How to Avoid Disputes with Your Tenant: Insights from the BC Residential Tenancy Branch
By Pino Frustaci
In my experience as a landlord, and as a former information officer for the BC Residential Tenancy Branch (RTB), I was always aware that being a landlord is not an easy job. The media may portray it as a lucrative and hassle free business, but as anyone who has been a landlord knows, it is neither. To be a landlord requires dedication, hard work, and an acute awareness of how to deal with your tenants with respect and diplomacy.
When I first started out as a landlord I was 24 years old and, as my mother would say, “green as a tomato plant”. I had no understanding of residential tenancy laws or even how to create a proper rental advertisement. In my pursuit of further education and to prevent damage or loss to my property I began to learn about tenancy laws, contracts and the proper way to run a rental property. The only problem I encountered was that there wasn’t a great deal of reliable information about what to do. The Residential Tenancy Act is an active piece of legislation, and without a legal background I could not understand how the rules, rights and obligations functioned when I was confronted with a problem. In fact, I had no clue about anything. Fortunately, I became employed at the Residential Tenancy Branch and through my five years of resolving disputes for landlords and tenants, I can say with confidence that I have developed a sound understanding of how to run a rental property, primarily by learning from the very mistakes of clients visiting our office.
In this article you will learn some techniques on what to do and what not to do to protect your property, have happy tenants, and perhaps live up to the stereotype that being a landlord is as easy as taking cheques to the bank.
Short Term Rentals
The rise of vacation rental websites seemingly makes it irresistible to rent out furnished units at a higher rate but may leave some landlords vulnerable to liability issues if limitations are not put in place. There has been a steady rise of complaints by strata councils, tenants, and landlords about the abuse of short-term rentals such as Airbnb, which may attract undesirable tenants who can damage a property. Many strata properties prohibit short-term rentals and there are municipalities that require landlords to have business licences to rent short-term. Furthermore, renting short-term may affect your insurance. If you do choose to rent your property for the short-term, it is your responsibility to become educated and ensure you have taken the necessary steps to protect your interest and limit liability.
Many landlords who rent long-term (six months or more) don’t think there is a need to pay attention to the short-term market. This is the first mistake. A tenant who has a fixed term tenancy that is six months or more in length has the right to assign and sublet their unit, with the landlord’s written consent, unless restricted. If the option to sublet or assign has not been restricted, the landlord cannot unreasonably withhold such a request, which is where the legislation has yet to catch up to the growing popularity of short-term rental websites.
The question that remains unanswered is whether it is unreasonable to deny the tenant the right to sublet on sites such as Airbnb. Unfortunately, I do not have the answer to this question and I will leave it up to the courts to interpret the law and apply it accordingly; however, my choice is to mitigate any potential for subletting in my rental contract. In my addendum I specifically prohibit assignment or subletting. This prevents a landlord from being in a position of vulnerability if requested to sublet. Rather than letting the courts decide your fate, it is more prudent to prevent such options from being exercised by a tenant.
Time and time again I hear of a landlord complaining that a tenant is being unreasonable with their expectations. The common denominator in many of these complaints is the lack of care taken when writing a rental contract, a common mistake that can leave a landlord in a pickle. Some landlords even rely on a verbal contract which, from experience, is difficult to enforce because in the event a dispute arises you will be relying on the tenant to support your position, which is very unlikely.
One of the most important things a landlord can do to prevent disputes is to write exactly what is included in the rent, whether they compose their own rental contract or use the one provided by the Residential Tenancy Branch. For example, if rent includes heat but not hydro then that should be explicitly stated.
Another opportunity to ensure that your contract reflects what is being offered as part of rent is the addendum page. The RTB rental agreement, Section 17 Additional Terms, is an opportunity for both parties to put down how many pages and conditions are attached to the rental agreement. This will provide further measures to ensure that your contract accurately reflects what is included, which can avoid the majority of future disputes.
In my experience with the Residential Tenancy Act, I have yet to find a condition that provides landlords with a better ability to control the outcome of their tenancy than a vacancy clause. The vacancy clause, a powerful and rarely used condition, is essentially an “out clause” for a landlord after a fixed term tenancy is ended.
There is a misunderstanding about what a fixed term tenancy means. A common mistake made by landlords when choosing a length of term for their contracts is that they assume after a fixed term tenancy has expired the landlord has the right to do as they please. Unless you have a vacancy clause, you are wrong. For example, the RTB Rental Agreement gives two options when choosing the length of tenancy. The first states “At the end of this fixed length of time the tenancy may continue on a month-to-month basis or another fixed length of time” and the second option says “the tenancy ends and the tenant must move out of the residential unit”.
If you choose the latter option, both the landlord and tenant must initial in the boxes to the right for it to be enforceable. If you choose the option that the tenancy may continue on a month-to-month basis
or another fixed length of time, you have essentially given up your right to have a say on how your contract will continue. The tenant does not have to comply with any of your requests. In fact, they can ignore you and continue the contract on a month-to-month basis despite your objections. However, if you choose the vacancy option, which states the tenant must move out of the residential unit, then you have given yourself a voice in the negotiation. You will essentially decide whether the contract will continue because the contract is severed once expired. The landlord has no further obligation to continue the tenancy unless they wish to re-enter into another agreement. The balance of power has shifted from the tenant to the landlord, which is invaluable when renegotiating terms of a rental agreement or deciding to end an agreement with a problem tenant.
I can’t stress enough how important a vacancy clause is for avoiding future disputes with tenants. The ability to have a voice in the renegotiation can also give a landlord the opportunity to restrict services and facilities that no longer become economically viable to include in rent, or to adjust the rent to the market without complying with the legislative rent increase percentages and three month notice. Essentially, the landlord can decide either to enter into another mutually agreed upon tenancy or rent to other prospective tenants.
The flexibility of a vacancy clause, if used correctly, can help avoid disputes. My recommendation is to be honest with tenants about how the condition works. I find through my conversations that the more I educate tenants about how a vacancy clause works the more they are comfortable signing. The vacancy clause should not be abused or used to intimidate tenants into agreeing to terms that are unconscionable. If a landlord is found to be abusing the process, the Residential Tenancy Branch is there to provide an outlet for tenants to make a claim. If used correctly, it creates a level playing field for both parties to have a constructive conversation and come to an agreement that everyone can be happy with. That is my ultimate goal when using the vacancy clause, and it should be yours as well.
Making a Claim with the RTB
My last point that I would like to make is to think twice before making a claim with the Residential Tenancy Branch. Far too often landlords jump at the chance to make a claim without actually having a conversation with the tenant to see if a resolution can be found before resorting to arbitration. Relying on an independent quasi-judicial tribunal to solve your problem is not the best use of your time. I find it more constructive to see if I can resolve the problem on my own because my time is valuable. Whether you realize or not, your rental property is a business which requires dedication, hard work, and time for it to become successful. I value my time, so I will only resort to filing a claim if I can no longer find a resolution on my own.
That is what is great about the Residential Tenancy Branch. It provides an avenue for landlords and tenants to resolves disputes when all else has failed. The hardworking staff at the RTB is knowledgeable and always goes the extra mile to help those in need but should be used only as your last option. So before you let your emotions get the best of you, take a step back and have an open discussion with your tenant that is constructive and respectful.
Giuseppe Pino Frustaci is a former Information Officer with the Residential Tenancy Branch, helping both landlords and tenants understand the rules and obligations of both parties when renting. He owns and manages multiple rental properties and is always looking to share his knowledge about real estate and to learn from others in pursuit of making smart investment choices.