LESSON 4 Flashcards
CHAPTER 6
JUST STARTING TH E NEW CHAPTER
NAUTRE OF THE RELATIONSHIP
DIFFERENCE BETWEEN A LEASE AND A LICENCE
Lease is an instrument granting exclusive possession of the land to another for a specified term, usually at a rent.
License is 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)
At common law, there were two important distinction between leases and licenses. First, a lease created an interest in land, while a license created a mere contractual privilege.
For example, 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. Therefore, if A granted B a license and A subsequently sold the land to C, then C would take the land free of B’s license. The reason for this is that 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.
The second difference between a lease and a license at common law was that a lease created the relationship of landlord and tenant, but a license did not. The relationship of landlord and tenant implied many rights and obligations between the parties to the lease.
DIFFERNCE BETWEEN COMMERCIAL TENANCIES AND RESIDENTIAL TENANCIES
Tenancy agreement is the contract between the landlord and the tenant, pertaining to the letting of residential premises.
In BC, tenancies are categorized as either commercial tenancies or residential tenancies.
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.
At common law the contract between a landlord and a tenant was called a lease. This term is still used when referring to commercial tenancies.
However, under the Residential Tenancy Act, an agreement between a landlord and tenant respecting possession of residential premises is called a “tenancy agreement”.
EXAMPLES OF COMMERCIAL TENANCIES ARE LEASES OF FACTORIES, WAREHOUSES, STORES AND OFFICES. THE RESIDENTIAL TENANCY ACT APPLIES TO AGREEMENTS RESPECTING POSSESSION OF A “RENTAL UNIT”. THIS TERM IS DEFINED AS LICING ACCOMODATION RENTED OR INTENDED TO BE RENTED TO A TENANT. BESIDE THE USUAL TYPE OF UNITS ONE WHOULD CONSIDER RESIDENTIAL PREMISES, THEE TERM INCLUDES 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 non 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 shelter 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 of Equity Act, which requires them to be writing if they are to be enforceable by the courts.
The written document should have all the essential terms spelled out.
-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.
WHAT MUST BE IN THE AGREEMENT: RESIDENTIAL
Section 13 of the Act also requires that 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 where the tenant must vacate the rental unit on that date as permitted in circumstances prescribed under section 97.
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 pert damage deposit and the date the security deposit or pet damage was or must be paid.
TYPES OF TENANCIES AND TERMINATION (FIXED TERM): COMMERCIAL
A commercial lease can be granted for a fixed period, no matter how long or how short. A commercial lease for a fixed term automatically ends when the term is over, for example, at the end of one year in a one year lease. No notice by either party is required. Note the 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 TERMINATINO (FIXED TERM): RESIDENTIAL
Under the Residential Tenancy Act, a fixed term tenancy agreement means a tenancy agreement with a predetermined expiry date. When a fixed term residential tenancy expires, one of two things will happen.
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.
Second, in narrow circumstances, the agreement can expire on the expiry date just as a commercial fixed term tenancy does. For this to happen, the tenancy agreement must provide that the tenant will vacate the rental unit on the date specified as the end of the tenancy.
PERIODIC TENANCY: COMMERCIAL
CREATION
A periodic tenancy is 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.
The most common types of periodic tenancies are weekly, monthly and yearly.
Periodic commercial tenancies are created in two ways. First, a periodic commercial tenancy can be created by the express terms of the lease.
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.
PERIODIC TENANCY: RESIDENTIAL
CREATION
Periodic residential tenancies are commonly created in two ways.
First, a periodic tenancy is created by the express terms of the agreement.
Second, a periodic tenancy can also be created by the operation of section 44 of the Residential Tenancy Act, where a fixed term tenancy that does not require the tenant to vacate the rental until expires, and the parties have nor entered into a new agreement.
In 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. The end of the period of notice should coincide with the last day of the tenancy period. 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.
TERMINATION: RESIDENTIAL
The Residential Tenancy Act has introduced the concept of security of tenue for tenants. Security of tenure means that 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:
1) A tenancy ends only if one or more of the following applies:
a. the tenant or landlord gives notice to end the tenancy in accordance with the Act
b. the tenancy agreement is fixed term tenancy agreement that, in circumstances prescribed under section 97, require 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.
