Ch. 6 COMMERCIAL AND RESIDENTIAL TENANCIE

Difference Between a Lease and a Licence

1. Lease: an instrument granting exclusive possession of land to another for a specified term, usually at a rent
   -if A granted B a lease, and A subsequently sold the land to C, then C would take the land subject to B’s lease.
   -a lease created the relationship of landlord and tenant, which implied many rights and obligations between the parties to the lease.
   -a right to exclusive possession

2. Licence: with respect to real property, a privilege to enter onto premises for a certain purpose. However, this privilege does not confer upon the licensee any title, interest, or estate in such property (e.g., exclusive right to possession of the property)
   -if A granted B a licence, and A subsequently sold the land to C, then C would take the land free of B’s licence.
   -A’s land was not affected by the contractual agreement between A and B. C, not being a party to the contract, could not be affected by it.
   -a licence was simply a contract and therefore created only those rights and obligations expressly stated in the contract.

Difference Between Commercial Tenancies and Residential Tenancies

-tenancy agreement: contract between the landlord and the tenant, pertaining to the letting of residential premises under the Residential Tenancy Act,

-Commercial tenancies: are governed almost completely by the common law and the actual terms of the lease, and to a lesser extent by the Commercial Tenancy Act.

-Residential tenancies: are almost completely governed by statute law.

-first important question which must be answered when dealing with any landlord and tenant dispute is whether the tenancy in question is residential or commercial. Once that question is answered, the relevant law can be determined and applied.

Rental unit

Living accommodation rented or intended to be rented to a tenant, including caretakers’ premises and residential premises provided to an employee to occupy during their employment.

-However, the Act does not apply in several circumstances, including:

• premises occupied for business purposes with a dwelling unit attached that is rented under one lease;

• living accommodation rented by a not for profit housing cooperative to a member of the cooperative;

• living accommodation in which the tenant shares bathroom or kitchen facilities with the owner of that accommodation;

• several types of communal living accommodations, such as educational institution residences for students and employees, public or private health facilities, community care, emergency shelters, and correctional institutions;

• a tenancy agreement for a term exceeding 20 years; or

• living accommodation occupied as vacation or travel accommodation.

What Must be in the Agreement (Commercial)

Commercial leases of over 3 years must comply with section 59 of the Law and Equity Act, which requires them to be in writing if they are to be enforceable by the courts. The written document should have all the essential terms:

• the names of the parties;

• a description of the premises demised (leased);

• the commencement of the term (usually a specific date);

• the duration of the term (the last day must be certain or capable of being determined);

• the rent; and

• any other material terms of the contract.

Matters must be dealt with in detail in a commercial lease, otherwise the common law can impose unexpected implied obligations on the parties

What Must be in the Agreement (Residential)

Tenancy agreements are subject to the Residential Tenancy Regulation (the “Regulation”), which requires that a tenancy agreement be in writing, signed, and dated by both the landlord and tenant, and written in a manner that is easily read and understood by a reasonable person. The following terms be included in every tenancy agreement:

1. the standard terms;

2. the correct legal names of the landlord and tenant;

3. the address of the rental unit;

4. the date the tenancy agreement is entered into;

5. the address for service and telephone number of the landlord or the landlord’s agent;

6. the date on which the tenancy starts;

7. if the tenancy is a periodic tenancy, whether it is on a weekly, monthly, or other periodic basis;

8. if the tenancy is a fixed term tenancy,”

i. the date the tenancy ends, and

ii. whether the tenancy may continue as a periodic tenancy, or for another fixed term after that date, or whether the tenant must vacate the rental unit on that date as permitted in circumstances prescribed under section 97(2)(a.1) of the Act;

9. the amount of rent payable for a specific period, and, if the rent varies with the number of occupants, the amount by which it varies;

10. the day in the month, or in the other period on which the tenancy is based, on which the rent is due;

11. which services and facilities are included in the rent; and

12. the amount of any security deposit or pet damage deposit and the date the security deposit or pet damage deposit was or must be paid.

-the Ministry of the Attorney General has developed a standard form tenancy agreement.

TYPES OF TENANCIES AND TERMINATION - Fixed Term; Commercial

-A commercial lease for a fixed term automatically ends when the term is over,

-No notice by either party is required

-leases dealing with “residential” property for a period of over 20 years are not “residential tenancies” and therefore must be dealt with as commercial tenancies.

TYPES OF TENANCIES AND TERMINATION - Fixed Term; Residential

When a fixed term residential tenancy expires, one of two things will happen:

1. First, if the landlord and tenant do not enter into a new agreement before the expiry date, and the tenant continues to occupy the premises, the landlord and the tenant are presumed to have renewed the original agreement as a month-to-month tenancy on the same terms and conditions as existed in the original agreement.

