Tenancy Agreements (19:II)

A. Protecting the Tenant

A third party should accompany a potential tenant during a rental unit showing, so there is a witness as to the landlord’s representations made during the showing. Important: Get the landlord’s promises in writing if possible, but note that landlords are not obligated to provide them in writing.

After establishing the tenancy and before the tenant moves their personal possessions into the rental unit, the RTA requires the landlord and tenant to jointly conduct a condition inspection and fill out and sign the RTB’s Condition Inspection Report. This report notes the condition of various elements of the rental unit. It is a good idea to take photographs at the initial move-in inspection, as well as the move-out inspection. The landlord must provide the tenant with a copy of the Condition Inspection Report within 15 days.

Fees for cable and internet should be negotiated before the tenancy commences, and included in the Tenancy Agreement.

The Residential Tenancy Branch provides a fillable and printable Tenancy Agreement at http://www.rto.gov.bc.ca/documents/RTB-1.pdf. TRAC’s website has more information as well as translations of the Tenancy Agreement forms into Punjabi, and Simplified and Traditional Chinese at http://www.tenants.bc.ca/other-languages.

B. General

The “leasehold” or tenancy interest is an estate (a bundle of property rights) of limited duration, which is created and acquired by the “tenant” when a person capable of granting that interest does so. Such a person (usually called the owner or landlord) conveys to the tenant the right of “exclusive possession”. The interest that the landlord retains is called the “reversion” because full possession reverts back to the landlord on the termination of the tenancy.

The landlord can sell his or her reversion to someone else, who becomes the new landlord and property owner. The tenancy follows the property, not the initial owner, so a tenancy agreement is still binding on a new owner, who is responsible for repaying the initial security and/or pet damage deposit when the tenancy ends (RTA, s 93).

1. Two Methods of Creating a Tenancy Relationship

a) By Formal Contract

A tenancy interest is granted by a contract known as a tenancy agreement or lease. Often the parties will enter into an express agreement (see Section IV.C: Contractual Nature of the Tenancy Agreement). The executed tenancy agreement governing the tenant’s possession may be written, or oral, or both (see the s 1 definition of “tenancy agreement”). To be enforceable, the elements of a complete contract (offer, acceptance, and consideration) must be present (see Chapter 11: Consumer Protection).

b) By Implied Contract

Every tenancy agreement entered into on or after January 1, 2004 must be prepared in writing by the landlord (RTA, s 12(1)).

Notwithstanding this obligation to prepare the agreement in writing, where a tenant is already in possession of the unit, or where rent has been paid, the law may imply the existence of a valid tenancy agreement (see Section III.C.2: Terms, Covenants, and Conditions). This type of rental agreement is quite common because many tenancies are entered into on the basis of an application form, or verbal consensus, without the existence of any written contract. A “tenancy agreement” may be found to exist, even when:

1. there is no written tenancy agreement;
2. a previously existing agreement has expired or terminated; or
3. there was no previous agreement of any kind.

If the person in possession pays rent or a deposit and the landlord accepts the payment with the intention of creating a tenancy, an agreement is created.

2. Where Something Other than a Tenancy is Created

A person who enters into an agreement with a landlord to rent accommodation does not always create a tenancy. Depending on specific circumstances and context, such a person may not be a tenant, but instead may be or a mere occupant.

An occupant or person in possession who is not a tenant has no agreement with the landlord concerning that possession or occupation. In the case of a licensee or occupant living in a home by permission of a main tenant (when the landlord/owner lives off-site), the main tenant is responsible for all obligations, including paying rent (and utilities if required). If the licensee or occupant is sharing a kitchen or bathroom with the landlord, the parties can seek remedies in Small Claims Court.

3. Formal Requirements

a) Essential Elements of the Agreement

A landlord must prepare in writing every tenancy agreement entered into on or after January 1, 2004 (RTA, s 13(1)). A tenancy agreement must comply with any requirements prescribed in the regulations and must set out all the requirements in RTA s 13(2).

Where these elements are absent, vague, or unclear, the agreement may be void (as a result, no interest would be created). However, if the tenant is in possession and has paid money (i.e. rent) then there is a tenancy agreement. If a tenancy has been created (i.e. the tenant has possession and is paying rent), vague terms of the tenancy agreement may be framed in the tenant’s favour using the principle of contra proferentem (i.e. the agreement will be strictly construed against the party seeking to rely on the contract), and principles of statutory interpretation. The law seeks to recognize and validate the relationship where possible, even where the requirement to have a written tenancy agreement has not been met.