2) Repealed
3)If, on the date specified as the end of the fixed term tenancy agreement that does not require the tenant to vacate the rental unit on that date, the landlord and tenant have not entered into a new tenancy agreement, the landlord and tenant are deemed to have renewed the tenancy agreement as a month to month tenancy on the same terms.
CONTINUATION OF TERMINATION/
NON-PAYMENT OF RENT…
The provision in the Act is as follows:
1) a landlord may end a tenancy if the rent is unpaid on any day after the day is due, by giving notice to end the tenancy effective on a date that is not earlier than 10 days after the date the tenant receives the notice.
2) a notice under this section must comply with section 52
3) a notice under this section has no effect if the amount of rent that is unpaid is an amount the tenant is permitted under this Act to deduct from rent.
4)within 5 days after receiving a notice under this section, the tenant may
a. pay the overdue rent, in which care the notice has no effect, or
b. dispute the notice by applying for arbitration.
5) if a tenant who has received a notice under this section does not pay the rent or apply for arbitration in accordance with subsection, the tenant
a. is conclusively presumed to have accepted that the tenancy ends on the effective date of the notice, and
b. must vacate the rental unit to which the notice related by that date.
6)If
a. a tenancy agreement requires the tenant to pay utility charges to the landlord, and
b. the utility charges are unpaid more than 30 days after the tenant is given a written demand for payment of them.
CONTINUATION OF TERMINATION/
FOR CAUSE…
Under section 47 a landlord may, at any time, give the tenant a notice of the end of the tenancy in any one of the following events has occurred:
a)the tenant does not pay the security deposit or pet damage deposit within 30 days of the date it is required to be paid under the tenancy agreement
b)the tenant is repeatedly late paying rent;
c) there are an unreasonable number of occupants in a rental unit;
d) the tenant or a person permitted on the residential property by the tenant has
i. significantly interfered with or unreasonably disturbed another occupant or the landlord of the residential property,
ii. seriously jeopardized the health or safety or a lawful right or interest of the landlord or another occupant, or
iii. put the landlord’s property at significant risk;
e)the tenant or person permitted on the residential property by the tenant has engaged in illegal activity that
i. has caused or is likely to cause damage to the landlord’s property,
ii. has adversely affected or is likely to adversely affect the quiet enjoyment, security, safety or physical well-being of another occupant of the residential property, or
iii. has jeopardized or is likely to jeopardize a lawful right or interest of another occupant or the landlord;
f)the tenant or a person permitted on the residential property by the tenant has caused extraordinary damage to a rental unit or residential property;
g) the tenant does not repair damage to a rental unit or other residential property, as required under section 32, within a reasonable time;
h) the tenant
i. has failed to comply with a material term, and
ii. has not corrected the situation within a reasonable time after the landlord gives written notice to do so;
i)the tenant purports to assign the tenancy agreement or sublet the rental unit without first obtaining the landlord’s written consent as required by section 34
j) the tenant knowingly gives false info about the residential property to a prospective tenant or purchaser viewing the residential property
k) the rental unit must be vacated to comply with an order of a federal, BC, regional or municipal government authority
l) the tenant has not complied with an order of an arbitrator within 30 days of the later of the following days:
i. the date the tenant receives the order;
ii. the date specified in the order for the tenant to comply with the order.
CONTINUATION OF TERMINATION/
LANDLORD USE OF PROPERTY
Under section 49, where 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. 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.
FURTHERMORE, UNDER SECTION 49 OF THE ACT, 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.
CONTINUATION OF TERMINATION/
RENOVATIONS OR REPAIRS: DIRECTOR’S ORDERS
In the event a landlord wishes to end a tenancy to carry out renovation 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. In order to be successful, 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 renovation or repairs;
b) the renovation or repairs require the rental unit to be vacant;
c) the renovation 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.
CONTINUATION OF TERMINATION/
NOTICE OF THE END OF THE TENANCY AGREEMENT BY THE TENANT
Under section 45, 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 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.
CONITUATION OF TERMINATION/
FORM OF NOTICE
Section 52 specifies that 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.
CONTINUATION OF TERMINATION/
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.
Where the notice is for non-payment of rent the tenant has 5 days; where it is for cause the tenant has 10 days; where it is for the landlord use of the property the tenant has 15 days; and where it is for the demolition or major renovation of the rental unit the tenant has 30 days.
TENANCY AT WILL
Tenancy at will is 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.
