Stage Two of a Tenancy
Renting your property involves many different tasks and processes. In a previous post we mentioned renting has three stages to the process. Today we will discuss stage two of renting your property.
Stage one of renting was the placement of your tenant. Stage two is managing the tenancy while the tenant occupies your property. Many Landlords neglect stage two especially when a tenant is regularly paying the rent. Tenancies can become a negative experience if not managed throughout the tenancy.
A tenancy agreement has many different clauses, payment of rent is only one of the terms of the agreement. Tenancy agreements will have clauses identifying who the occupants are, how many people may reside at the property, if pets are allowed, if smoking is permitted and a requirement for tenants to report maintenance issues to the Landlord. Verifying these clauses is difficult unless a landlord visits the property to verify the tenant is adhering to the tenancy agreement.
Landlords should visit and inspect the property on a regular basis, Cartref Properties recommends twice a year. Being a proactive Landlord provides tenants opportunities to communicate issues to Landlords. Open two way communication creates a better experience for both Landlords and tenants. Tenants may not report a maintenance issue which is an easy fix as it isn’t bothering them, when left unattended becomes a major concern. Inspections provide Landlords opportunities to attend to minor maintenance repairs reducing costs. Performing routine inspections improves the positive experience of a tenancy. Tenants may be in violation of a term of the agreement which would allow Landlords to seek termination of a tenancy or correct the action through a hearing with the residential tenancy branch. Informing applicants that inspections will be performed during the tenancy often turns away applicants who would have been a negative experience.
Managing a rental property doesn’t stop when a tenant is paying the rent, it moves to a different stage.
Looking for Property Management you can find more information about us at: www.cartrefproperties.com
Do tenants prefer to rent from owners directly or a property manager?
I was speaking with a landlord recently about helping them with their rental property. During the discussion they indicated their experience was that tenants preferred to rent from owners and not a property manager. I found this to be interesting. I have heard many landlords complain about “professional tenants”, a term landlords use to describe tenants who manipulate the system and take advantage of landlords because they know the system and how to work around it. My response to the landlord was that my experience is that tenants prefer dealing with owners because they can take advantage of owners who aren’t familiar with the tenancy laws.
As a property manager I have never dealt with a “professional tenant”. When a Landlord lacks the knowledge of managing a rental in BC they often find themselves in a difficult situation when they haven’t followed the law. By the time the owner finds out they are dealing with a professional tenant they are on the road to a negative situation.
Managing a rental requires a significant amount of knowledge. When a tenant knows and understands that the owner is unfamiliar with the tenancy laws they become easy targets to take advantage of. After the tenant occupies your property it is difficult to remove them. Many landlords complain this is the fault of the tenancy branch. The RTB is mandated to not make a person homeless without a valid reason. They also expect the landlords, which includes self managing owners, to be more familiar with tenancy laws than tenants. Interpreted this means landlords are held to a higher standard during the RTB hearings. When a landlord fails to follow the law the RTB will often make a decision which doesn’t include eviction of the tenant from your rental property.
A property manager should have greater knowledge and understanding of the tenancy laws than the individual owner which will help reduce and or prevent the professional tenants from occupying your rental properties.
Renting your property can be confusing. Cartref Properties can assist you, call today to discuss your needs or find more information about us at: www.cartrefproperties.com
How can your strata better manage rentals in your building?
With the removal of the rental restrictions in all strata corporations in BC, many strata corporations are worried this is going to lead to an influx of issues at their property. Here are a few things that strata corporations can do to improve the situations regarding rental in their building.
The first thing is to improve communication between the strata corporation and the landlord, landlord’s agent and tenant. Quality communication in any relationship is important and will improve outcomes. Today’s almost all strata management companies use online communication tools to connect to the ownership of the property. These tools are used for communicating many different issues at the building from distributing meeting minutes, to notices regarding work being completed at the property. Work can be the annual fire testing which if the unit is tenanted the tenant must provide access for. If a notice for the fire testing is distributed electronically to the landlord and they have to forward or pass that on to the rental manager who then forwards it to the tenant, the communication is naturally delayed in comparison to when an owner receives the same information. This causes a delay in the response and or lack of cooperation due to the timely nature the information is received.