2. Second, in narrow circumstances, the agreement can expire on the expiry date just as a commercial fixed term tenancy does. The tenancy agreement must provide that the tenant will vacate the rental unit on the date specified as the end of the tenancy. However, a landlord may only use a vacate clause in the tenancy agreement if that agreement is a sublease agreement or if the tenancy is a fixed term tenancy within circumstances prescribed in section 13.1 of the Residential Tenancy Regulation. A tenant is not required to otherwise move out at the end of a term.
   -Where a landlord intends to enforce the vacate clause and the tenant does not agree in writing to mutually end the tenancy and move out at the end of a term, the landlord will need to apply for an order of possession through the Residential Tenancy Branch.

TYPES OF TENANCIES AND TERMINATION - Periodic Tenancy; Commercial

Periodic tenancy: a tenancy which automatically renews itself on the last day of the term for a further term of the same duration until terminated by either party

-weekly, monthly and yearly.

-created in two ways:

1. First, a periodic commercial tenancy can be created by the express terms of the lease

2. Second, it can arise by implication of law. This happens where the tenant stays in possession of the premises after a fixed term lease ends and pays rent which the landlord accepts. In general, if the original term was for a year or more and the rent was expressed yearly, the new implied tenancy would be from year to year

TYPES OF TENANCIES AND TERMINATION - Periodic Tenancy; Residential

created in two ways:

1. First, a periodic tenancy is created by the express terms of the agreement.

2. Second, a periodic tenancy can also be created by operation of section 44 of the Residential Tenancy Act, where a fixed term tenancy that does not require the tenant to vacate the rental unit expires, and the parties have not entered into a new agreement. In a residential tenancy, fixed terms, when they end, automatically become periodic tenancies unless the parties agree otherwise.

Termination (Commercial)

-A commercial periodic tenancy agreement might include a clause governing the termination of the agreement.

-However, if no applicable clause is present, then either party can terminate a commercial periodic tenancy by giving “reasonable” notice to the other party

-In the common law, reasonable notice usually means one full rental period in the case of a weekly or monthly tenancy, and six months for a yearly tenancy. However, some flexibility is allowed.

-the form of the notice is not important as long as its substance indicates an intention on the part of the person giving it to terminate the existing tenancy at a certain time. This intention must be shown with reasonable certainty.

Termination (Residential)

-Security of tenure: a tenancy cannot be terminated except for specific reasons.

-The Act lists the events which will result in the end of a tenancy agreement, and these include:

(a) the tenant or landlord gives notice to end the tenancy in accordance with the Act (to be discussed later);

(b) the tenancy agreement is a fixed term tenancy agreement that, in circumstances prescribed under section 97(2)(a.1), requires the tenant to vacate the rental unit at the end of the term;

(c) the landlord and tenant agree in writing to end the tenancy;

(d) the tenant vacates or abandons the rental unit;

(e) the tenancy agreement is frustrated;

(f) the director orders that the tenancy is ended;

(g) the tenancy agreement is a sublease agreement.

-if the tenant can prove a breach of a material term (i.e., one which goes to the root of the whole tenancy), they may elect to treat the tenancy as over. Doing so is risky because if an arbitrator or court does not agree, the tenant will be liable in damages for unpaid rent.

Non-payment of rent

-A landlord can give a notice of the end of the tenancy agreement to a tenant who does not pay the rent when it is due.

-it is cancelled if the tenant pays the rent owing within 5 days of receiving the notice.

For cause

-Under section 47(1) a landlord may, at any time, give the tenant a notice of the end of the tenancy for cause

-A notice of the end of the tenancy agreement given under this section must be not less than one month and is effective on the last day of an ensuing rental payment period.

-if an arbitrator considers that it would be unreasonable or unfair to the landlord or other occupants of the property to require the landlord to give one month’s notice, the arbitrator may order the tenancy agreement to end on a specified date.

Landlord use of property

-a landlord enters an agreement in good faith with a purchaser for the sale of the rental unit occupied under a tenancy agreement and:

1. all conditions precedent in the sale agreement have been satisfied;

2. the purchaser is an individual and the purchaser, or a close family member of the purchaser, intends in good faith to occupy the rental unit. (The Act defines a “close family member” as the individual’s father, mother, spouse or child, or the father, mother or child of that individual’s spouse.); and

3. the purchaser requests in writing that the landlord give the tenant of the premises a notice of the end of the tenancy agreement,

-the landlord may give a two month notice of the end of the tenancy agreement to the tenant.

