BC Government Responds to Industry Feedback on Residential Tenancy Act Changes
In the immediate wake of publicly voiced concern from the BC Real Estate Association (BCREA), the BC Government has reversed course on two recent changes to the Residential Tenancy Act (RTA) as they relate to buyers of tenanted properties.

The initial changes laid out in Bill 14, which came into effect on July 18, 2024, required four months' notice – instead of the previous two months' notice – for evictions due to personal or caretaker use. The legislation also raised the dispute period from 15 days to 30 days.

Now the government is amending the regulation to lower the personal-use notice period to three months and the dispute period to 21 days for situations when a landlord gives notice to a tenant on behalf of a purchaser. These changes come into effect on August 21, 2024.

As you navigate the complexities of selling tenant-occupied properties, it's crucial to be aware of the latest regulations, including Bill 14 Tenancy Statutes Amendment Act, 2024, and best practices to ensure compliance and protect all parties involved. Here are the key points you need to know.

Key Changes Effective July 18, 2024

Mandatory Use of Landlord Use of New Web Portal:

Landlords must use this portal to generate Notices to End Tenancy for personal or caretaker use. Landlords using the website portal will be required to have a Basic BCID to access the site. The portal will require landlords to provide details about the persons moving into the home. The details of the new occupant of the home will be shared with the tenant. While using the website portal, landlords will be given information about the required conditions for ending a tenancy and the penalties associated with ending the tenancy in bad faith. They will also be informed about the amount of compensation they will be required to issue to tenants when ending a tenancy.

Occupancy Requirements:

The individual moving into the property must occupy it for at least 12 months.

Landlords found to be ending a tenancy in bad faith could be ordered to pay the displaced tenant 12 months’ rent. CLICK HERE TO READ MORE 

Metro Vancouver suffers a double whammy in regard to outrageous house prices. It's a gateway city for foreign capital. And it's located in a country that compounds unaffordability through unrivalled population growth.

This phenomenon has been captured by Josh Gordon of McMaster University and economist David Williams of the Business Council of B.C. Their research counters past accusations by politicians, real-estate industry executives and pundits that it is xenophobic to suggest such a thing.

And now the Bank of Canada and countless others are recognizing that overall Canadian prices and rents are exaggerated compared to other well-off countries — largely because of Canada’s unprecedented population growth, almost all of which comes from international migration.

Let’s start with a closer look at how the Vancouver region became such an outlier. READ MORE

The Bank of Canada cut its benchmark interest rate by 25 basis points on Wednesday, the first reduction in more than four years, bringing its policy rate to 4.75 per cent. We can relax a bit today knowing this is trending in the right direction.

The decision was widely expected by economists. The central bank cited progress on lowering inflation, weaker than expected economic growth in the first quarter, and employment growing at a slower pace than the working-age population.

“With continued evidence that underlying inflation is easing, Governing Council agreed that monetary policy no longer needs to be as restrictive and reduced the policy interest rate by 25 basis points,” the Bank of Canada said in a statement.

“Recent data has increased our confidence that inflation will continue to move towards the 2 per cent target.” read more

The District of West Vancouver council has rejected a rezoning that would have allowed additional coach houses and secondary suites on about 200 residential properties and brought the district in line with new provincial legislation.

The vote to reject the plan comes after the province gave municipalities a deadline of June 30 to bring local bylaws in line with new rules allowing greater density on single-family lots to supply more “small scale housing.”

Most single-family lots in the rest of West Vancouver already allow both secondary suites and coach houses, so wouldn’t have been impacted by the change.

But about 220 properties – or about 1.6 per cent of the total in the district – stood to have their allowable density increased as a result of the provincially-mandated change (about 40 of the properties already have apartments, so the real number impacted is closer to 180).

The rules about how many dwellings must be allowed on lots varies depending on the size of the lot and how far it is from major bus routes.

Senior planner David Hawkins previously stressed to council the new rules don’t require owners to build on their properties and will only impact property owners who decide they want to build additional housing on their lots. CLICK HERE TO READ MORE. 

Article content

Weekly roundup of properties that recently sold in Metro Vancouver.

1103 — 1790 Bayshore Dr., Vancouver

Type: Two-bedroom, two-bathroom apartment

Size: 1,553 square feet

B.C. Assessment: $1,930,000

Listed for: $2,188,000

Sold for: $2,150,000

Sold on: Jan. 20

Days on market in this listing: Two

Listing agent: Holly Calderwood PREC at Royal LePage Sussex

CLICK HERE TO READ MORE 

Dining out in Vancouver

The Michelin Guide has finally come to Canada’s third largest city. Not only did Michelin award eight Vancouver restaurants with coveted stars, a dozen other restaurants received Michelin’s Bib Gourmand designation, which recognizes value and quality. Michelin also added another 40 Vancouver restaurants to their recommended list. Click here to learn more

Did you know that the sale of commercial real property is treated as a taxable supply, for which the Goods and Services Tax (“GST”) applies? A common pitfall for investors and advisors in real property transactions is determining whether GST will apply to a transaction, and which party is responsible for paying it. The application of GST in residential and commercial real property sales is set out in Canada’s Excise Tax Act, R.S.C., 1985, c. E-15 (the “ETA”). Generally, GST applies to all transfers of real property, unless explicitly exempted.

