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{{LSLAP Manual TOC|expanded = landlord}}
{{LSLAP Manual TOC|expanded = landlord}}
Chapter 6 SECURITY DEPOSITS


== A. Duty to Provide and Maintain Rental Unit in Repair ==


=== 1. Landlord ===
=A. General=


Sections 32(1)(a) and (b) of the RTA provide that a landlord must provide and maintain residential property in a state of decoration and repair that complies with the health, housing and safety standards required by law, and having regard to the age, character and location of the rental unit. It must be suitable  for tenant occupation. With respect to a landlord’s obligation to repair, the RTR Schedule states that the landlord must provide and maintain the residential property in a reasonable state of decoration and repair, suitable for occupation by a tenant.  
A requirement that a tenant pay a security deposit is an express term of the model agreement. Security deposit is defined in s 1 of the RTA very broadly. It can include money or property or almost any other item of value to be held by a landlord for the purpose of securing the performance of a tenant’s obligations under the agreement and the RTA (e.g. the payment of rent and the obligation to leave the rental unit in the same condition they were received). A security deposit is a deposit which may cover a variety of costs to the landlord: see Balfour v. Thomson, Vancouver Registry F771652 (BC Co Ct). A security deposit does not include: a post-dated cheque for rent, a pet damage deposit, or a fee prescribed under RTR ss 6 and 7. See RTB Policy Guideline 29: Security Deposits.


A landlord is responsible for repairing:
A landlord can only request a security deposit from a tenant as a condition of entering into a tenancy agreement, not after the agreement has been formed. However, pursuant to s 20, if a landlord permits a tenant to keep a pet on the residential property the landlord may require the tenant to pay a pet damage deposit in accordance with s 19 at the time the tenant moves in with a pet, or at the time a tenant acquires a pet.
*the rental structure, and roof;
*heating, plumbing, electricity;
*locks, walls, floors, ceilings;
*fire doors, and fire escapes;
*intercoms, elevators; and
*anything else included in a tenant’s rent, if so identified in the tenancy agreement.  


If a landlord is required to make a repair to comply with the above obligations, the tenant should be advised to notify the landlord of the need for repair (preferably in writing). If the landlord refuses to make the repair, the tenant may seek an Arbitrator’s order. If the tenant fails to notify the landlord and substantial damage results from the lack of repair, the tenant may have breached his or her duty.  
=B. Requirements Under the RTA=
==1. Amount==


When a tenant goes to the RTB to request a repair order, they may also request for a rent reduction until the repair is complete.  
A security deposit demanded or received must not exceed one half of the monthly rent (RTA, s 19(1)). Only one security deposit can be required for each rental unit (s 20(b)). A landlord can also ask for an additional ½ month rent as a pet damage deposit (s 19(2)). The tenant may, with the landlord’s written permission, set off all or part of a security deposit against the rent that is due from him or her (s 21). Any excess security deposit paid (more than ½ of the amount payable as rent at the beginning of the tenancy) to the landlord may be set off by the tenant, presumably without the landlord’s permission (s 19(2)). Failure to pay a lawful security deposit is a ground for ending the tenancy (s 47(1)(a)). The landlord may give a one-month end of tenancy notice if the tenant fails to pay the security deposit within 30 days.


=== 2. Tenant ===
==2. Inspection Reports==


Tenants must maintain “ordinary health, cleanliness and sanitary standards” in their rental unit. Tenants must also repair damage caused to the rental unit  and property (this includes common areas) by their or their pet’s wilful or negligent acts or omissions, or those of a person permitted by him or her on the rental unit or property (RTA, s 32(3)). There is no duty to repair reasonable wear and tear (s 32(4)).  
The RTA requires landlords and tenants to do move-in (ss 23 and 24) and move-out (ss 35 and 36) condition inspection reports. The rights to the security deposit of a landlord or tenant who does not participate in the condition inspection process may be extinguished.