-Similarly, where the landlord intends in good faith that the landlord, or a spouse, child, or parent of the landlord or landlord’s spouse will occupy the premises, the landlord can give a two month notice of the end of the tenancy agreement which is effective on the last day of a rental payment period.

-A Two Month Notice to End Tenancy applies to fixed term tenancies as well as periodic tenancies; however, in the case of fixed term tenancies, the effective date of the notice cannot be earlier than the termination date of the fixed term tenancy that is stated in the fixed term tenancy agreement

The notice must be at least four months and is effective on the last day of a rental payment period

-if the landlord has all the necessary permits and approvals required by law, and intends in good faith, to do any of the following:

(a) demolish the rental unit;

[…]

(c) convert the residential property to strata lots under the Strata Property Act;

(d) convert the residential property into a not for profit housing cooperative under the Cooperative Association Act;

(e) convert the rental unit for use by a caretaker, manager, or superintendent of the residential property; or

(f) convert the rental unit to a non-residential use,

the landlord can give a notice of the end of the tenancy agreement to the tenant.

-a Four Month Notice to End Tenancy applies to fixed term tenancies as well as month-to-month tenancies; however, the effective date cannot be earlier than the date specified as the end of the tenancy in the tenancy agreement.

-a landlord who gives a tenant notice under section 49 (landlord’s use of property) must pay the tenant, on or before the effective date of the notice, an amount that is equivalent to one month’s rent (section 51).

Renovations or repairs: director’s orders

In the event a landlord wishes to end a tenancy to carry out renovations or repairs, the landlord must first apply to the Residential Tenancy Branch requesting an order ending the tenancy and granting the landlord possession of the rental unit

-the landlord must satisfy the Residential Tenancy Branch that:

(a) the landlord intends in good faith to renovate or repair the rental unit and has all the necessary permits and approvals required by law to carry out the renovations or repairs;

(b) the renovations or repairs require the rental unit to be vacant;

(c) the renovations or repairs are necessary to prolong or sustain the use of the rental unit or the building in which the rental unit is located; and

(d) the only reasonable way to achieve the necessary vacancy is to end the tenancy agreement.

-If granted, an order under section 49.2 will not require the tenant to move out of the rental unit for at least four months after the date of the order.

-a tenant has a right of first refusal to enter into a new tenancy agreement at a rent determined by the landlord after the renovations or repairs are complete.

-A landlord must compensate a tenant 12 months’ rent (unless excused by an arbitrator in extenuating circumstances) if the tenant exercises a right of first refusal and the landlord fails to give the tenant notice

-a tenant who must vacate a rental unit for renovations or repairs is entitled to the equivalent of one month’s rent

-a landlord who obtains an order ending a tenancy for renovations or repairs must accomplish those renovations or repairs within a reasonable period of time after the order comes into effect. If they fail to do so, they may be required to pay the tenant who was forced to vacate the equivalent of 12 months’ rent,

Notice of the end of the tenancy agreement by the tenant

-a tenant can give notice of the end of the tenancy agreement, other than a fixed term agreement, on or before the last day of a rental payment period to be effective on the last day of a later rental payment period, but the period of notice must be at least one month.

-If the tenant is given a two month notice under the “landlord use of property” provision, the tenant may in turn give the landlord at least 10 days written notice of an earlier end date.

-the tenant owes a proportional amount of rent for the dates of occupation, and the landlord must pay the tenant the remaining pro-rated amount

Form of notice

-A notice given by a landlord is void unless the required form is used

-A defective notice may be allowed if it is reasonable in the circumstances and if the person receiving the notice was aware of the information that was left out.

-a notice to end a tenancy must be in writing and must also:

• be signed and dated by the landlord or tenant giving the notice;

• give the address of the rental unit;

• state the effective date of the notice; and

• where the landlord is giving notice, state the grounds for ending the tenancy.

Dispute of notice of the end of the tenancy agreement

-Where a tenant is given a proper notice, they may apply to an arbitrator for an order setting it aside. The tenant must apply within a limited time unless the arbitrator extends it.

-If the tenant does not dispute the notice, the tenant is deemed to have accepted the end of the tenancy agreement on the effective date given in the notice.

-An order for possession is a court order which can be carried out by the sheriff if the tenant fails to comply with it.

Tenancy at Will (Commercial)

-a tenancy where the tenant, with the consent of the landlord, occupies land as a tenant for a term which can be terminated by either party at any time

-can be created expressly or by implication, and frequently arises when the seller of land permits the buyer to occupy the property until the sale is completed.