A British Columbia landlord was ordered to drop a lease provision that allowed for an above-guideline rent increase in the event the landlord incurred additional costs.
According to a news report, the provision allowed the landlord to increase rent by an additional 7%, but only in the event the landlord needed to replace the roof or pay for similar improvements. The Residential Tenancy Branch’s new Compliance and Enforcement Unit took issue with the clause, saying it would effectively circumvent the province’s latest efforts to cap rent increases — currently at 2.6%. Several tenants agreed to sign the lease, according to the report.
A Member of the Legislative Assembly, who initially received a complaint about the lease provision, conceded that the Residential Tenancy Act does provide for additional rent increases where the tenant agrees to the higher amount. However, the Member advises that those increases apply only on a “case-by-case” or “one-time” basis, and not to a blanket lease provision, according to the report.
The landlord voluntarily agreed to amend the tenancy agreement to omit the controversial provisions. Although the Compliance Unit has the authority to punish landlords with fines, it appears the landlord suffered no financial consequences. In fact, the director of the Compliance Unit told reporters that most of the cases he investigates are landlords who are trying to do the right thing, but don’t fully understand the law.
This case highlights the difficult balance that exists between the ability of landlords and tenants to reach mutually acceptable terms in the tenancy agreement, and the ever-changing tenancy laws and guidelines. The problem is compounded when landlords are asked to look beyond the language presented in the law to the overall public policy, especially when those policies — in this case, keeping rents as low as possible — go against the landlord’s own interests.
Because of the possible consequences of illegal lease provisions, especially for landlords with multiple properties, it’s important to have a landlord attorney review the tenancy agreement before providing it to a tenant. This attorney also can provide needed updates as rental regulations change. The attorney will be familiar with how these rules are likely to be interpreted by arbitrators and judges.
The risk of fines or other penalties from an illegal lease provision generally is tied to the number of tenants who are asked to sign it, although small landlords also are at risk. But the more likely problem for landlords with illegal lease provisions is tenants who feel pressured to sign an agreement that they believe can’t be enforced. This can set the stage for any number of tenant disputes, like not paying rent on time. For a successful tenancy, the tenant must be committed to following the lease rules, and to do that, the tenant needs to feel the lease is fair.
Illegal lease provisions also cause problems when landlords seek dispute resolution and the tenancy agreement is scrutinized. An illegal provision can impact the landlord’s overall credibility, even for simple matters like the tenant’s failure to pay rent. In the worst-case scenario, the illegality is so severe that the tenancy agreement in its entirety is deemed unenforceable and the landlord’s rights are not protected.
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Disclaimer: The information provided in this post is not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.