== B. Withholding Rent ==
=C. Return of Security Deposit and Pet Damage Deposit=


A tenant cannot withhold rent because of repairs needed unless an Arbitrator gives an order permitting it. Another way to seek repairs can be through the local municipality’s Standards of Maintenance bylaw however this is only the case in some municipalities, for example, Vancouver, the City of North Vancouver, and New Westminster. Tenants should check with the municipality to see if there is a Standards of Maintenance bylaw in place. A tenant can call a local municipality and ask for a free inspection if the repair problem relates to structural defects (requiring a building inspector), health problem (e.g. mould or pests), or fire problem (e.g. fire inspection for fire exits, smoke alarms). The inspection may result in a formal report and may require  the landlord to conduct repairs. The inspection report can also be important evidence to present at an RTB dispute resolution when seeking a Repair Order or an Order for reduction in rent.
When a tenant moves out, he or she must provide his or her landlords with a forwarding address in writing. The security deposit must be returned to the tenant, with interest, or the landlord must file for dispute resolution to retain the deposit, within 15 days after the date at which the tenancy ends, or the date the landlord receives the tenant’s forwarding address, which must be in writing, whichever is later.


'''NOTE:''' There is a risk attached to calling a City Inspector. The inspection could result in the municipality ordering the suite vacated, resulting in an eviction for the tenants.  
If a landlord does not comply with s 38(1) of the RTA (fails to return deposits within 15 days, and fails to file for dispute resolution) and the tenant still has a valid right to the deposit, the tenant may apply for dispute resolution, the landlord may not make a claim against the security deposit or any pet damage deposit, and must pay the tenant double the amount of the security deposit, pet damage deposit, or both (s 38(6)).
Leases may not include a term providing that the landlord automatically keeps all or part of the deposit at the end of a tenancy.


== C. Emergency Repairs ==
Changes have been passed, but not yet brought into force as of the time of writing, allowing landlords to repay security deposits by electronic funds transfer, in addition to the former cheque or personal service methods. For more information on whether the changes have been brought into force, consult the RTB.


Before advising any tenant on this course of action, an advocate should be aware that this is a rather complicated area. To qualify, the repairs must fall  into the categories below, and must be urgent and necessary for the health and safety of persons or the preservation and use of the property and rental units. Pursuant to s 33, a tenant may conduct emergency repairs without going to dispute resolution if the landlord fails to make repairs within a reasonable time after a tenant has made a reasonable effort on two or more occasions to contact the landlord. Sometimes there is a discrepancy between what  a tenant, landlord, and RTB might consider ‘emergency’ repairs. '''Before a tenant conducts any repairs, he or she should call the Residential Tenancy Branch, speak to an Information Officer, and make note of the Officer’s name and what the Officer tells them.''' The specific types of repairs that may qualify as  emergency repairs are urgent, necessary for the health, safety or preservation of property AND concern:
==1. Interest on Security Deposit==
*major leaks in the pipes or roof;
*damaged or blocked water or sewer pipes or plumbing fixtures;
*malfunction of the central or primary heating system;
*defective locks that give access to the residential premises; 
*electrical system repair.


Emergency repair is a complicated area. Tenants must follow the exact procedure under s 33(3) of the RTA or the landlord can make a claim against the tenant. All steps taken should be documented fully. Emergency repairs usually constitute a large repair bill and should only be undertaken by the tenant in the clearest of circumstances. When in doubt, apply first to an Arbitrator for a Repair Order, refer to a Property Use Inspector, or investigate local Standards of Maintenance bylaws.  
Interest on a security deposit is calculated from the date the tenant pays the deposit to the day before the security deposit is paid back to the tenant. If the deposit is disputed at dispute resolution, the interest is calculated from the date the tenant paid the deposit up until the date the Arbitrator orders its return (usually the date of the hearing).


== D. Terminating or Restricting Services or Facilities ==
Interest on a security deposit is calculated as follows. For each one-year period beginning on January 1, the rate will be 4.5% below the prime lending rate of the principal banker to the province on January 1st of that year, compounded annually. The current and past rates are:


