• fax, it is considered received on the third day after it was faxed; and

• attaching a copy to a door, or leaving a copy in a mail box or mail slot, it is considered received on the third day after it was attached or left.

Quiet Enjoyment and Privacy

Commercial:

-Because a commercial lease grants exclusive possession of a piece of property and conveys an interest or estate in that land, there is an implied covenant of quiet enjoyment at common law

-covenant of quiet enjoyment: a guarantee to the tenant that they will be able to possess and enjoy the premises without significant interference

-assures the tenant of the use and enjoyment of the premises for all usual purposes without physical interference or unreasonable disturbance from the landlord. However, this right can be altered by the terms of the lease.

Residential:

-The implied covenant for quiet enjoyment has specifically been preserved by the Residential Tenancy Act:

(a) reasonable privacy;

(b) freedom from unreasonable disturbance;

(c) exclusive possession of the rental unit subject only to the landlord’s right to enter the rental unit in accordance with section 29 [landlord’s right to enter rental unit restricted];

(d) use of common areas for reasonable and lawful purposes, free from significant interference.

Derogation from Grant

-covenant of non-derogation from the grant: a guarantee to the tenant that the landlord will not substantially deprive them of the benefit conferred by the tenancy agreement

Commercial: the landlord cannot deliberately prejudice any rights which they have granted to the tenant under the lease

-Residential: The common law right of the tenant against derogation from grant of the landlord still exists for residential tenants.

Interesse Termini

Commercial: implied covenant on the part of a commercial landlord to let the tenant into possession of the leased premises at the beginning of the term of the lease.

Residential: The doctrine of interesse termini has been abolished under the Residential Tenancy Act

Landlord’s Duty to Repair

Commercial: an implied condition that leased furnished premises be reasonably fit for human habitation and occupation

-The doctrine of caveat lessee (let the tenant beware) applies: there is no obligation on the landlord to repair. The tenant has to satisfy themselves as to the suitability of the premises before entering into the lease.

Residential: Under section 32 of the Residential Tenancy Act, the landlord has a duty to repair all types of residential premises, furnished or unfurnished, even if they were in disrepair when the tenancy agreement was made.

-Where the landlord breaches this section or fails to provide a service or facility they are obliged to provide, the arbitrator can order the tenant to pay the rent to a named person to be used to remedy the failure.

-the landlord must conspicuously post on the property or give to the tenant in writing, the name and telephone number of a person the tenant is to contact for emergency repairs.

Tenant’s Duty to Repair

Commercial: a tenant must do those odd jobs required to maintain the premises as would a reasonable tenant

-Aside from treating the premises in a tenant-like manner, the tenant has no obligation to repair.

-The tenant does have a duty, however, not to intentionally harm the premises by pulling down the walls or performing acts of a similarly destructive nature which would constitute waste.

-further implied covenant that the tenant will deliver up the premises as they found them, fair wear and tear excepted.

Residential: A tenant must maintain reasonable health, cleanliness and sanitary standards throughout the rental unit and the other residential property to which the tenant has access; must repair damage to the rental unit or common areas that is caused by the actions or neglect of the tenant or a person permitted on the residential property by the tenant; not required to make repairs for reasonable wear and tear.

The Right to Assign or Sublet

Commercial:

-Assignment: transfer by a party of all of the party’s interest in a property to another party

-Sublease: lease by the original tenant (the sublandlord) to a third party (the subtenant) for less than the total remainder of the sublandlord’s original lease term (the head lease term); can be for part or all of the premises; a sublandlord can sublease some or almost all of the remainder of their head lease term, as long as they reserve some period of time at the end of the head lease for their re-entry (typically, this would be for the final day of the term). Failure to do so will result in the arrangement being characterized as an assignment.

-Unless there is an express prohibition in the lease, a tenant under a commercial lease may assign or sublet without the consent of the landlord.

-if the lease states that the tenant “shall not assign or sublet the premises”, the tenant may still assign or sublet a portion of the premises without being in breach of the lease.

Residential:

-A residential tenant may not assign or sublet unless the landlord consents in writing.

-If a tenancy agreement is for a fixed term of 6 months or more the landlord may not unreasonably withhold consent.

-A landlord may never charge for this consent.