The second thing strata corporations need to improve is their understanding of the enforcement of bylaws when the unit is tenanted. All strata corporations should review with their management company the process they follow when dealing with a complaint of a tenanted unit. The CRT has heard multiple cases where the application of fines hasn’t followed the correct process of providing a tenant the opportunity to respond in a timely manner and in these cases the fines have been overturned. When a unit is tenanted the renter has the same right to reply to a complaint as an owner, and in the same time frame. If the management company is not sending tenants directly a copy of a bylaw notice and is expecting the owner to forward it to their tenant, which fails to allow a tenant to respond to a bylaw notice, you are not meeting the requirements in section 135 of the SPA. Many cases have been brought to the CRT and the fines are being thrown out due to lack of proper procedure when a bylaw letter is not sent to the tenants directly.
The biggest change can be with attitude. Most tenants are good people and all people want to be treated with respect. If strata corporations stop treating renters like they are outcasts and don’t belong, the experience for owners and renters will be a positive one. The old adage of don’t let a few bad apples spoil it for everyone applies here.
Cartref Properties manages multiple properties in the lower mainland and they are managed by many different strata management companies all of whom use electronic communication to the owners. At this time of the over ten strata management companies we deal with only two allow Cartref Properties to receive communication as the landlord’s agent and the tenant to receive the communication about the building electronically. Two other companies allow the rental agent to receive the communication but not the tenant.
The challenge we are putting to strata management companies is, it’s time to improve your communication skills to all parties involved with the strata lot. A more informed tenant and landlord’s agent will improve many issues owners complain about.
Renting your property can be confusing. Cartref Properties can assist you, call today to discuss your needs or find more information about us at: www.cartrefproperties.com
Should you use the strata management company of your building to manage your rental property?.
If you own an investment property in a strata corporation and are looking for a rental management company there are many things you should consider.
One of the most overlooked aspects of hiring a rental property manager is, are they fully invested in managing your property. A rental property manager will help a landlord with multiple aspects including finding a tenant, managing tenant relations during the tenancy and completing the move out process.
BC has regulations in place identifying who can manage your property. If you are the owner of the property you are able to manage it yourself. When you hire a third party they must be licensed by the governing body which in BC is the BCFSA. Why do third parties need to be licensed, to protect landlords from being misrepresented in the rental property management process. Licensed individuals have training on the laws, regulations and processes governing rental properties in BC.
There are three licensing groups in BCFSA for Real Estate Professionals, Trading, Strata Management and Rental Management. A person with a trading licence assists you in selling your property, they can also help tenants find a rental property. Strata Managers are licensed to manage Strata Corporations, which is the entire building, and can be residential or commercial properties.
Rental Managers are licensed to manage rental properties, which can include residential, or commercial. Residential properties include Apartment buildings, individual houses and strata lots inside Strata Corporations. Strata lots include commercial properties, condos, townhouses and can include single family homes in a Strata Corporation. What is often misunderstood is rental managers are not licensed to assist tenants find a property to rent as they represent the landlords not tenants.
An individual and a brokerage may obtain all three licence categories if they choose and provide Trading, Strata and Renal Management to their clients.
BCFSA describes various types of conflicts of interest when dealing with multiple types of licence categories if interacting with one client. In recent years BCFSA removed the ability of Trading agents to represent the buyer and the seller in a sales transaction, this is called dual agency. This was implemented to ensure each party's interests are being fairly represented.
In property management there are no limitations at this time for a strata property management company and rental unit in that strata be managed by different parties.
BCFSA identifies areas of potential conflicts of interest for all licensees when they are licensed in another category.
Here is BCFSA explanation on a licensee's responsibility regarding conflicts of interest.
