Tenancy Agreements (19:IV): Difference between revisions
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→4. Agreements for Lease (Also Known as Agreements to Lease, or Agreements for Tenancy)
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“Agreements for tenancy” are executory contracts in which the lessor promises that he or she and the lessee will enter into a written tenancy agreement at a later date. For an executory contract to have effect, generally the agreement must be in writing and must contain the essential elements of a lease. While the law states that the agreement must be in writing, this requirement is not always enforced. Consequently oral agreements may be considered valid. Also, the payment of money may point to the fact that a contract has been entered into. It should be noted that since this is simply an agreement to agree, the RTA does not yet apply. At this point, any money paid is a processing fee, holding deposit, or administration fee. Section 15 of the RTA prohibits fees to consider or process an application for tenancy. | “Agreements for tenancy” are executory contracts in which the lessor promises that he or she and the lessee will enter into a written tenancy agreement at a later date. For an executory contract to have effect, generally the agreement must be in writing and must contain the essential elements of a lease. While the law states that the agreement must be in writing, this requirement is not always enforced. Consequently oral agreements may be considered valid. Also, the payment of money may point to the fact that a contract has been entered into. It should be noted that since this is simply an agreement to agree, the RTA does not yet apply. At this point, any money paid is a processing fee, holding deposit, or administration fee. Section 15 of the RTA prohibits fees to consider or process an application for tenancy. | ||
If the money paid is part payment of rent or the security deposit (as distinct from a processing fee, holding deposit or administration fee), it is important to clearly identify that on the receipt at the time of payment (see definition of a security deposit). Until the tenant comes into possession, he or she has only a contractual interest, which applies only to “tenancy agreements”. Thus, failure to give the tenant possession is a breach of contract and not a violation of a property interest or breach of a tenancy covenant. When the tenant acquires possession, the agreement for lease is treated as a lease agreement, and the court may order the lessor to execute a lease (specific performance): see ''Horse and Carriage Inn Ltd. v. Baron'', [1975] 53 DLR (3d) 426 (BCSC). Recording the initial exchange of money as “rent”or as “security deposit” is important to create a basic tenancy agreement in situations where | If the money paid is part payment of rent or the security deposit (as distinct from a processing fee, holding deposit or administration fee), it is important to clearly identify that on the receipt at the time of payment (see definition of a security deposit). Until the tenant comes into possession, he or she has only a contractual interest, which applies only to “tenancy agreements”. Thus, failure to give the tenant possession is a breach of contract and not a violation of a property interest or breach of a tenancy covenant. When the tenant acquires possession, the agreement for lease is treated as a lease agreement, and the court may order the lessor to execute a lease (specific performance): see ''Horse and Carriage Inn Ltd. v. Baron'', [1975] 53 DLR (3d) 426 (BCSC). Recording the initial exchange of money as “rent”or as “security deposit” is important to create a basic tenancy agreement in situations where there is only an “agreement to agree” in place, and where the tenant is not yet in possession of the rental unit. | ||
== C. Contractual Nature of the Tenancy Agreement == | |||
=== 1. Freedom of Contract and the Agreement === | |||
Throughout the establishment and duration of the agreement, the parties are generally free to add and alter the terms, covenants and conditions as they see fit – subject to restrictions imposed by common law and statute (e.g. prohibition of contracts for an illegal purpose, '''unconscionable terms''', or contracts in restraint of trade). The RTA and MHPTA both restrict parties from contracting out of requirements of those Acts and from adopting terms that are contrary to the Acts. The changes in the tenancy agreement must be in writing, and be signed and dated by both parties. Some requirements, such as locks on doors, are automatically included in every tenancy agreement even if the tenancy agreement does not specifically mention them. A unilaterally altered or newly included term may be unenforceable where there is no consideration for it. a)Collateral Contract The parties may enter into additional or subsequent oral or written contracts, separate from the tenancy agreement, that involve a change in the way the terms of the tenancy agreement are carried out (e.g. agreement by the tenant to do repairs in return for paying a reduced amount of rent). The terms of the tenancy agreement still exist; they must be performed as stipulated when the collateral contract is fully performed or is otherwise terminated (e.g. one party dies or goes away). If an Arbitrator determines the terms are reasonable and not unconscionable, as defined within s 3 of the RTR, any purchaser of the reversion will be bound by the former owner’ s collateral contract. A remedy for the new landlord would be found in an action against the seller. Generally speaking, oral collateral contracts are hard to prove. If something is important, it should be recorded in writing. 2.Terms, Covenants, and Conditions a)Covenants and Conditions A covenant in a tenancy agreement consists of a promise by a person that a certain thing must or must not be done (the RTA eliminates the word “covenant” and uses the more modern word “term”). A “Material Term”, as used in the RTA, is a term going to the root of the relationship and the tenancy agreement. Landlords and tenants may agree to any term they wish, as long as it is not unconscionable or contrary to the RTA. Terms contrary to the RTA may not be identified in some cases until dispute resolution, and a tenant is free to argue that a term violates the RTA and should therefore be void. The Arbitrator will take this into consideration when determining reasonableness. For more information, see RTB Policy Guidelines 8: Unconscionable and Material Terms. A condition creates an obligation that arises in the event a certain thing does or does not happen. “Conditions precedent” are conditions that must be performed or satisfied before other obligations arise. “Conditions subsequent” cause existing obligations to cease when the conditions subsequent occur or are satisfied. b)Express, Implied and Statutory Terms | |||