A service or facility, as defined in s 1 of the RTA, includes: furniture, appliances and furnishings; parking and related facilities; cable television  facilities; utilities and related services; cleaning or maintenance services; maid services; laundry facilities; storage facilities; elevator facilities;  common recreational facilities; intercom systems; garbage facilities and related services; and heating facilities or services.  
Jan 1/2009 - Dec 31/2015 - 0.00% compounded annually
Jan 1/2008 - Dec 31/2008 - 1.50% compounded annually
Jan 1/2006 - Dec 31/2007 - 0.50% compounded annually
Jan 1/2002 - Dec 31/2005 - 0.00% compounded annually
Jan 1/2001 - Dec 31/2001 - 3.00% compounded annually
Jan 1/2000 - Dec 31/2000 - 2.00% compounded annually
Jan 1/99 - Dec 31/99 - 2.25% compounded annually
Jan 1/98 - Dec 31/98 - 1.50% compounded annually
Jan 1/97 - Dec 31/97 - 0.25% compounded annually
Jan 1/96 - Dec 31/96 - 3.00% compounded annually
Jan 1/95 - Dec 31/95 - 3.50% compounded annually
Jan 1/94 - Dec 31/94 - 1.00% compounded annually
Jan 1/93 - Dec 31/93 - 2.75% compounded annually
Jan 1/92 - Dec 31/92 - 3.50% compounded annually
Jan 1/91 - Dec 31/91 - 8.25% compounded annually
Jan 1/90 - Dec 31/90 - 9.00% compounded annually
Jan 1/89 - Dec 31/89 - 7.75% compounded annually
Jan 1/88 - Dec 31/88 - 5.25 % compounded annually
Feb 1/87 - Dec 31/87 - 5.25% compounded the last day of that period
July 1/84 - Jan 31/87 - 8.00% per annum
April 1/83 - June 30/84 - 8.00% compounded annually
June 1/80 - March 31/83 - 12.00% compounded annually
Dec 1/74 - May 31/80 - 8.00% compounded annually


Sections 27(1)(a) and (b) of the RTA provides that a landlord must not terminate or restrict a service or facility if it is essential to the tenant’s use of the rental unit as living accommodation, or providing the service or facility is a material term of the tenancy agreement.  
NOTE: A tenant has only one year from the time the tenancy ends to supply the landlord with his or her forwarding address. If the tenant fails to forward the address within the one year limit the landlord may retain the security or pet damage deposit or both.


Section 27(2) of the RTA provides that a landlord may terminate or restrict a service or facility other than one referred to in ss 27(1)(a) or (b) if the landlord gives 30 days written notice, in the approved form, of the termination or restriction, and reduces the rent in an amount that is equivalent to the reduction in the  value of the tenancy agreement resulting from the termination or restriction of the service or facility. The tenant may dispute the restriction or termination on the basis that the service being restricted or terminated constitutes an essential service.
The RTB website provides a Deposit Interest Calculator which calculates the interest payable on a security deposit during any specific time period:
www.rto.gov.bc.ca/content/calculator/calculator.aspx.


See RTB Policy Guideline 22: Termination or Restriction of a Service or Facility.  
NOTE: A landlord does not have to return a deposit within 15 days if the tenant’s right to the return of the deposit (pet or security) has been extinguished for failing to participate in the condition inspection procedures.


== E. Bedbugs ==
NOTE: A pet damage deposit may be used only for damage caused by a pet to the residential property, unless the tenant agrees otherwise.


Bedbugs are an increasing problem in British Columbia, particularly in the West End and Downtown Eastside of Vancouver. Bedbugs are small (about 1/5 inch  long) parasites that tend to live in and around bed frames, cracks in walls, along baseboards, and under carpet edges. They are active at night, coming  out to feed on sleeping people before returning to their crevices and crannies. Bedbugs are extremely difficult to get rid of, and the extermination  process can be frustrating for both landlords and tenants.
=D. Extra Deposits and Non-Refundable Fees=


=== 1. Landlord Obligations ===
The RTA allows landlords to charge a deposit for additional access devices (a device so long as it is not a tenant’s only means of entry to one’s building).


Under s 32(1) of the RTA, landlords must maintain the property in a state of repair that complies with health standards and is suitable for human occupation. Although bedbugs are not a public health risk (they do not transmit infectious diseases), they are still considered a pest and an infestation  creates unsuitable living conditions. Some municipalities, such as Vancouver, have Standards of Maintenance bylaws that require landlords to get rid of  pest infestations. If a landlord is refusing to treat the infestation, a tenant can call their municipality for an inspection and for an order that the  building be treated. Each municipality’s bylaws will vary, so it is best to call city hall.  
Administration fees for returned cheques ($25) or moving between rental units on a single property can only be charged if the tenancy agreement specifically allows for it (RTR, s 7(1)(d)).
==1. Allowable Non-Refundable Fees==


