Why Some Shortcuts Are Not Worth It!

Landlords, like everyone else, are on the look out for the most efficient way to deal with their affairs. And in a perfect world, all of our shortcuts would lead directly to our destination. However we don’t live in a perfect work, so sometimes it is necessary to do extra work to avoid what could turn into a disaster.
 
When renting out a building - usually a house or multiplex - that has more than one unit where utilities are not included, it would seem efficient to have one of the tenants put the utilities in their own name, and have them collect the other share from the other tenants in the building. This would mean you would only have to deal with collecting the rent and no other money each month. This sounds great, but it opens you up for many other issues.
 
One potential disaster is that the utilities do not get paid by the tenant who is responsible for them, though the other tenants have been paying their share to the tenant who should be paying the bill. The end result is the utilities being cut off - and the tenants who paid their bills on time coming after you.
 
Or the opposite; the tenant who is responsible for utilities pays the full bill, but the other tenants decide that they’d rather not pay. Again, the tenant who paid the full utilities - or could only pay part of them seeing as they don’t have enough money - will be looking to you to fix the issue.
The warning to heed? Unless the utilities are billed for one specific unit only, do not require any of your tenants to have the utility bills in their name.

Strike Alert - RTB Closure September 5th

BCGEU will be staging a one day strike on September 5th; this job action will include Information Officers at the Residential Tenancy Branch. Dispute resolution hearings scheduled for September 5th will not be affected by this one day strike though evidence packages or applications will not be able to be submitted in person - online options for dispute resolution applications will still be available.  

-- Hunter Boucher

Hydro Tip

There are often gaps in time between the end of one tenancy and the beginning of another.    Or tenants may decide to leave early and contact BC Hydro to close their account. The property owner then gets a surprise invoice for the period of vacancy that often can be corrected, but it takes time and effort and the ability to connect with the right person at BC Hydro.

One of our property management members arranges to set up Hydro, water and cable accounts on behalf of new tenants. He has the appropriate forms and gets the tenants to sign them, ensuring the accounts are established at the right time. With the BC Hydro application, he also includes the meter reading at the time the application is submitted. If there is a significant gap between that reading and the last reading (or estimate) in Hydro’s files, the company avoids being charged for the usage that should have been paid by the previous tenants.

-- Carly Ludwar

What's That Noise

Not a lot surprises us here at the ROMS BC office. We get countless questions about some incredibly bizarre situations, however they are our everyday norm. Though from time to time, we hear something so strange, we just can’t help but share it. 

In early November, June, a manager who never ceases to astound us with her sensational stories and ability to cope, called to ask for advice. This time, her story started out with a simple noise complaint. Edie and Gerald, tenants in the basement suite of the fourplex June manages, wrote a very polite complaint about the noise coming from the unit above them (Susan and her two young children occupy the suite above). Because Susan had always been a wonderful tenant, we recommended that June speak with her about the issue. When Susan got home that day, June went up to her unit and asked if she could come in. June entered the unit and before she even had the chance to say why she was there, she saw the culprit. Susan had set up a trampoline in the living room for her children to play on. June could not help but laugh; she explained the complaint to Susan, who had figured the mat under the trampoline would absorb all of the noise. June resolved the issue with Susan very easily, but this was definitely one for the book every landlord should write.

-- Hunter Boucher

Mixing Words

The Residential Tenancy Act is full of terms that have definitions specific to our industry. Because the RTA has its own vocabulary, it can be difficult to follow the right processes if you are not aware of the correct definition. Below is a list of six of the most commonly used and misused terms.

Assignment: A tenant with a fixed term tenancy agreement leaves permanently before the end of the term and transfers the remainder of the tenancy agreement to another person, who then becomes the tenant.

Sublet: A tenant with a fixed term tenancy agreement leaves for a period of time, returning before the end of the term and someone else lives in the rental unit while s/he is away.

Fixed Term Tenancy Agreement: A tenancy agreement that both parties agree is for a defined period of time (often twelve months). It may terminate at the end of the term or may be renewable.

Lease: A fixed term tenancy agreement. The word “lease” doesn’t appear anywhere in the Residential Tenancy Act!    Its legal meaning is a commercial tenancy agreement, however our industry commonly refers to a fixed term residential tenancy agreement as a lease.

Occupant: A person living in a rental unit who has not signed the tenancy agreement as a tenant. An occupant includes a person to whom the unit has been subletted (a “subletee”).

Tenant: A person who has signed a tenancy agreement as a tenant; tenants are legally responsible for the tenancy. 

-- Al Kemp and Hunter Boucher

Landscaping Smaller Properties Attracts Tenants

Reprinted and adapted with kind permission from LPMAnews, news magazine of the London Property Management Association.

Curb appeal isn’t limited to multi-residential complexes. The same principles can be applied to smaller complexes and houses.
 
