In British Columbia, most residential landlord and tenant matters are governed by the Residential Tenancy Act, S.B.C. 2002, c. 78 (the “RTA”). Over the years, the RTA has been amended to provide more protections to tenants faced with eviction from their landlord who wish to move into the rental property. At present, individual landlords wishing to move into their rental property may unilaterally end a tenancy in one of two ways:
- The landlord includes a “must vacate clause” in their residential tenancy agreement requiring the tenant to vacate the rental unit at the end of the fixed term for the purpose of the landlord or their “close family member” occupying the rental property; or
- The landlord issues a 3 Month Notice to End Tenancy from the Residential Tenancy Branch on the basis that the landlord or their “close family member” intends to occupy the rental property in good faith. The effective date of the 3 Month Notice must not be before the end of the fixed term in a fixed term tenancy agreement.
Notably, a “close family member” has special meaning under the RTA, and only includes the following categories of relatives in relation to an individual landlord:
- The individual landlord’s parent, spouse or child; or
- The parent or child of the individual landlord’s spouse.
Assuming the landlord meets these end of tenancy requirements, they are free to end a residential tenancy with their tenant for the purpose of moving into the rental property. When it comes to ending a tenancy under a 3 Month Notice, the RTA affords tenants one month’s rent compensation for the move. If a landlord fails to follow through with their move into the rental property under a 3 Month Notice or fixed term tenancy agreement, however, the cost payable from a landlord to their tenant can be significantly more………….
More Money, More Problems
When a landlord or their “close family member” fails to move into the Rental Property within a “reasonable period of time” following the end date of their fixed term tenancy agreement or following the effective date of the 3 Month Notice, the RTA permits a tenant to bring a monetary claim against their landlord for further compensation. Years ago, a tenant was entitled to apply for compensation in the amount of two month’s rent payable under their tenancy agreement. Now, a tenant is eligible to apply for compensation in the amount of 12 months’ rent payable under their tenancy agreement.
Doing the math, the “12 month penalty” provision under the RTA can be quite high for some rental properties. The higher the monthly rent, the higher the penalty. At the time of writing, the Residential Tenancy Branch only has the jurisdiction to decide a tenant’s 12 month penalty claim up to a maximum amount of $65,000. Depending on the amount of the monthly rent, some tenants will abandon part of their claim that is more than $65,000 to remain within the Residential Tenancy Branch’s simplified purview. For other high-rent rental properties, however, tenants may wish to pursue their full compensation claim in BC Supreme Court.
In My Defense
In the event that a former tenant advances a 12 month penalty claim against their former landlord in the Residential Tenancy Branch or BC Supreme Court, the landlord’s only available defense is to establish the following conditions:
- Steps have been taken by the landlord or their close family member to move into the rental property within a reasonable period of time; and
- The rental property has been used for the purpose of the landlord or close family member’s occupancy for the timeline prescribed by the RTA.
For an end of tenancy under a fixed term tenancy agreement, a landlord must prove that they or their close family member occupied the rental property for at least 6 months after the tenancy ended within a reasonable period of time.
For an end of tenancy under a 3 Month Notice, a landlord must prove that they or their close family member occupied the rental property for at least 12 months after the effective date of the 3 Month Notice to End Tenancy within a reasonable period of time.
May I be Excused?
Even if a landlord is unable to avail itself of a defense to the 12 month penalty, the 12 month rent compensation afforded to tenants is not an absolute certainty. The RTA permits landlords to be excused from this statutory penalty in the event that a landlord can prove that “extenuating circumstances” prevented the landlord or their close family member from accomplishing their move into the rental property within a reasonable period of time, or not at all. What constitutes an “extenuating circumstance” is, not surprisingly, extenuating….
The Branch considers extenuating circumstances to be circumstances in which it would be unreasonable and unjust for a landlord to pay the hefty compensation. Generally speaking, an extenuating circumstance must not have been reasonably anticipated and must have been outside of a reasonable landlord’s control. The central question for the Branch is whether or not the Legislature would have intended the landlord to be captured by its penalty provisions.
Although each case at the Residential Tenancy Branch is decided on its own facts, the following circumstances have been recognized by the Branch as extenuating enough to avoid a 12 month penalty:
- A landlord’s father who was intending to occupy the rental property died within one month of moving into the rental property;
- A landlord intended to move into the rental property, and the rental property was destroyed in a wildfire;
- A landlord was delayed moving into the rental property on a more permanent basis because their employer delayed a previously approved transfer.
Landlords and tenants confronted with a dispute regarding entitlement to a 12 month penalty claim are encouraged to seek legal advice and review the Residential Tenancy Branch policy guidelines for further insight on extenuating circumstances and entitlement to this statutory compensation.
For further assistance with residential tenancy matters, please contact our practice group leader, Lisa Mackie, or a member of our Residential Tenancy Group.
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