Landlords are obligated to bear the cost for treatment of an infestation, provided the tenant cooperates with treatment (see Tenant Obligations below). In Vancouver, the Health Bylaw mandates that only a trained and certified person can spray pesticides in a multiple-unit dwelling. The landlord should not, and legally '''cannot''', do it themselves. There are also other requirements in the Health Bylaw, such as notification in writing 72 hours prior to spraying. The pesticide technician should also adhere to the label on the pesticide bottles.
*Direct costs of replacement keys;
 
*Direct costs of any additional keys that a tenant requests;
=== 2. Tenant Obligations ===
*Bank service fees for NSF cheques plus a maximum late fee of $25; and
 
*Parking fees.
Under s 32(2) of the RTA, the tenant is also obligated to maintain the property in a sanitary condition. This includes notifying the landlord of any suspected infestation. Upon discovery of a bedbug infestation, the tenant is obligated to cooperate with the landlord in treating the infestation. If tenants do not cooperate, they could be found liable for the cost of treatment, or be evicted. The landlord is obligated to get rid of the infestation '''unless''' it can be '''proven''' the tenant brought the bedbugs with them when they moved in.
 
If a landlord refuses to have the suite or building treated, the tenant can apply to the RTB for an order compelling the landlord to do so, or as noted above can get an order from a city inspector. Vancouver Coastal Health no longer does inspections, but is available to answer questions over the phone at 604-675-3800.

Revision as of 01:35, 10 August 2016

LSLAP Manual
LSLAP Manual
This page is from the
Law Students' Legal
Advice Program Manual.
See the full contents.
LSLAP Manual
Introduction
Chapters
19. Landlord and Tenant Law
 · I. Introduction

 · II. Governing Legislation
 · III. Residential Tenancy Act & Laws
 · IV. Tenancy Agreements
 · V. Moving In & Moving Out
 · VI. Security Deposits
 · VII. Repair & Service
 · VIII. Rent Increase
 · IX. Tenant's Rights
 · X. Subletting & Assignment
 · XI. Termination & Eviction
 · XII. Dispute Resolution
 · XIII. Common Law
 · XIV. Strata & Condos
 · XV. Assisted Living
 · XVI. Manufactured Homes

 · XVII. Guidelines & Resources
v • d • e



Chapter 6 SECURITY DEPOSITS


A. General

A requirement that a tenant pay a security deposit is an express term of the model agreement. Security deposit is defined in s 1 of the RTA very broadly. It can include money or property or almost any other item of value to be held by a landlord for the purpose of securing the performance of a tenant’s obligations under the agreement and the RTA (e.g. the payment of rent and the obligation to leave the rental unit in the same condition they were received). A security deposit is a deposit which may cover a variety of costs to the landlord: see Balfour v. Thomson, Vancouver Registry F771652 (BC Co Ct). A security deposit does not include: a post-dated cheque for rent, a pet damage deposit, or a fee prescribed under RTR ss 6 and 7. See RTB Policy Guideline 29: Security Deposits.

A landlord can only request a security deposit from a tenant as a condition of entering into a tenancy agreement, not after the agreement has been formed. However, pursuant to s 20, if a landlord permits a tenant to keep a pet on the residential property the landlord may require the tenant to pay a pet damage deposit in accordance with s 19 at the time the tenant moves in with a pet, or at the time a tenant acquires a pet.

B. Requirements Under the RTA

1. Amount

A security deposit demanded or received must not exceed one half of the monthly rent (RTA, s 19(1)). Only one security deposit can be required for each rental unit (s 20(b)). A landlord can also ask for an additional ½ month rent as a pet damage deposit (s 19(2)). The tenant may, with the landlord’s written permission, set off all or part of a security deposit against the rent that is due from him or her (s 21). Any excess security deposit paid (more than ½ of the amount payable as rent at the beginning of the tenancy) to the landlord may be set off by the tenant, presumably without the landlord’s permission (s 19(2)). Failure to pay a lawful security deposit is a ground for ending the tenancy (s 47(1)(a)). The landlord may give a one-month end of tenancy notice if the tenant fails to pay the security deposit within 30 days.

2. Inspection Reports

The RTA requires landlords and tenants to do move-in (ss 23 and 24) and move-out (ss 35 and 36) condition inspection reports. The rights to the security deposit of a landlord or tenant who does not participate in the condition inspection process may be extinguished.

