Returning Security Deposits

At the end of the tenancy the Landlord and tenant must complete the move out process before the landlord returns the security deposit to the tenant. 

The move out process includes completing the move out inspection with the tenant. At the start of the tenancy a condition inspection report should have been completed by the Landlord and the tenant. Landlords need to bring that same report to the move out inspection and compare the current condition of the property. 

After reviewing the condition of the property at the end of the tenancy, both the Landlord and the tenant should sign the condition inspection report. The report has a section where  Landlords and tenants can state they agree or why they disagree with the report. It is important for a tenant to sign the document, even when they disagree with what the Landlord indicates on the report. If the two parties are not able to agree on the condition and amount of the deposit to be returned, then the landlord must file a claim with the RTB to be allowed to keep those funds. When Landlords apply to the Residential Tenancy Branch requesting to keep the damage deposit they are required to submit the condition inspection report as evidence to why they should be allowed to keep all or part of the damage deposit. 

When the Landlord fails to complete the inspection report at the end of the tenancy it becomes more difficult for the Residential Tenancy Branch to grant them permission to retain all or part of the damage deposit. Tenants signing the document benefits both parties. It benefits the tenant as they have the opportunity to write on the report why they disagree with it. It benefits the Landlord by showing the Residential Tenancy Branch they have completed the process correctly and have not violated their tenants rights during this process.

One other key factor both parties often misunderstand about returning deposits is, when the parties disagree with the inspection and the landlord files for a hearing, the Landlord is not required to return any of the deposit until after the hearing has completed. This also means the Landlord may not use any of those funds to pay for repairs at the property until after the hearing.

I always encourage both parties to accept some responsibility and reach an agreement that both can accept to end the process. Arguing over $50 for not cleaning carpets, a stove or a broken light fixture will take more time and effort than agreeing on a lesser amount with each party taking a small loss to complete the process.   

With recent increases in interest rates the returning of security deposits has changed for 2023. The interest rate is at a level that tenant deposits now qualify for interest earned to be returned to the tenant. This is not hard to calculate thanks to the Residential Tenancy Branch website. Using the security deposit calculator (link below) you enter the date the tenancy started, ended and the amount of deposit collected. The calculator will add the amount of interest owed to the tenant. It is good practice to use this calculator even when interest is not owed, and bring a printed copy to the move out inspection to show the tenant they are owed or not owed interest on their deposit. 

http://www.housing.gov.bc.ca/rtb/WebTools/InterestOnDepositCalculator.html

Managing your rental 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

Rental Application fees

Searching for a tenant takes time and effort to find the right people for your property.

First you must advertise your property and show it to prospective applicants. Prospects will submit an application and Landlords will need to check references, perform credit checks and determine if the applicant is suitable for the property. All of this work takes time, and some Landlords want to charge a fee for this time. 

Part two section 15 of the Residential Tenancy Act in BC prohibits Landlords from requiring a deposit or charging a fee for accepting or processing the rental application, investigating an applicant's suitability or accepting the tenant. What this means is a Landlord is not entitled to be directly compensated for these efforts. Rent for the property will need to cover these anticipated costs for Landlords. I have seen some Landlords state the fee will be added to the rent or deposit when the tenancy is accepted, this is inappropriate and not in accordance with the Residential Tenancy Act.

Asking a potential tenant to provide an amount of money could deter quality tenants from applying because they are informed of the law. Landlords could find themselves in a Residential Tenancy Board hearing if an applicant submitted their application fee, then wasn’t selected to rent the unit. 

Being a Landlord is equivalent to owning a business. If you owned a retail store, restaurant or other business and required potential employees to pay a fee for submitting their application you would limit your choice significantly. Quality employees would look elsewhere and your business wouldn’t perform as you would expect. Requesting a fee for the application to rent would provide the same results, and a tenancy that wasn’t what you expected.  

Landlords should take the appropriate time to thoroughly investigate each applicant's suitability for renting their property, in a manner which is in accordance with the Residential Tenancy Act. Failure to adhere to Tenancy Laws in BC often creates issues between Landlords and Tenants.  

Looking for Property Management you can find more information about us at: www.cartrefproperties.com

Performing a move-out inspection with or without the tenant.

When a tenant gives notice, or a landlord serves legal notice to vacate a property, a landlord must perform a few tasks in order to be able to claim costs against the security deposit. Many landlords understand they must return the damage deposit within 15 days after a tenant vacates the property, and that the tenant is required to provide their forwarding address. Those are the easy parts of the move out process. There are other steps many landlords often misunderstand about the move out procedure.      