Under the ETA, an owner or vendor of a property is obligated to collect and remit GST. However, excluding certain circumstances involving residential complexes and special types of properties, if the purchaser is registered for GST purposes, then the purchaser will be obligated to account for GST instead. In this situation, the vendor should obtain and validate the purchaser’s GST registration number and the purchaser may claim an input tax credit on its GST remittance form, if eligible.

Commercial transfers of real property will be subject to GST. Moreover, purchasers of new residential property, including pre-sales, will be required to pay GST. Broadly, there are several exemptions under the ETA for real property transactions:

1. Property that has been previously occupied and used for residential purposes will be exempt from GST. However, if the property was substantially renovated prior to being sold, then GST may apply to the sale of that property.
2. Residential lands, such as a residential land leases or trailer parks.
3. Land or residences acquired for personal use, unless the land is subdivided into more than two parcels.
4. Bare land sold by non-profit organizations or an individual or trust will usually be GST-exempt. However, land sold by a corporation or partnership will be subject to GST.

Note that GST is also payable on rental payments for commercial properties, unless specifically exempted, such as a lease made by a public service body. Businesses paying a commercial lease will usually be entitled to claim an input tax credit on that GST, but landlords of residential leases will not be able to claim input tax credits on their businesses.

All stakeholders in commercial real estate should be well advised as to their obligations, liabilities and exemptions. They should make clear in their contracts whose responsibilities it is to pay, collect and remit such taxes.

Sources: Commercial Real Property – Sales and Rentals, Canada Revenue Agency GST/HST memorandum 19.4.1.; Real Property and the GST/HST, Canada Revenue Agency GST/HST memorandum 19.1; Sales of Vacant Land by Individuals, Canada Revenue Agency GST/HST Info Sheet GI-003.

Can I Own my Waterfront Shoreline? 

The area between the bank and the water's edge (often called the beach or foreshore) belongs to the Crown, not to landowners. Even if dedicated lands don't separate your lot from the lake, the land closest to the lake or river is usually the bank of the water body. In British Columbia, the foreshore is publicly owned. The foreshore of the Burrard Inlet where ones's property is located is managed by the District of West Vancouver, which leases it from the province. The pool and seawall are considered "encroachments" on the foreshore. Click here to read more

You have a new client with a rental property they are looking to sell. What do you do at this stage?

In our previous article “BC Tenancy Act: What Landlords Should Know Before Selling The House” we looked at the Do’s and Don’ts of maintaining a good relationship with the tenant during this process. 

Let’s look at maintaining a good relationship with the owner as well!

HERE ARE THE BASICS:

1. You can’t evict a tenant to sell a property
2. tenancy laws overrule the real estate contract (when it comes to vacant possession)
3. follow proper protocols for providing notice for showings
4. be aware of the proper notice required for eviction (and notice required by buyer, notice to evict tenant form)

START OFF ON THE RIGHT FOOT WITH THE TENANT

When is the best time to tell the tenant the home is being sold?

• Best practice is to tell them up front so there are no surprises – like a for sale sign suddenly goes up or strangers start wandering the property
• Have clear communication on what each party will do to respect everyone’s privacy, access and showings
• Ask the tenants: is there anything that needs to be fixed up? This is a good time to see if landscaping, painting or any repairs could be done are addressed
• Remember: this is going to be stressful on the tenant too but you can minimize it!

TYPES OF TENANCY AGREEMENTS

When it comes to a BC tenancy agreement, here are the two most common types:

Month to Month Tenancy:

• The buyer and seller are required to give two months notice to end tenancy if it’s a month to month tenancy and the buyer plans to live in the property.
• A written notice is required.
• The landlord must serve the Two Month Notice to End Tenancy so that it’s received:
• At least two months before the effective date of the notice, and
• Before the day that rent is due

Fixed Tenancy Agreements:

• This type of tenancy is in the form of a lease
• the new buyers of the property cannot move in until the lease expires, unless otherwise mutually agreed to by both parties.
• The new buyer will have no power over to whether or not the tenancy will end early

SHOWING A PROPERTY

The tenant has a legal right to peace and quiet while the tenancy continues. The landlord or their agent must provide written notice to the tenant or have their permission to enter and show the unit to prospective buyers or to conduct an open house.

The notice must provide the:

• Reason for entering the rental unit
• Date and time of entry – which must be between 8 a.m. and 9 p.m., unless the tenant agrees to another time
• Ideally, a tenant and landlord can agree in writing on a schedule for viewing times. If not, the landlord must give the tenant 24 hours written notice of each showing of the unit (these showings may be on the same day or on a reasonable number of other days).

When the landlord has given proper notice, they can show the rental unit even if the tenant isn’t home.

During showings of the rental unit, the landlord or the landlord’s agent is required to ensure the safety of the tenant’s possessions.