Ann Pavlic, who owns three rental houses in Old North London, pays extra attention to her landscaping in spring and fall to ensure her properties are in top shape when students are shopping for accommodations in mid- to late-summer. The grass is kept short and bushes are neatly trimmed. Chipped paint, tired porches and windows are also repaired during the summer.
 
“I do it for the business component and curb appeal, but I also do it for my own sense of pride and satisfaction,” she says. “I live in the neighbourhood and I want my properties to mirror the neighbourhood’s level of living. I’ m conscious that there are residents mingling with the rentals and I want to bring that quality up.”
 
When Pavlic bought her houses 10 years ago, she landscaped in a similar way to other homeowners. She planted ground covers that turn colour from spring to fall, as well as ivies that change from green to burgundy.
 
“It looks wonderful. It frames the house beautifully and it kind of puts it in an Old English kind of setting,” she says.
Pavlic advises small landlords to choose low-maintenance plants that require less care. That practice is particularly important in high-traffic areas, such as along walkways.
 
“Choosing carefully, yet attractively is the key. You want to have enough to be appealing, but not too much to have high maintenance and costs,” she adds.

Minimum Wage - Resident Caretakers

Since May 1st of 2011, BC's minimum wage has been increased every 6 months, with the final increase coming into effect on May 1st of this year. What does this mean to you as a landlord? If you own a building that has a 9 or more suites and have a resident manager or caretaker, their wage will need to be increased if you haven't already raised it.

The final increase on May 1st brought the minimum wage for managers/caretakers of buildings with 9 to 60 suites to $615 plus $24.65 per suite. If your building has more than 60 suites, the minimum salary is now $2,094.84.

Remember these amounts are the minimum; they are not necessarily what you should pay your on-site staff. Good managers and caretakers can be difficult to find - and minimum wage may not be the best way to attract the good ones. 

-- Carly Ludwar and Hunter Boucher

Rent Increase

The cost of living keeps going up and a big factor in that is the cost of maintaining rental units. The cost of the services required to maintain your rental unit are subject to change with very little notice and there is no way of passing your increased cost of doing business to your existing tenants, the only exception being an annual rent increase.

As a landlord you are able to raise your tenants' rent once a year (12 months from the last increase or the date the tenancy began), but as BC has government imposed rent controls, the maximum amount of increase is limited.  The limit is tied in part to the consumer price index, resulting in a maximum increase of 4.3% for any rent increase effective in 2012.  In early September, the government will announce the limit for 2013.

Despite your cost increases, you need to consider the market in your area when deciding whether to increase rents for existing tenants.  Higher vacancy rates give tenants more flexibility to move if they think their rent is too high. 

-- Al Kemp and Hunter Boucher

Part Three: Deducting From and Returning Deposits

Welcome to the final installment in our three part series on security deposits. (See the prior two weeks posts on Security and Pet Damage Deposits.)

Most issues for landlords surrounding deposits happen at the end of the tenancy, after the condition inspection has been completed. Many people do not know how to properly deduct from or return deposits and if either is not done properly, it can mean increased costs for the landlord. The landlord has 15 days from the end of the tenancy and/or the date you received the forwarding address (whichever is later) to do one of three things; your first option is to return all of the deposit(s). This does not mean that it has to be in the tenants hands within 15 days; just that it has to have left your hands in that time.

The next two options are used when you'd like to deduct any amount from the deposit(s). Once you know how much you'd like to keep, you can have the tenant agree in writing to the specific deductions and return the remainder, if any. Both the ROMS BC and Residential Tenancy Branch (RTB) Condition Inspection Reports contain "Security Deposit Statements;" you could use this section to record the amount of the deposit(s), any interest payable and whatever deductions you'd like to make. If the tenant agrees, they can sign authorizing the deductions.

Your last option for making deductions from the deposit(s) is to apply for dispute resolution at the RTB to retain all or part of either deposit. If your tenant owes you more than the deposit(s) will cover, you can include a request for an additional monetary order at the same time.

What do I do if my tenant does not give me a forwarding address?

Tenants are required to provide their forwarding address at the end of a tenancy. If they fail to do so, they are not entitled to claim their deposit back. Tenants have one year from the end of tenancy date to provide you with the address. After that time, they have lost their right to claim the deposit(s) back.

What if my tenant does not take part in the condition inspection?

The Residential Tenancy Act states that a tenant that does not take part in either condition inspection waves his or her right to the return of the deposit(s). That being said, if your tenant provides you with a forwarding address - even if he or she misses either or both inspection opportunities, you should still apply for dispute resolution to retain the deposit(s).

Do I have to pay interest on the deposit?

Yes; interest is payable on all security and pet damage deposits in BC. Each year, the Residential Tenancy Branch calculates the rate for that year. For 2012, the rate remains at 0.00% (which it has been since January 1, 2009). The RTB has an interest calculator available on their website, but just remember that you calculate interest from the date you receive the deposit to the date you return it (not from the start of the tenancy to the end).

Remember that every situation is different and the ROMS BC staff are here to help you work through any situation - deposit-related or otherwise.


