RTB Update: Regulations for Vacate Clause Fixed Terms
On December 11, 2017 The Residential Tenancy Branch (RTB) released an update to the Residential Tenancy Regulation. This update was the result of a month and a half long process which began in the Provincial Legislature on October 26t 2017 with the introduction of Bill 16 by the Honourable Selina Robinson, Minister of Municipal Affairs and Housing.
The Bill, an amendment to the Residential Tenancy Act (RTA) put forth many changes including amendments to when fixed-term tenancies with a vacate clause can be used. The change to the RTA stated that the vacate clause would only be able to be used in certain circumstances to be outlined in the regulations.
Bill 16 received Royal Assent on November 30, 2017 but this does not mean that these new provisions come into effect immediately. The wording of this amendment means that the Cabinet had to come up with new regulations, specifically exemptions to the prohibition on vacate clauses, to activate this new section of the RTA.
The Cabinet released a singular exemption in the regulations on December 11, 2017. This exemption allows a landlord, who intends on using the unit for personal or a close family member’s use, to enforce the vacate clause as per their signed agreement.
What Exactly is the Exemption to the Prohibition on Vacate Clauses?
The regulations state that a vacate clause will only be enforceable by a landlord if the tenancy is a fixed-term tenancy in circumstances prescribed in section 13.1 of the Residential Tenancy Regulation. This regulation specifies situations where a landlord or landlord’s close family member plans in good faith to occupy the rental unit
What Does This Mean for a Tenancy That is Currently in Place?
Tenancies that are currently in place and have a vacate clause will revert to month to month at the end of the fixed term unless at the time of signing the agreement the landlord had intended in good faith to use the rental unit for the purpose set out in the regulations.
If a landlord had intended on moving into the rental unit or intended on having a close family member move into the rental unit at the end of the fixed term, they should inform their tenant that they must vacate at the end of the fixed term. It is advisable to sign a Mutual Agreement to End Tenancy with your tenant at that time. If the tenant either does not vacate or informs the landlord that they intend to not vacate, the landlord must apply for an order of possession through the RTB’s Dispute Resolution process.
Is my Existing Tenancy Agreement Still Valid?
Yes, the only aspect that is changing is what reasons the vacate clause will be enforceable. Specifically, that a landlord can only enforce a vacate clause if they or a close family member intend on residing in the rental unit. All other terms of the agreement, such as a smoking or insurance clauses, are still enforceable.
This also means that if a tenant wants to leave before the end of a fixed term they are still responsible for liquidated damages and any lost rental revenue that is the result of an early end of tenancy.
What is Considered a Close Family Member?
The change to the regulations will use the definition of close family member found the Section 49 of the RTA. Section 49 defines a close family member as a parent or child of the landlord or landlord’s spouse. We remind landlords that you must intend in good faith to use the rental for your own purposes or that of your close family as defined above. Any misrepresentation in this regard could result in significant compensation being awarded to the tenant as well as possible administrative penalties levied by the RTB.
Will There be Changes to the Tenancy Agreement?
Yes, the Residential Tenancy Agreement will be changed to include a section that sets out why the vacate clause is to be enforced. This section will require that the landlord fill in a box with there reason as to why they are choosing a fixed term with vacate clause. This reason must match the exemption on the regulation.
Can a Tenant Subletting Their Unit Use the Vacate Clause?
Yes, tenants that are subletting their rental unit can sign an agreement with an enforceable vacate clause with their subtenant(s). This was addressed in the original amendment to the RTA and ensures that the tenant can return the rental unit before the end of their fixed term, a requirement of subletting.
What if I Have a Bad Tenant and Wanted to Use the Vacate Clause?
The RTA gives landlord several tools to end a tenancy when a tenant is breaching rules of the agreement or not paying rent. You can read more about how a tenancy ends in our blog post on Ending Tenancies.