Handling Deposits Correctly

Correct ly Han dling Deposits By Hunter Boucher, Director of Operations, LandlordBC

Improperly handling security deposits can present a significant liability for landlords. With the penalty for even a simple mistake being double the deposit, it is vital to have firm understanding of the processes that surround returning, retaining, and documenting deposits. In this article we will cover a few of the most common issues landlords face when dealing with deposits. Most issues for landlords concerning deposits happen at the end of the tenancy after the condition inspection has been completed. Determining when and how to make deductions from a deposit can be a confusing endeavour. As the landlord, you have 15 days from the end of the tenancy or the date you received the forwarding address to deal with the deposit. The first point of confusion lies in determining when you start counting down the 15 days. If at the end of the tenancy, the tenant has provided their forwarding address you must act within 15 days. If, however, the tenant has not provided their forwarding address you do not start counting down the 15 days. The tenant has one year to provide their forwarding address, if they fail to do so they have waived their right to their deposit. Your first option is to return the deposit in full; this does not mean it has to be in the tenant’s hands within 15 days — just that you have

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sent the deposit. We do not recommend returning the deposit in cash, instead use a method that allows you to prove you have in fact returned it such as cheque or email money transfer. If you choose to return the deposit using email money transfer, the tenant is still obligated to provide a forwarding address. The next two options are used when you need to retain all or part of a deposit. Ideally you will calculate the required deductions and come to an agreement on the amount with your tenant. If an agreement can be reached it must be in writing with the tenant’s signature. Both the LandlordBC’s Condition Inspection form and the standard Residential Tenancy Branch form have a section titled Deposit Statement. In this section you record the deposits, interest, and deductions. This is also the form that the tenant can sign in agreement to any deductions. Alternatively, a letter that outlines the deductions and is signed by both landlord and tenant would suffice. If there is deposit left over you must return the remainder within the 15 days. Your last option for making deductions from a deposit is to apply at the Residential Tenancy Branch to retain all or part of either deposit. This is done through the Residential Tenancy Branches Dispute Resolutions process. While the application needs to be made within the 15 days, the hearing itself will be held several months from the application date. There is occasionally confusion as to how to deal with the deposit while you are waiting for your hearing. If you applied within the 15 days, you simply retain the deposit until the hearing has occurred and an arbitrator has issued a decision. If your tenant owes you more than the deposit will cover, you can include this in your application as a monetary order.

Cann abis Refr esher In May of 2018 Bill 30 was presented in the B.C. Legislature. A small section of this bill provided landlords and tenants a clear understanding of their rights and responsibilities regarding the growing and consumption of recreational cannabis. This change is retroactive to all tenancies entered into before the “Cannabis Control Date” (October 17th 2018), which is the date this

legislation becomes law. Any agreement entered into after this date must include a prohibition that specifically mentions cannabis or is a broad prohibition, such as the LandlordBC tenancy agreement which bans the smoking and vaping of all combustible materials. The cultivation of cannabis in rentals units has been a major focus of LandlordBC’s advocacy efforts over the past year and we are happy to announce that due to these efforts there will be a retroactive prohibition on the growing, cultivation, and harvest of cannabis in all rental units across B.C. This ban on growing cannabis in rental units is a significant step to ensure landlords retain the right to determine how their property is used. The legislative change states that all tenancy agreements entered into before the “Cannabis Control Date” are considered to prohibit the growing, cultivation, and harvesting of cannabis in the rental units, regardless of whether the agreement has a clause that already includes this prohibition. It is important to note that all tenancies entered into after the “Cannabis Control Date”, must include terms that specifically prohibit the use and growing of cannabis and cannot rely on the retroactive prohibition. LandlordBC members using our most recent agreement will already have these vital clauses. Any agreement entered into after the Cannabis Control Date will be considered to allow smoking and growing cannabis unless there is a clause that specifically prohibits these actions.

2019 Ren t Incr ease The RTB released 2019’s allowable rent increase on September 7th and at 4.5 per cent the rent increase for 2019 is the highest one we have seen in 14 years. This allowable increase applies to all existing tenancies and landlords that choose to raise their rent must follow a legislated process that includes using a government provided form. There are a few key points to understand when considering a rent increase, they include: • The increase must not take effect less than 12 months since the last increase or the date the rent was originally set. • T he increase must not take effect less than three months from the date of notice of increase is served. • T he increase must be issued on an approved RTB form. • T he increase must not be higher than the allowed rate for that year (4.5 per cent for 2019). The process for increasing rent applies to all existing and continuing tenancies, including both month to month and fixed terms. If a fixed term tenancy is ending and the tenant is staying either on another fixed length of time or as a month to month the landlord must still follow the approved rent increase process.

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