The most important step is performing the move-out inspection. After the tenant has removed all their belongings from the property and cleaned the unit the landlord and tenant must meet at the property to review the condition of the property. The Landlord and tenant should have completed a condition move-in inspection report at the start of the tenancy, (RTB27 form) and this same report should be brought to the move-out by both the landlord and the tenant for review by both parties. The condition inspection report has a section where the tenant inputs their forwarding address, and the parties indicate on the form what the amount of the damage deposit is going to be held back by the landlord. If the parties don’t agree there is a section where the tenant signs to say they disagree with the amount held and then the landlord must then file with the RTB within two weeks to claim the funds from the deposit. Without a tenant’s signature on the move out inspection form, the landlord has no right to keep any part of the damage deposit.   

During the inspection process if there is a dispute regarding the condition of the property between both parties it is at this time that an estimated cost of the repair must be indicated on the form. For example if the unit has not been cleaned to your expected standard and you the landlord feels it is going to cost $200 to clean the property then you advise the tenant you will keep that amount from the security deposit. If the tenant agrees you write that amount on the move out form and both parties sign off on the remainder of the deposit being returned to the tenant. If the tenant disagrees with the amount you suggested then both parties must agree on a different amount or there is a section on the form where the tenant has the right to indicate they disagree with the amount the landlord wants to keep and if this is identified then the landlord must file with the RTB for a hearing to keep those funds. 

Two other aspects of this are when there is a dispute of the amount the landlords want to keep they are not required to return to the tenant any of the security deposit until the hearing is held and they are not allowed to keep any of the deposit until the hearing is held, as the arbitrator may award more or less of the amount identified. The other part which many landlords misunderstand is when a tenant disagrees and the landlord fails to file for a hearing within 15 days they could be subject to paying double the security deposit to the tenant.       

It is important for landlords and tenants to understand during the move out inspection when you indicate the amount of funds you hold back from the security deposit. There is no option to have the tenants sign the form then indicate at a later date what the amount of the security deposit you are keeping from them.  You also can’t perform the move out then collect the keys and revisit the property to evaluate the amount of damage and file a claim. In this scenario a tenant has no indication if damage was caused after they left the property. 

When returning the security deposit landlords are required to send a copy of the completed move out form to the tenant along with the funds benign returned. 

A good practice is when a tenant gives notice to vacate the property, visit the property to perform an inspection to identify any items that may need repair. This will give you the opportunity to obtain a quote for potential costs of the repair and then have a better understanding of how much you need to hold back from the security deposit. 

When a tenant doesn’t show up to a scheduled move-out inspection, this doesn’t give landlords permission to keep the damage deposit. A landlord must complete the move-out report and either file with RTB to keep the deposit, or wait two years which is the limitation act requirements for filing a claim for a loss in BC. A tenant has two years as does a landlord to claim in court losses you have incurred. The difficult part here is when a tenant fails to attend you may not have their forwarding address to send documentation for a hearing.  A landlord may be able to file using electronic communication if this has been agreed upon by the tenant as a form of communication for serving documents. 

Completing the move out report even when the tenant fails to attend is very important. If the move-out inspection report wasn’t completed due to the tenant failing to attend the move out inspection and then the tenant applies to RTB within two years to have the security deposit refunded the Landlord needs to be able show they scheduled the move out, and performed the move out inspection. Without these two factors it is possible the RTB could rule in favour of the tenant to have the security deposit refunded. A condition inspection report has an important feature for the tenants which is where they need to indicate their forwarding address for the landlord to send the refunded security deposit.  

In all hearings with the RTB they expect landlords to follow the rules and be professional during the transaction between landlords and tenants. Failing to perform the required steps shows lack of professionalism during the process. Landlords are held to a hire standard.    

Need assistance managing your rental property, Cartref Properties can assist you, call today to discuss your needs. You can find more information about us at: www.cartrefproperties.com

How do you know you have a good applicant?

You don’t - Doing your due diligence with reference and credit checks which indicate positive information about tenants could result in a negative experience. How does Cartref Properties selection process help owners find quality tenants?.    

In a previous blog about stage one of the tenancy we discussed how the tenant selection process has multiple steps. Each step gives you the opportunity to learn more about applicants before deciding to rent your property to them. The tenant selection processes shouldn’t be rushed, to ensure due diligence can be performed effectively.    

Each step gives you the opportunity to confirm or verify information, eliminating tenants who may not be suitable for your property. Tenant selection has three main steps, screening, showing and evaluating, when not rushed are very effective in selecting quality tenants. 

The screening process is performed when applicants contact us asking to rent or view the property. This step gives the opportunity to ask basic information including who would be renting the unit, when they want to move in, where they currently live and why they are moving. They may not provide all these details during this process and you will need to decide if you want to proceed to the next step based on the information provided. How quickly they reply or effectively they answer your questions gives insight into them as a person. I often asked people to tell me about themselves and who would live there and the reply was just the number of people, with no further details. This is a sign they are not reading our request.