COMMERCIAL
A tenancy at will arises when a tenant, with the consent of the owner, occupies land for a term which can be terminated by either party at any time. This tenancy 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. It can be terminated by any act of the parties inconsistent with its existence, for example, a demand for possession.
RESIDENTIAL
A tenancy at will is not expressly mentioned in the Residential Tenancy Act, and other than the provisions regarding tenant’s failure to pay rent, the statute is not set up to handle it. The minimum notice period specified in the Act for any end of tenancy agreement is five days.
RESIDENTIAL TENANCY ARBITRATIONS
For many years, the courts have not been considered to be the best choice for resolving disputes between landlords and tenants. Today, most disputes are addressed through arbitrators of the Residential Tenancy Branch.
The RTB is an administrative body tasked with overseeing residential tenancies in BC.
The arbitrator is given wide powers. They may conduct the hearing in any manner considered necessary. The arbitrator may refuse a hearing where they consider the matter frivolous, vexatious or not initiated in good faith.
The arbitrator must give the decision within 30 days of the hearing, and the decision must be made in writing.
TENANCIES OF MANUFACTURED HOMES
Tenancies at manufactured home sites and manufactured home parks in BC are not regulated by the Act and are instead governed by the Manufactured Home Park Tenancy Act and its regulation. Disputes between landlords and tenants in manufactured home parks are still referred to arbitrators at the RBT.
It is important for licensees to be mindful that under section 30 of the Manufactured Home Park Tenancy Act Regulation, landlords are permitted to establish rules to regulate manufactured home parks.
THE KEY RIGHTS AND OBLIGATIONS OF THE PARTIES IN A TENANCY RELATIONSHIP/ RENT: COMMERCIAL
Rent is 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 and the allocation of operating expenses (property taxes, building maintenance, landscaping, utilities etc)
In commercial leasing, certain phrases commonly refer to particular arrangements for the payment of rent and operating expenses by the parties:
GROSS LEASE
In some leases, the amount of rent paid by the tenant is inclusive of all operating expenses that the tenant must contribute to. In other words, the tenant will never be required to contribute to any operating expenses outside of what the tenant pays in rent. From a tenant’s point of view, a gross lease is most desirable because it is the landlord’s responsibility to pay any increase in expenses until there is a rent review or an adjustment for any escalation in expenses.
TRIPLE NET LEASE
On the other end of the spectrum from gross leases are triple net leases. In triple no lease, the tenant pays a base rent plus all applicable operating expenses, including any increases that occur from time to time.
The remedies of a landlord for non-payment of rent on commercial premises are as follows:
-the landlord can bring a court action for the rent either by suing 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.
THE KEY RIGHTS AND OBLIGATIONS OF THE PARTIES IN A TENANCY RELATIONSHIP/ RENT: RESIDENTIAL
Rent increases are regulated by part 3 of the Act. A landlord may increase the rent in only two circumstances.
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.
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. A change of landlord does not give a right to raise the rent.
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 for BC.
Rents can no longer be increased above the maximum annual allowable amount between fixed-term tenancy agreements with the same tenant. This protects tenants by preventing landlords from significantly increasing rent from year to year, at the end of the fixed term.
SECURITY DEPOSITS: COMMERCIAL
Security deposit
A sum of money paid to the landlord as collateral in case the tenant damages the premises of otherwise violates a term of the tenancy agreement.
There are no legal restriction regarding the security deposits for commercial tenancies. This is an item left open for negotiation.
The landlord will usually require some form of a security deposit to ensure that the tenant will continue to pay the rent, as well as to protect against damage to the property committed by the tenant.
Sometimes, the security deposit takes the form of pre-payment of rent for the last month or two.
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 it.
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 term of a tenancy agreement.
A landlord may collect a security deposit at the time the tenancy agreement is entered into. Further, the deposit may not be more than one-half of one month’s rent.
Only one security deposit can be collected for each residential unit. A landlord must pay interest (compounded annually) on both the security deposit and the pet damage deposit (if the landlord allows pets or not).
DISTRESS: COMMERCIAL
Distress is a legal term for a landlord’s right to seize and sell a tenant’s personal property in order to recover arrears of rent.
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.
DISTRESS: RESIDENTIAL
Section 26 of the Residential Tenancy Act abolishes the remedy of distress in residential tenancies.
MITIGATION: COMMERCIAL
Mitigation is a principle requiring that a party who has suffered loss take reasonable action to minimize the amount of loss suffered.
