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
Mutual Agreement to end Tenancy
There are many ways to end a tenancy, one overlooked option is the mutual agreement to end tenancy. A mutual agreement to end the tenancy is simply an agreement between the Landlord and Tenant to end the tenancy on a specific date.
When should this agreement be considered? It may be used when a tenancy is frustrated and both parties are unable to agree how to correct the disagreement. I have used it in the past when a tenant obtained a pet without permission from the Landlord, which was in violation of the tenancy agreement. The tenant wanted to keep their pet, which required them to find a different rental and they agreed to move out at a mutually agreed upon date. The tenant found a new place to live and the owner was able to have the property back to rent to a new tenant without a pet.
Landlords have asked can we sign a mutual agreement to end the tenancy at the same time we sign the lease? The Residential Tenancy Branch identifies this as inappropriate. Why is this not allowed? In the standard tenancy agreement in BC there is a section where the landlord must identify if the rental is for a fixed term, and what happens at the end of that term. A landlord is only allowed to have a fixed term where the tenant must vacate at the end of the term when the landlord has plans to move back into the property. If they are not reoccupying the property then it would be identified as becoming a month to month tenancy from that point on. Trying to use the mutual agreement to end tenancy stating this date would be circumventing the process of landlord use for vacating a tenant. The Residential Tenancy Branch doesn’t agree with situations that are attempting to find ways around the statute.
There are benefits for both parties to mutually agree on the end of the tenancy. Tenants know they have time to look for alternative living accommodations. Landlords are able to plan for when the tenants vacate the unit. If the unit needs repairs or updating they can begin to make arrangements to have that completed as soon as the tenants vacate. Landlords are able to begin searching for a new tenant knowing when the current tenancy will end.
A benefit of the mutual agreement is it is a less adversarial process and both parties know the end is coming, reducing tension between the two parties. If you have frustrated tenancy consider approaching the tenants, or Landlords and mutually agree to move on.
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
Owner repairs
When a tenant moves into a rental property a condition inspection should be completed to identify the condition of the property at that time. During the tenancy there may be some repairs required, some are to be completed by the tenant and others should be completed by the landlord.
The Residential tenancy branch has a guideline that includes items that should be paid for by the landlord. They included things like painting, carpet cleaning and duct cleaning to mention a few. It’s important that an owner understands what they are responsible for when being a landlord.
The guidelines say a landlord is required to paint the rental unit at regular intervals. This doesn’t mean a landlord must paint after every tenancy. It also means a landlord can’t make as part of the tenancy agreement that a tenant is required to paint the property. The only time a tenant is required to paint is to repair damage to a wall or return a wall to an original colour due to the tenant painting the unit without permission. The same can be said for carpets, blinds, appliances, window coverings and many other items in the rental property.
The landlord is required to provide clean carpets at the beginning of the tenancy. It is then expected the tenants leave the carpets in the same condition. During the tenancy this would be a tenants responsibility to clean them not the landlords.
Appliances are also items that must be in working order at the start and repairs are the owners responsibility unless it is clear the tenants actions have caused the item to malfunction. If the light bulb on the oven goes out the bulb should be replaced by the tenants because if they never turned it on it won’t burn out. If the elements stop working that is different. It is unreasonable to expect that an oven element which fails over time is caused by the tenants’ use directly. This would be an owner repair.
In houses one often confusing item is the servicing of a furnace heating system. The guidelines require the heating system be serviced by the landlord as per the manufacturer's specifications, or annually when manufactures specifications are not available. It is the Landlords responsibility to change or at least provide filters for the tenants to change on a regular basis. These are costs a tenant is not required to pay for. Cleaning of the ducts is not heating the home and therefore falls under the tenants requirement to clean the ducts.
It is the landlord's responsibility to provide a property that meets health, safety and housing standards established by law. Failing to provide a property in this condition may provide a tenant the opportunity to apply to the Residential Tenancy Branch for repairs to be completed at the owners cost. Landlords should review the Residential Tenancy Guideline- Responsibility Residential Premises.
Need assistance managing your rental property? contact us for an evaluation of your needs.
Cartref Properties specialises in managing rental units located within Strata Corporations.
“Helping owners find tenants a place they call home”
www.cartrefproperties.com
Why inspections are important.
As a property management company Cartref Properties offers all our clients two inspections annually as part of our services. We have had clients ask us to reduce our fees by eliminating the inspections as they feel they are not needed. We have refused to take on these properties because we feel the inspections have an important value in property management.
Performing inspections during a tenancy is often overlooked for its importance in ensuring a positive tenancy. Potential clients have indicated they don’t need inspections because the tenant always pays the rent on time. There are three stages of a tenancy, in suite inspections are part of stage two, management of the property.
An inspection provides multiple options for a landlord to engage with the tenant in a positive manner. Often tenants are reluctant to inform the landlords of potential repairs required, partly in fear the landlord may charge them for the cost of the repairs. They also fear the landlord will take the opportunity to identify something they are doing wrong in the tenancy and try to evict them. We communicate clearly to “applicants” that we perform these inspections for multiple reasons. One is to be proactive with potential repair issues, and the other is to ensure the tenants are following all the clauses of the tenancy agreement which includes not doing anything illegal.
Tenancy agreements have many different clauses and payment of rent is only one of them. Other common clauses are no pets, no subletting and no smoking. One is unable to determine if tenants have not acquired pets, is the correct person residing in the property or the tenant is not smoking by collecting rent alone. Performing regular inspections provides Landlords the opportunity to verify all the terms of the tenancy agreement are being met.
With the development of short term accommodations I have heard of cases where people rent a property to an individual, who then turns and rents it through short term accommodation websites. If this is in a Strata Corporation which prohibits short term accommodations, you the Landlord may be considered in violation of the bylaws and subject to fines imposed by the Strata Corporation. Performing regular inspections provides owners the opportunity to verify tenants who aren’t adhering to all the terms of a tenancy agreement.
Owners often say it’s a waste of time to perform inspections as tenants must be informed prior to the inspection. Tenants have the right to be informed of the inspection. During an inspection one can usually identify contraventions of the tenancy agreement by observing how the occupant is living. A person staying short term will live differently then a person who is residing there permanently.
During the inspection process it is best to not point out all the concerns you have at that time, make notes for later reference. If the unit is messy, you can make a comment, or ask a question if you see someone there you're not familiar with. Violations of the tenancy agreement should be put in writing which provides tenants the opportunity to respond to the issue. It also documents the issue for future reference in the event there is a need to attend a hearing.
If you suspect an issue but are unsure, continue to perform inspections until you find the information you require. Section 29 of the Residential Tenancy Act permits Landlords permission to inspect a rental unit monthly. Tenants who aren’t in violation of the agreement are usually receptive and welcome inspections.
Our experience is when you are proactive with communication, the tenants are more receptive to the inspections. They are prepared, meaning they keep the property clean for the inspection, if only for that day, they have taken the time to clean the property which is difficult to do if they don’t live there or are not naturally clean people. They are more willing to share information about repair needs, which if you fix them before they completely fail will reduce costs for repairs. Better communication with tenants also leads to more receptiveness of rent increases. If they see you are maintaining the property they understand better there is a cost to keeping up the property. We find better communication with all these issues leads to a positive tenancy.
Need assistance managing your rental property? contact us for an evaluation of your needs.
Cartref Properties specialises in managing rental units located within Strata Corporations.
“Helping owners find tenants a place they call home”
www.cartrefproperties.com