Showing the property is an opportunity to interview the applicants in person. It shows if they are respectful of our time, property and process. When applicants fail to attend a showing on time without an explanation it provides insight into their character. How the tenant views your property, do they ask to enter, or open a door or closet, or do they proceed without asking provides further indication of their personality. If an applicant asks if you can alter the selection process it often indicates inaccurate information may be provided.

When potential renters are viewing the property it is important to ask questions about them, including where they work, live and plan on moving. These questions would be asked in the screening process, during the showing is the opportunity to hear if the applicants provide the same information or different details. A showing also provides the opportunity to explain the evaluating process and what is expected during the tenancy at the property.   

The final step is the evaluation process. After the showing we may provide potential renters with an application form to rent the property. Upon receiving the application we review notes taken during the screening and the showing process and compare if details are consistent with the information on the application. When information is inconsistent it often means they are trying to hide something. We look for signs applicants are trying to keep information from you.   

Today with the advent of cell phones it’s very easy for applicants to provide contact information for managers/supervisors where the phone number is not the business number.

I have been asked how to verify this situation. Doing your due diligence to ensure the contact person provided is actually the supervisor may require more investigation. We search for the business online and will call the main business number asking to speak with the person provided on the application.  

A recent applicant asked me why I didn’t call the number provided for the employer. This immediately advised me they were not forthcoming with the information provided on the application. I had researched the employer online, called the main office number and asked for the person identified on the application. Although I was informed they were the applicants supervisor, I had suspicions they weren’t based on the response provided. 

Another tactic used by applicants is pressure of time. This same applicant advised me one day after sending the application in (and on a Saturday) they were approved for another unit but preferred ours and wanted to know when they would be approved. We continued our normal process of checking applicant information, which carried over into the next work week and were able to determine multiple pieces of information provided were inaccurate.  Allowing us to select a different applicant who we feel is more appropriate. 

Applicants who are good people will provide you with correct and accurate information required to make an informed decision. Applicants who try to alter the process of evaluating an application often are trying to hide something from you, and are probably a tenant which would provide  a negative experience.  

There are many good tenants who will rent your property, sometimes it takes time to find the right one. 

Need assistance with your rental property contact us for an evaluation of your needs.

www.cartrefproperties.com 

Red Flags

Happy New Year 
As we start a new year we will review the beginning of the rental management process and identify a few red flags we see from potential applicants. The tenant selection process is the beginning of, and probably the most important part of the process in rental property management. 

There are many aspects of the tenant selection process, and it is important to pay attention to what we call “red flags” and they are often hard to see. The process starts with the initial contact from a tenant who inquires about your property. 

The first step is to pre-screen the inquiry to ensure they are a possible fit for your property. At this point you’re inquiring if th are a potential fit for the property. Asking how many people would live there is a good question. If you have a two bedroom and they want eight people to live there you have the right to say no to that situation. A person does not have a right to rent your property simply because they have contacted you or applied for the property. 

Make notes of what they tell you about themselves. If possible, inquire what they do for work and if they have pets.  During the viewing ask the same questions again in a different format. If they provide a different answer than during the pre screening this is a red flag, which indicates they may not be forthcoming with the facts about the situation.  

When multiple people are planning on living together it is best if they all attend the viewing, as this gives you the opportunity to meet each party. When one party is unable to attend it is acceptable to inquire why they are unavailable. A party not attending could be a red flag that the individual will not actually reside at the property.  

When communicating with potential applicants how they respond can give insight to the person they are. Schedule an appointment for the viewing. Give them specific instructions for confirming the appointment by communicating with you before the viewing time. Failing to confirm the appointment shows disrespect for your time and is a red flag to how they respect others. If they lack respect for others they may lack respect for your property.  

When asking questions, listen carefully for the reply, are they trying to give a response you want to hear or is it natural answering the questions. People who are telling the truth are more natural in their replies. While people trying to hide something often brush off the answer, avoid the subject and try to change the direction of the conversation. This is a red flag if you are trying to ascertain a specific answer and having difficulty obtaining a response to a simple question. This is why we don’t like open houses for rental properties, we ask questions during the viewing process, which is more difficult with multiple parties in the property. 

How long do they look at the property?. If a person or people attend a viewing and are in and out in five minutes without asking very many questions, this is a red flag they may not be looking for themselves.  A person looking to live at a property will take the time to look at all parts of the property, ask questions of something that catches their eye that is of concern to them. 

People looking to move in fast are also a red flag. When a party is looking and says they can move in now why are they available? There may be legitimate reasons and it could be they have had a hard time finding another place, due to who they are.   

These are a few of the red flags we watch out for when renting 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