“As a licensee, you have an overriding duty to avoid conflict of interest, which can be achieved in many cases through proactive planning. However, where a conflict cannot be avoided despite your best efforts to do so, you must promptly and fully disclose the conflict to your client so that they can make an informed decision on how to proceed.”
The first conflict we will identify is between Rental Managers and Trading (Sales) agents.
“Providing additional categories of real estate services (e.g. trading services), such as where you may have an interest in receiving a commission from the sale of a rental property that you manage;
In the above scenario a Trading agent may be encouraging a client to sell a property at a time that may not be the most appropriate for you.
The other conflict is between Strata Management and Rental management as outlined below.
“Providing rental property management services to a strata unit owner in a strata building that you or your brokerage manages;”
-Represent Offering a discounted rental property management rate to owners in a strata corporation that the brokerage manages (is the strata corporation actually subsidizing the individual owners?
The larger issue is how BCFSA recommends how to manage a conflict of interest between managing a rental in a Strata Corporation you manage is as follows:
“This potential conflict could be addressed by modifying your duties in advance by designating a primary and secondary client. The secondary client must understand and agree that the primary client the duties owed to them may be limited in certain situations”
The above statement recommends that when the Strata management company also manages a rental in the same building they have one of the parties sign a document stating one party will be the primary and the other will be the secondary client. In all cases the rental client will be identified as the secondary client because the strata earns more revenue for the property management company.
What does this mean for the rental client? Section 30 of the real Estate Council rules outlines the duties of a licensee and includes acting in the best interest of the client, taking lawful instruction, maintain confidentiality, and take steps to avoid conflict of interest.
When one party agrees to have the services they receive modified by their agent they are being under-represented in the times they need them most, which is when a conflict arises. As a landlord when you hire a property manager you should be able to expect they will always be able to represent your interests.
The issues they may not be able to assist you with are bylaw infractions, CRT claims filed against you and when insurance claims are not being handled properly. These are the most important situations that you should be receiving professional advice and guidance on.
Link to real estate council rules
https://www.bcfsa.ca/about-us/legislation/real-estate-services-rules#section30
There have been a significant number of cases filed in the CRT when bylaw infractions have been applied incorrectly to tenants and the fines overturned due to strata management companies not following proper process to apply the fines in accordance with the Strata Property Act. In these cases your rental property manager should be advising that the process has been applied incorrectly before it reaches the CRT to resolve the issue with the Strata.
We recommend you don’t hire the strata management company who is managing your building to also manage the rental property in the same building. This protects you and your tenant. We also recommend you ensure the manager you hire is licensed by BCFSA to protect your rights as a landlord.
Cartref Properties has worked in both rental and strata management but only provides rental property management specializing in properties located within Strata Corporations.
Renting your property can be confusing. Cartref Properties can assist you, call today to discuss your needs or find more information about us at: www.cartrefproperties.com
What will the removal of rental restrictions mean for strata corporations and the housing market?
The BC government has removed the ability of a strata corporation to restrict rental in their properties. How will this affect the housing market? How will this affect properties with rental restriction bylaws? What can your strata do to manage the addition of rentals?.
If your building currently has a rental restriction, you may already have tenants in the building and the entire building could even be rented under specified exemptions including family members and hardship rentals.
Many strata lot owners and Strata Corporations view “Tenants or Renters‘ as bad people who may not take care of the property due to lack of pride of ownership. Being the owner of the property doesn’t automatically make you a more responsible person.
Is not wanting renters discriminatory? The definition of discrimination is:
“the unjust or prejudicial treatment of different categories of people or things”
One could argue that tenants or renters are “categories of people”, and therefore being against them is a discriminatory thought or action.
Why are people afraid of tenants in their strata corporation? Some concerns are there will be more complaints, or bylaw infractions because tenants don’t care for the property.
In BC when a strata lot is rented the owner is required to provide a form K which identifies the unit is rented and who the tenants are that reside in the unit. By signing the form K tenants are
agreeing to adhere to the bylaws and rules of the strata corporation. This provides the strata with the tenants information and allows them to send bylaw infractions and fines to the tenant when there is an issue. What is often miss understood by stratas and management companies is that they are required to send the infraction notice to the tenants, and copy the owner on the infraction letter, the tenants also have all the rights of an owner to respond to the notice of infraction including the right to request a hearing.