C. Return of Security Deposit and Pet Damage Deposit

When a tenant moves out, he or she must provide his or her landlords with a forwarding address in writing. The security deposit must be returned to the tenant, with interest, or the landlord must file for dispute resolution to retain the deposit, within 15 days after the date at which the tenancy ends, or the date the landlord receives the tenant’s forwarding address, which must be in writing, whichever is later.

If a landlord does not comply with s 38(1) of the RTA (fails to return deposits within 15 days, and fails to file for dispute resolution) and the tenant still has a valid right to the deposit, the tenant may apply for dispute resolution, the landlord may not make a claim against the security deposit or any pet damage deposit, and must pay the tenant double the amount of the security deposit, pet damage deposit, or both (s 38(6)). Leases may not include a term providing that the landlord automatically keeps all or part of the deposit at the end of a tenancy.

Changes have been passed, but not yet brought into force as of the time of writing, allowing landlords to repay security deposits by electronic funds transfer, in addition to the former cheque or personal service methods. For more information on whether the changes have been brought into force, consult the RTB.

1. Interest on Security Deposit

Interest on a security deposit is calculated from the date the tenant pays the deposit to the day before the security deposit is paid back to the tenant. If the deposit is disputed at dispute resolution, the interest is calculated from the date the tenant paid the deposit up until the date the Arbitrator orders its return (usually the date of the hearing).

Interest on a security deposit is calculated as follows. For each one-year period beginning on January 1, the rate will be 4.5% below the prime lending rate of the principal banker to the province on January 1st of that year, compounded annually. The current and past rates are:

Jan 1/2009 - Dec 31/2015 - 0.00% compounded annually Jan 1/2008 - Dec 31/2008 - 1.50% compounded annually Jan 1/2006 - Dec 31/2007 - 0.50% compounded annually Jan 1/2002 - Dec 31/2005 - 0.00% compounded annually Jan 1/2001 - Dec 31/2001 - 3.00% compounded annually Jan 1/2000 - Dec 31/2000 - 2.00% compounded annually Jan 1/99 - Dec 31/99 - 2.25% compounded annually Jan 1/98 - Dec 31/98 - 1.50% compounded annually Jan 1/97 - Dec 31/97 - 0.25% compounded annually Jan 1/96 - Dec 31/96 - 3.00% compounded annually Jan 1/95 - Dec 31/95 - 3.50% compounded annually Jan 1/94 - Dec 31/94 - 1.00% compounded annually Jan 1/93 - Dec 31/93 - 2.75% compounded annually Jan 1/92 - Dec 31/92 - 3.50% compounded annually Jan 1/91 - Dec 31/91 - 8.25% compounded annually Jan 1/90 - Dec 31/90 - 9.00% compounded annually Jan 1/89 - Dec 31/89 - 7.75% compounded annually Jan 1/88 - Dec 31/88 - 5.25 % compounded annually Feb 1/87 - Dec 31/87 - 5.25% compounded the last day of that period July 1/84 - Jan 31/87 - 8.00% per annum April 1/83 - June 30/84 - 8.00% compounded annually June 1/80 - March 31/83 - 12.00% compounded annually Dec 1/74 - May 31/80 - 8.00% compounded annually

NOTE: A tenant has only one year from the time the tenancy ends to supply the landlord with his or her forwarding address. If the tenant fails to forward the address within the one year limit the landlord may retain the security or pet damage deposit or both.

The RTB website provides a Deposit Interest Calculator which calculates the interest payable on a security deposit during any specific time period: www.rto.gov.bc.ca/content/calculator/calculator.aspx.

NOTE: A landlord does not have to return a deposit within 15 days if the tenant’s right to the return of the deposit (pet or security) has been extinguished for failing to participate in the condition inspection procedures.

NOTE: A pet damage deposit may be used only for damage caused by a pet to the residential property, unless the tenant agrees otherwise.

D. Extra Deposits and Non-Refundable Fees

The RTA allows landlords to charge a deposit for additional access devices (a device so long as it is not a tenant’s only means of entry to one’s building).

Administration fees for returned cheques ($25) or moving between rental units on a single property can only be charged if the tenancy agreement specifically allows for it (RTR, s 7(1)(d)).

1. Allowable Non-Refundable Fees

  • Direct costs of replacement keys;
  • Direct costs of any additional keys that a tenant requests;
  • Bank service fees for NSF cheques plus a maximum late fee of $25; and
  • Parking fees.
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