Commercial
Where one party breaches a contract, the law usually requires the other party to mitigate their damages. In other words, the innocent party must try to reduce the loss suffered as a result of the breach.
If a tenant improperly abandons the premises, the landlord may be able to sue the tenant for each month’s rent. However, once the landlord is held to have surrendered the lease, they will lose any claim for rent against the tenant after the surrender.
There are two types of surrender. First, surrender can occur by an act of the parties. Second, it can arise by operation of law. A surrender is the giving up of the term so that it joins with the reservation. A surrender by an act of the parties would occur when the tenant offers to terminate the lease early and the landlord accepts.
A surrender by operation of law occurs where the landlord does some act which is inconsistent with the continuation of the tenancy.
MITIGATION: RESIDENTIAL
Section 7 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 of Regulation, or from a breach of the tenancy agreement.
MITIGATION: RESIDENTIAL
Section 7 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 of Regulation, or from a breach of the tenancy agreement.
DELIVERY OR SERVICE OF DOCUMENTS UNDER THE RESIDENTIAL TENANCY ACT
Acts sets out the rules for delivery or service of any documents required to be given under the Act.
-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
COMEMERCIAL
Because a 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.
The term “quiet enjoyment” does not simply mean freedom of noise; rather, it is an assurance to the tenant against the consequences of a defective title.
In other words, if the landlord, or anyone who claims to have received rights from the landlord, attacks the tenant’s right to the premises, it would be a breach of this covenant.
QUIET ENJOYMENT AND PRIVACY
RESIDENTIAL
The implied covenant for quiet enjoyment has specifically been preserved by the Residential Tenancy Act, section 28 states:
PROTECTION OF TENANT’S RIGHT TO QUIET ENJOYMENT
A tenant is entitled to quiet enjoyment including, but not limited to, right to the following:
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
d) uses of common areas for reasonable and lawful purposes, free from significant interference.
One aspect of quiet enjoyment is “reasonable privacy”. The Act goes on to limit a landlord’s right to enter a rental unit, in furtherance of protecting a tenant’s right to reasonable privacy. Section 29 states:
LANDLORD’S RIGHT TO ENTER RENTAL UNIT RESTRICTED
1) A landlord must not enter a rental unit that is subject to a tenancy agreement for any purpose unless one of the following applies:
a) the tenant give permission at the time of the entry or not more than 30 days before the entry
b) at least 24 hours and not more than 30 days before the entry, the landlord gives the tenant written notice that includes the following info:
i)the purpose for entering, which must be reasonable
ii) the date and the time of the entry, which must be between 8am to 9pm, unless the tenant otherwise agrees;
c) the landlord provides housekeeping or related services under the terms of a written tenancy agreement and the entry is for the purpose and in accordance with those terms;
d) the land has an order of the director authorizing the entry;
e) the tenant has abandoned the rental unit;
f) an emergency exists and the entry is necessary to protect life or property.
2) a landlord may inspect a rental unit monthly in accordance with subsection 1 (b)
DEROGRATION FROM GRANT: COMMERCIAL
Covenant of non-derogation from the grant is a guarantee to the tenant that the landlord will not substantially deprive them of the benefit conferred by the tenancy agreement.
The implied covenant of quiet enjoyment is very similar to another rule, namely, the covenant of non-derogation from the grant. This means that the landlord cannot deliberately prejudice any rights which they have granted to the tenant under the lease. Having given a thing with one hand, the landlord must not take away the means of enjoying it with the other. For example, a landlord cannot grant a lease of premises to a tenant an then, by actions on adjoining premises, frustrate the tenant’s lease.
DEROGATION FROM GRANT: RESIDENTIAL
The common law right of the tenant against derogation from grant of the landlord still exists for residential tenants.
INTERESSE TERMINI: COMMERCIAL
There is an 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. If the landlord does not do so, they will be liable for damages. However, the commercial tenant cannot get an order for specific performance in these circumstances. The tenant may only sue for damages. This is because of the common law doctrine of interesse termini, which provides that no estate in land passes until the tenant takes possession.
INTERESSE TERMINI: RESIDENTIAL
The doctrine of interesse termini has been abolished under the Residential Tenancy Act. Therefore, if a residential tenant is refused possession by the landlord at the start of the term of the tenancy, the tenant can obtain an order for possession against the landlord. The residential tenant is not limited to damages.