The addition of rentals into your strata corporation will not have an immediate impact on your building. Mass amounts of people are not going to sell their properties to investors simply because they are now rentable, there simply isn’t that many investors available. Some owners who currently live there may choose to rent instead of selling. The process of enforcing your bylaws is slightly different when it is tenanted, ensuring your property management company understands the process is important. Multiple cases have been brought in front of the CRT regarding bylaw fines for tenants which were applied not in accordance with the Strata Property Act and were overturned. Strata Corporations need to understand the rights tenants have in the strata property act when they rent.
Strata corporations whose management company uses electronic communication to inform residents of issues in the building should ensure their management company includes tenants on the system. This makes communication easier, and tenants feel welcome and part of the community. Strata should discuss with the management company to see if they understand the process of applying fines to tenants. The strata must follow section 135 of the act before applying fines. For tenants they must also understand section 130 and 131. The CRT has ruled in multiple cases sending the notice to the owner alone isn’t sufficient when following section 135 as related to tenants. Tenants have the right to reply to a complaint under section 135. Failing to provide them this opportunity means the fines have been applied incorrectly.
How is this change going to help the housing market? Currently there are a large number of people who purchased properties in Vancouver where the empty homes tax was implemented. The properties are vacant as they formally used them part time and want to hold on to them for future full time use. They have applied to their strata corporation for permission to rent and have been denied, due to the rental limit in the bylaw already achieved. This will add a number of rentals to the rental market.
Many rental restriction bylaws have wording that includes owners are not allowed to rent “all or part” of their strata lot. This restricts current owners from obtaining a roommate for their spare room as that would make them in violation of the bylaw. The SPA has exemptions for owners to rent to “family members” which is currently limited to immediate family members, which means parents or children of owners or the owner’s spouse. Lifting the rental restrictions will allow owners to rent all or part of their strata lot to other family members including, siblings, cousins, aunt, uncles and friends. Allowing current owners to rent their spare bedroom will alleviate their cost of housing and provide a home for another person. The way the Act is written now, if you are the person on title and your sibling moves into your spare room, or your new partner moves in with you, you are in violation of the strata bylaw.
Another factor affected by removing the rental restrictions is hardship rentals. Currently an owner may need or want to relocate for work or other reasons for a specified period of time. Currently if the building has a rental restriction bylaw which stipulates a limit to the number of rentals and there is no availability the owner would be forced to request hardship permission. If council denies the hardship application the only options are to leave the unit vacant or sell the property. This could help the economy in many different ways including the following scenarios:
-A person is offered employment in Ontario for a term of two years to work on a specific project. If strata deny the hardship rental then the person needs to leave the unit vacant out of the rental market or sell the property. Leaving it vacant is costly to the owner, doesn’t provide housing in the local market and doesn’t provide the employer with the person they desire. Selling it forces the party to buy another property when they return, which could also be more expensive at that time.
-A family member lives in another province and has their first child. A retired parent living in BC may want to live there for a period of time, one or two years to help their child with their grandchild. Again this person may be forced to sell and buy in again at a different price when they always intended to return to this area.
-A couple who both own a property in strata corporations with rental restrictions, want to move in together to see if the relationship works before buying a property together. Both of their buildings don’t have availability under the rental restriction bylaws. This means one or both must sell the property, and if the relationship fails the one party is now without housing.
These are just a few scenarios where people are being forced to sell a property they would prefer to retain for future personal use, but are forced to sell due to current rental restriction bylaws.
Allowing these types of rentals will increase housing options for people in BC, reduce current housing costs for some owners, and help the economy by allowing people to make decisions to relocate temporarily easier.
Renting your property can be confusing. Cartref Properties can assist you, call today to discuss your needs or find more information about us at: www.cartrefproperties.com