-- Hunter Boucher and Carly Ludwar

Part Two: Pet Damage Deposits

Welcome to the second installment of our three part series on deposits.

You already talked about security deposits; what’s the difference between security and pet damage deposits?

Security deposits can be requested for any residential tenancy in BC, where pet damage deposits can only be requested when a pet (or pets) are present in the rental unit. The maximum amount a pet damage deposit can be is also half a months rent – despite the number of pets in the unit.

When do I take a pet damage deposit?

A pet damage deposit is generally paid at one of two times in a tenancy; the first being at the beginning of the tenancy when the tenant applies with a pet, and the second being when the tenant gets a pet for the first time during a tenancy. If your tenant is getting a pet part way through a tenancy, remember that if they moved in prior to January 1^st, 2004 and you did not complete a move-in condition inspection report, you must complete one now. Just as with the security deposit, the tenant has 30 days to pay this from the date it is requested.

What can I deduct from the pet damage deposit?

That one’s easy; pet damage! This deposit is meant to cover only damage caused by a pet. At times, this can be a tricky thing to determine, as some damage could be considered ambiguous. When you complete the move-out inspection, be sure to mark down what damage you can be sure was made by a pet. Then, when filling out the Security/Pet damage deposit statement, be sure to use the correct line for pet damage.

Remember again that every situation is different and the ROMS BC staff are here to help you work through any situation.

Be sure to come back next week for the final chapter of the series; deducting from and returning deposits.

-- Hunter Boucher and Carly Ludwar

A Three Part Series on Deposits

Part One: Security Deposits
Welcome to the first in a three part series on deposits in residential rentals in BC.

Contrary to popular opinion, you cannot take a “damage deposit” in BC. This is because the Residential Tenancy Act allows you to take a security deposit of a maximum of half a months rent instead.

But what’s the difference?
The answer is: everything! A “damage deposit” is a deposit (in other provinces) that applies only to damage done to the unit. With a security deposit, you are able to claim any amount owing by the tenant whether it be damage, rent, fees (like the $25 administration fee for late rent in the ROMS BC Residential Tenancy Agreement), cleaning, liquidated damages – you name it!

When do you take a security deposit?

Generally this is done before the tenancy begins, but remember that the tenant does have 30 days to pay it from the date it is requested. Most tenants will pay the security deposit before they move in. But if you have a tenant who refuses to do so, this could potentially be a red flag about what could happen with other payments during the tenancy.

Remember that every situation is different and the ROMS BC staff are here to help you work through any situation.

Check back here next Friday for part two of the series: Pet Damage Deposits.

-- Hunter Boucher and Carly Ludwar

"Damage" Deposit

Q. I know I can collect a half month’s damage deposit that goes toward any damage caused to the suite. Renters lose keys, so can I collect a $50 key deposit? Also, I want a deposit in case any cheques bounce. How much do you recommend I collect?

A. Whoa! Let’s go back to basics. First, the Residential Tenancy Act uses the term "security deposit" not "damage deposit" – and for good reason. A security deposit is defined as the renter’s money on deposit with the landlord against any obligation the renter may have at the end of the tenancy. That includes lost keys, late rent fees, NSF charges, or anything else that costs money and is the renter’s responsibility.

And when you request a security deposit, you cannot collect more than one half month’s rent. Having said that, if you allow pets, you can require an additional half month’s rent as a pet damage deposit. This is intended to protect you against any damage specifically caused by the pet(s).

-- LandlordMentor

Retaining the security deposit

We've recently had many questions regarding making an application to retain a security deposit through dispute resolution. As most of you know if you have a debt that is equal to or higher than the amount of the security deposit, the landlord is to apply to retain the deposit and hold on to it until the dispute resolution officer tells them to keep it to apply towards the debt, or to release it back to the tenant. But what if the debt is less than the security deposit?

Section 38(4) of the Residential Tenancy Act states, in part, "A landlord may retain an amount from a security or pet damage deposit if . . . (a DRO) orders that the landlord may retain the amount." Note the use of the word, "amount."

It is our interpretation that failing to return the portion of the security deposit that you do not have a claim against would entitle your tenant to double that amount, because only part of the deposit would have been dealt with within the fifteen days allowed.

--AdviserToTheAdvisers

"Security" deposit, not "damage" deposit

Your outgoing renters damaged a cupboard door. You said you would keep $150 from their security deposit to cover the repair costs. They said you can’t do that. They are right!

Landlords need to understand that security deposits are just that – deposits of the renters’ money with the landlord. If you had a $350 security deposit and you applied $150 to damage done during the tenancy, this means you only have $200 left at the end of the tenancy to apply to lost rent, damages to the suite, liquidated damages, unpaid utilities - you name it!

At the end of a tenancy the landlord must either return the deposit in full, get the renters’ agreement in writing to keep some or all of it, or file for dispute resolution to claim against the deposit for money owed. (Never apply to keep the deposit before the tenancy is over!)

-- LandlordMentor & AdviserToTheAdvisers