4. Agreements for Lease (Also Known as Agreements to Lease, or Agreements for Tenancy)

Landlords may occasionally attempt to have potential tenants enter into “agreements to lease”, whereby they agree, by paying some amount now, to enter into a lease at a later date. In accordance with the provisions of the RTA, particularly section 15, application, holding, consideration administration or other fees are not permitted. If a tenant gives a landlord a sum of money, after negotiating in relation to a rental unit, the most likely legal outcome is that the parties have created a tenancy, and the amount paid is considered a security deposit and/or rent.

C. Contractual Nature of the Tenancy Agreement

1. Freedom of Contract and the Agreement

Throughout the establishment and duration of the agreement, the parties are generally free to add and alter the terms, covenants and conditions as they see fit – subject to restrictions imposed by common law and statute (e.g. prohibition of contracts for an illegal purpose, unconscionable terms, or contracts in restraint of trade). The RTA and MHPTA both restrict parties from contracting out of requirements of those Acts and from adopting terms that are contrary to the Acts. The changes in the tenancy agreement must be in writing, and be signed and dated by both parties. Some requirements, such as locks on doors, are automatically included in every tenancy agreement even if the tenancy agreement does not specifically mention them. A unilaterally altered or newly included term may be unenforceable where there is no consideration for it.

a) Collateral Contract

The parties may enter into additional or subsequent oral or written contracts, separate from the tenancy agreement, that change the way the terms of the tenancy agreement are carried out (e.g. agreement by the tenant to do repairs in return for paying a reduced amount of rent). The terms of the tenancy agreement still exist; they must be performed as stipulated when the collateral contract is fully performed or is otherwise terminated (e.g. one party dies or goes away). If an Arbitrator determines the terms are reasonable and not unconscionable, as defined within s 3 of the RTR, any purchaser of the reversion will be bound by the former owner’s collateral contract. A remedy for the new landlord would be found in an action against the seller. Generally speaking, oral collateral contracts are hard to prove. If something is important, it should be recorded in writing.

2. Terms, Covenants, and Conditions

a) Covenants and Conditions

The parties may enter into additional or subsequent oral or written contracts, separate from the tenancy agreement, that change the way the terms of the tenancy agreement are carried out (e.g. agreement by the tenant to do repairs in return for paying a reduced amount of rent). The terms of the tenancy agreement still exist; they must be performed as stipulated when the collateral contract is fully performed or is otherwise terminated (e.g. one party dies or goes away). If an Arbitrator determines the terms are reasonable and not unconscionable, as defined within s 3 of the RTR, any purchaser of the reversion will be bound by the former owner’s collateral contract. A remedy for the new landlord would be found in an action against the seller. Generally speaking, oral collateral contracts are hard to prove. If something is important, it should be recorded in writing.

b) Express, Implied and Statutory Terms

Valid express terms or conditions override any implied terms or “usual terms” that might otherwise apply at common law. For residential tenancies, the RTA deems some express terms to be unenforceable (see Section III.C.2.d: Reasonable Terms below). The RTA also establishes statutory terms, deemed to be terms in every agreement, that override any express or implied term to the contrary. For tenancies not governed by the RTA, a court will find implied obligations and insert the usual terms, if the parties have failed to expressly agree to certain matters.

c) Express Terms and Obligations

Parties may write their own tenancy agreement with their own terms, or may use a standard form tenancy agreement to which they can add their own extra terms. Parties may also adopt a lease in conformity with the Land Transfer Form Act, RSBC 1996, c 252, p 2.

The RTA requires that all tenancy agreements include standard terms outlining key statutory rights and responsibilities of the tenant and landlord (see RTA s 12, and the Schedule to the Regulation). The standard terms cover repairs, payment of rent, rent increases, security deposits, assignment or sub-let, occupants and invited guests, entry of the residential premises by the landlord, locks, ending the tenancy, and the application of the RTA. To assist landlords and tenants, the Ministry created a standard Residential Tenancy Agreement, available online (http://bit.ly/1eiaQNL). This Agreement incorporates suggestions put forward by landlord and tenant stakeholders, and includes the prescribed terms found in the Schedule of the Regulation.

For residential tenancies, the following express terms are void and unenforceable:

• a term purporting to hold that the RTA does not apply to the agreement (s 5(1));

• that the rent remaining for the term of the agreement becomes due and payable if a tenant fails to comply with a term of the tenancy agreement (s 22) (i.e. “accelerated rent terms” are not permitted); or

• that the landlord can seize the tenant’s personal property for rent owing (s 26(3)(a)).

