"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

"If it ain't in writing, it don't exist!"

Everyone has heard LandlordMentor say this 100 times before (including his wife, who doesn't like his improper English!), but it’s an important saying regardless. This industry is built on a paper foundation and it’s important to realize that even if you have a great relationship with your tenants, most of the time you need to communicate in writing. Many people will remember the day when you signed up a tenant over a cup of coffee and a hand shake, but unfortunately those days are gone.

For almost every situation you have with your tenant, there will be a form you will need to fill out, serve, photocopy and file. It sounds like a lot of work; but it really isn't and it's well worth your time.

The most classic example of an unused form is the Caution Notice. It isn't a necessary form, but it's much easier than drafting a letter! For instance, one of your tenants has a loud party and the neighbouring tenants complain that the smoke from the party came into their unit - though it is a non-smoking building as per all tenancy agreements. You - being the "nice guy" who likes all your tenants - go to your partying tenants and politely tell them that they should keep the noise down and ensure no one smokes on the property. A week later it happens again, but this time you are not in town so you send them a text message asking them to be more careful, because this is strike two. Two weeks after the first event, the disturbed tenants tell you that the others have had yet another loud party and it is keeping up them, and the smoke is coming in the window of their new born baby's room. They also tell you that they may have to look into moving to a quieter apartment. You are starting to take this seriously, so you send the louder tenants a strongly worded email telling them that the parties and the smoking have got to stop. While you are on the computer, you make sure that they get the message by commenting on their Facebook page. Four weeks have passed from the original incident and you receive a letter from your complaining tenants. The letter explains that they really like you and the apartment, but they can’t handle the noise and the smoke and they are ending their tenancy. You now want to evict the noisy, smoky tenants but you can’t because you have not given them any formal warning - which needs to be completed before a 1 Month Notice to End Tenancy for a breach of material term can be served. This mess could go on for many more months and in the end, it is a possibility that you may not get the noisy tenants out.

How could this have been handled better? Could you have saved your good tenants?

The answer is yes, of course, and it would have been a lot easier than everything you have already done. This exact situation occurred with one of our well informed members and they dealt with it quite differently: Their tenant had a loud party and the neighbouring tenants complain that the noise kept them up all night and marijuana smoke entered their unit. Being another nice guy who likes all of their tenants, they go over to their noisy tenants and politely tell them that they should keep the noise down. They also serve a Caution Notice for the incident. By serving the Caution Notice, the noisy, smoky tenants are aware that this is serious. The notice is official and it states that if the issue is not corrected, the landlord could end their tenancy. The Caution Notice scared the noisy tenants and now they party at a friend’s house and the issue is resolved. If the Caution Notice no longer deters these party fiends and they have another disturbing, smoky party, then a 1 Month Notice to End Tenancy could be served immediately.

What’s the difference? Paper. Verbal conversations, email messages, text message, Facebook, Twitter and telepathy all count as nothing in the grand scheme of residential tenancy. If you’re unsure whether or not something should be done on paper, do it on paper and serve it properly to be sure. As everybody's Mama says, "better safe than sorry!"

-- Staff and AdviserToTheAdvisers

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

Behind on rent increases?

Q. My great renter has been on a disability pension for the last six years so I haven’t increased the rent. I recently learned that he now has a good job with the government, so would like to increase the rent. I’ve done some research and learned that BC’s rent controls limited increases to 3.7%, 3.7%, 4.0%, 4.0% and 3.8% in the last five years respectively. That’s a cumulative increase of 20.7% which is just the right amount I need to get the rent back to market rate. Do I have to use a special form to increase by this amount?

A. There is no special form because you can’t do this! The simple answer regarding rent increases is, “use it or lose it.” You are permitted to increase rents by the rent control limit once every twelve months. If – for whatever reason – you choose not to raise the rent in any given year, you cannot carry the foregone increase into a future year. Even though you haven’t raised the rent for six years, you can only raise it by 3.2 % in 2010 .

--LandlordMentor