OPEN HOUSES

A standard showing of a rental unit requires the landlord or the landlord’s agent (Ex. a Realtor) to accompany any prospective purchaser. With open houses, multiple prospective purchasers or agents may attend the property at the same time with varying levels of direct supervision by the landlord’s agent. Landlords should be aware of the tenants’ right to quiet enjoyment and avoid holding multiple open houses in a short period of time as these have the potential to be disruptive.

TENANT RIGHTS AND RESPONSIBILITIES

When the landlord has given proper notice to enter the rental unit, the tenant must not prevent the landlord’s access (or access by the landlord’s agent).

The tenant, or a representative of the tenant, may be present at the time the rental unit is entered. The landlord cannot require that a tenant leave when the rental unit is shown. Tenants who are concerned about their possessions may be present.

When a rental unit is being shown to prospective buyers or prospective tenants, the landlord or the landlord’s agent must be present.

CAN A TENANT REFUSE ENTRY THAT’S UNREASONABLE OR UNLAWFUL?

Unreasonable entry could be all-day showings every Saturday for several weeks. Unlawful entry could be where the landlord or the landlord’s agent has not provided proper notice of entry.

UNCOOPERATIVE TENANTS

If a tenant unreasonably refuses access to show the unit or provides misleading or inaccurate information to prospective buyers, the landlord could:

• Discuss the situation with the tenant
• Invite them to contact the Residential Tenancy Branch
• Serve a One Month Notice to End Tenancy for Cause

IT’S SOLD! NOW WHAT?

Once a property is sold, the buyer becomes the new landlord and the tenancy continues under the same terms. The buyer and the tenants don’t need to sign a new tenancy agreement, but may do so if they both agree.

The buyer must serve notice to end the tenancy in good faith if they plan to occupy the unit or use it for other purposes – the tenant has 15 days to dispute that notice

HOW TO GIVE LEGAL NOTICE

Sudden tenancy eviction notices can happen but in BC you can not just randomly evict a tenant, you have to serve proper legal notice.

EXAMPLE: if rent is due on the 1st of every month and you receive a firm deal on March 15:

• You would give notice prior to September 1st.
• If the tenant as acknowledges it received by August 31st then the two months notice is now effective September 1st.
• The entirety of September & October would constitute as two months notice.
• The buyer could move in as of November 1st.

**Keep in mind any holidays when serving notice**

WHAT IF THE BUYER IS DOING DEMOLITION, RENOVATION, REPAIRS OR A CONVERSION?

“Renoviction” is a term used in British Columbia to describe an eviction that is carried out to renovate or repair a rental unit.

Effective July 1, 2021, under new legislation, if a landlord wants to end a tenancy for extensive renovations or repairs, they need to apply for an Order of Possession from the Residential Tenancy Branch.

• Four months notice is required
• Learn more about the new legislation

COMPENSATION

When serving a Two Month Notice to End Tenancy or a Four Month Notice to End Tenancy, the landlord must compensate the tenant with an amount equal to one month’s rent – paid on or before the effective date of the notice period. Compensation is owed even if the tenant gives notice to leave earlier. The tenant may choose to not pay rent in the last month of the tenancy instead of taking a payment from the landlord.

• Learn about rights and responsibilities in this situation
• Find out about additional compensation

SECURITY AND PET DAMAGE DEPOSITS

When a tenant moves out, the person who owns the property at the time is responsible for the tenant’s security deposit or pet deposit. This may make the buyer responsible for a tenant’s security deposit or pet damage deposit, even though the deposits were held in trust by the seller. The buyer and seller may wish to address the transfer of deposits in trust in their contract of sale or the closing settlement.

If the tenant owes money to the seller, it’s important that the parties to the sale – the buyer and seller – address these debts clearly in the contract of sale and purchase. Landlords should seek independent legal advice if they’re unsure how to do this.

WHAT IF…?

What if the buyer wants to move in? What kind of paperwork is required?

• Does the Buyer want the home to be vacant at the time of possession?
• on the contract of purchase and sale in the “possession” section of the contract they would add ‘vacant’ in addition to their move in date and time.
• the buyer must serve written notice to the tenants that they are moving in, which would be provided by the buyer’s agent to the buyer to sign off on and then deliver to the seller’s agent.

What if the Buyer wants to take over the tenancy instead?

• Yes, absolutely the buyer can take over the tenancy!
• the new buyer can arrange a new agreement to be drafted with or without amendments to the terms and conditions already stipulated.
• if the buyer takes title of the property later than the 1st of the month, the rent for that month is typically adjusted and split between the buyer and the seller.
• the security deposit originally collected is typically credited to the buyer upon completion.

FINAL TIPS & SUGGESTIONS

• Do not break any tenancy laws
• give tenants lots of advanced notice on your plans with selling
• if looking for vacant property incentivise the tenant to sign a mutual agreement to end tenancy by offering free rent or financial compensation
• work around the tenants schedule for showings – not the other way around, you need cooperation!

LINKS:
BC RTO – Selling a Tenanted Property
BC Tenancy Forms – All tenancy forms