Some included requirements of the RTA state that the tenant:

• must maintain reasonable health, cleanliness, and sanitary standards throughout the rental unit and other areas of the property to which the tenant has access;

• shall not assign or sublet without the landlord’s written consent, where the agreement is for a period of six months or more; and

• shall not pay more than one-half of one month’s rent for each of the security deposit and/or pet damage deposit.

Similarly, terms in a short form lease that are inconsistent with the RTA are unenforceable. The parties may however enter into a separate collateral agreement, under which a clause requiring the tenant to perform repairs is binding on the tenant, so long as there is separate consideration.

d) Reasonable Terms

Changes in the RTA allow more ability to agree to any term landlords and tenants wish, than the repealed Act did.

However, a term of tenancy is unenforceable if (RTA, s 6):

• the term is inconsistent with this RTA or the regulations;

• the term is unconscionable; or

• the term is not expressed in a manner that clearly communicates the rights and obligations under it.

See Policy Guideline 8: Unconscionable and Material Terms.

NOTE: The RTR defines “unconscionable” for the purposes of s 6(3)(b) of the RTA as follows: a term of a tenancy agreement is “unconscionable if the term is oppressive or grossly unfair to one party”.

e) Pets

In B.C., there is no law that allows tenants to have a pet. RTA, s 18 allows a tenancy agreement to include terms that prohibit pets, or restrict the size, kind or number of pets a tenant may keep on the residential property. In order to keep a pet one needs to have a term in one’s tenancy agreement that allows pets. If a tenancy agreement doesn’t allow pets and a tenant gets one anyway, the landlord can tell the tenant to remove it. If the tenant refuses, the landlord may be able to give an effective eviction notice. RTA, s 18 is subject to the rights and restrictions under the Guide Animal Act RSBC 1996, c 177, s 4, which states that landlords must not deny tenancy or impose discriminatory terms on a person with a disability who intends to keep a guide animal in the rental unit.

(1) New Pet: Where Permitted

The landlord and tenant together must inspect the condition of the rental unit on or before the day the tenant starts keeping a pet or on another mutually agreed day where the landlord permits the tenant to keep a pet after the start of a tenancy (RTA, s 23(2)). Failure of the tenant or landlord to participate in the inspection may extinguish the right of the failing party to the rights relating to the pet deposit (s 24(1)). The landlord can request a pet damage deposit not greater than ½ of a month’s rent, regardless of the number of pets.

f) Prescribing Terms

Terms and conditions that must or must not be included in every written tenancy agreement, or an application for an agreement, may be prescribed by an order-in-council and may prescribe different terms for different classes of tenancy agreements. As discussed above, the RTR sets out in its schedule those terms that must be included in every tenancy agreement.

g) Implied Obligations and Usual Terms

(1) Landlord’s Obligations

A landlord must ensure that:

• the tenant is given vacant possession on the starting date of the tenancy;

• the tenant has quiet enjoyment;

• the rental units are reasonably fit for occupation; and

• the rental units are maintained in a state of decoration and repair that complies with housing health and safety standards required by law.

(2) Tenant’s Obligations

A tenant must ensure that:

• he or she pays the rent or other fees on time and conducts him or herself in a manner consistent with protecting the landlord’s rights and interests;

• he or she delivers up the rental unit in a reasonably clean condition and in a reasonable state of repair, reasonable wear and tear excepted; and

• he or she gives one full month’s notice in writing when terminating the agreement. (see Section XI.B.1: Form and Basic Requirements).

(3) Court-Implied Terms

The usual terms that a court may insert in a tenancy agreement, where express provision is lacking and statutory terms do not apply, include a tenant’s undertaking:

• to pay rent;

• to pay taxes and utilities not payable by the landlord assigned to them in the tenancy agreement; and

• to keep and deliver up the rental unit in good repair.

h) Statutory Terms in the RTA: Duties and Prohibitions

For residential tenancies subject to the RTA, the common law implied obligations apply, unless their subject matter is superseded by one of the RTA’s obligations.

i) Rent Increases for Additional Occupants

A rental increase for a new occupant can only be imposed if the contract specifically allows for it. Disputes most often arise upon the birth of a baby, so renters should consider whether they might have children before signing a contract with a new occupant increase clause.

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