Copyright 2017 by the UBC Real Estate Division

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1 DISCLAIMER: This publication is intended for EDUCATIONAL purposes only. The information contained herein is subject to change with no notice, and while a great deal of care has been taken to provide accurate and current information, UBC, their affiliates, authors, editors and staff (collectively, the "UBC Group") makes no claims, representations, or warranties as to accuracy, completeness, usefulness or adequacy of any of the information contained herein. Under no circumstances shall the UBC Group be liable for any losses or damages whatsoever, whether in contract, tort or otherwise, from the use of, or reliance on, the information contained herein. Further, the general principles and conclusions presented in this text are subject to local, provincial, and federal laws and regulations, court cases, and any revisions of the same. This publication is sold for educational purposes only and is not intended to provide, and does not constitute, legal, accounting, or other professional advice. Professional advice should be consulted regarding every specific circumstance before acting on the information presented in these materials. Copyright: 2017 by the UBC Real Estate Division, Sauder School of Business, The University of British Columbia. Printed in Canada. ALL RIGHTS RESERVED. No part of this work covered by the copyright hereon may be reproduced, transcribed, modified, distributed, republished, or used in any form or by any means graphic, electronic, or mechanical, including photocopying, recording, taping, web distribution, or used in any information storage and retrieval system without the prior written permission of the publisher.

2 LESSON 4 COMMERCIAL AND RESIDENTIAL TENANCIES AND STRATA PROPERTIES Required Reading 1. UBC Real Estate Division Real Estate Trading Services Licensing Course Manual. Vancouver: UBC Real Estate Division. Chapter 6: Commercial and Residential Tenancies Chapter 7: Strata Properties (Condominiums) and Cooperatives in British Columbia Recommended Reading 1. Case Law (Links are available on the Course Resources webpage under Course Materials ): Bray Holdings Ltd. v. Black B Commercial Tenancy Act First Island Financial services Ltd. v. GR Technical Training Institute Ltd. B Implied terms of a commercial tenancy. Heron Court Housing Co-op v. Sweeney B Housing Co-ops, eviction. Matthias v. The Owners, Strata Plan VR2135 B Ethical obligations of a strata council. 2. Websites of Interest: Links are available on the Course Resources webpage under Course Materials. General Objectives The objective of this lesson is to familiarize students with commercial and residential tenancies as well as the regulation, governance and administration of strata developments. Learning Objectives Upon completion of this lesson, a student should be able to: 1. distinguish between a lease and a licence and explain the importance of the distinction; 2. distinguish between a commercial and a residential tenancy; 3. explain the major features of each type of tenancy and how these features apply to residential and commercial situations; 4. describe the types of reasons a residential landlord must give for terminating a tenancy and list a few specific examples, including termination for cause, non-payment of rent, landlord's own use and reasonable cause; 5. describe the manner in which a residential landlord must give notice of end of tenancy and the tenant's right to dispute it; 6. describe when and how a rent increase notice is given in residential tenancies; 7. discuss the role of an arbitrator and/or a court in settling disputes; 8. explain the rights and obligations of commercial or residential landlords and tenants in respect to security deposits, repair, privacy, and assignment and subletting; 9. explain the implied rights and obligations of commercial or residential landlords and tenants; 10. describe the notice requirements under the Residential Tenancy Act; 11. define the concept of quiet enjoyment ; 12. distinguish between the strata corporation and the strata council and be able to describe the duties of each; 13. explain how strata bylaws and rules are created and amended; 14. list the responsibilities of a strata lot owner and, if he or she does not fulfil these responsibilities, the remedies available to the strata corporation or another owner; 15. list the rights of a strata lot owner and the remedies he or she has against the strata corporation or other owners; 16. describe the obligation of the owner developer to disclose rental information;

3 4.2 Real Estate Trading Services Licensing Course Workbook 17. discuss what information a licensee should have about a condominium development and where to find that information; and 18. explain how a cooperative development is created and distinguishable from a strata development. Instructor's Comments A significant instrument for conveying time limited interests in land is the lease. Licensees need to be knowledgeable about their creation, format and operation to properly advise their clients regarding their real estate investments. Condominiums, or strata title units, are becoming increasingly popular B especially in urban areas, and cooperative housing, one of the oldest forms of property ownership, is enjoying a modern comeback in Canadian cities and in other special property contexts (e.g., vacation properties). In understanding tenancies, students will have to draw from the knowledge they have gained in Lesson 2 on Estates and Interests in Land, as a lease is also an interest which runs with the land. (A lease is also essentially a contract between two parties, and students should keep this in mind when they get to Lesson 7, which deals with Contract Law). The strata concept was introduced to you in Chapter 4 (The Subdivision of Land and Title Registration in British Columbia) in the context of discussing how land can be subdivided. You learned about how a strata is created and the types of strata properties. In this chapter, the discussion of stratas continues and focuses on the operation and administration of stratas.

4 Lesson ASSIGNMENT 4 CHAPTERS 6 & 7: COMMERCIAL AND RESIDENTIAL TENANCIES AND STRATA PROPERTIES Marks: 1 mark per question. 1. John has a fixed term tenancy in Bill's building that expires on July 31 st. Bill has decided that he wants to renovate the suite and that it must be vacated in order for him to do so. John pays his rent on the first of the month. On March 20 th, Bill gives John notice of the end of the tenancy agreement pursuant to the Residential Tenancy Act. What is the earliest date on which John must vacate? (1) March 31 st (2) April 30 th (3) May 31 st (4) July 31 st 2. A tenant has been renting a basement apartment from the landlord for over two years on a regular month to month periodic tenancy, without any rent increases. The tenant has received three months written notice from his landlord that the rent will be increased from $1600 to $1625 per month. The tenant knows that similar basement suites in the neighbourhood are renting for only $1500, and he thinks that the rent increase is the landlord s way of trying to get him to move out of the house. He is contemplating terminating the tenancy in order to find something cheaper, but before giving his notice to the landlord, he asks your opinion. You correctly advise him that: (1) for periodic tenancies, the Residential Tenancy Act requires four months written notice for a rent increase. Accordingly, the rent increase is not effective. (2) provided the increase is not more than the change in the Consumer Price Index (CPI) over the past year plus 2%, the increase is allowable, and he has no right to dispute the increase. (3) in periodic tenancies, the Residential Tenancy Act requires that the notice for rent increases be reasonable. As such, one month s notice would likely have been sufficient. (4) the Residential Tenancy Act requires all rent increases to be justifiable. Because similar suites in the neighbourhood rent for significantly less, this rent increase will likely not be enforceable. 3. With respect to bylaws and rules in a strata development, which of the following statements is TRUE? (1) Bylaws are passed by special resolution of the strata council. (2) Bylaws provide for the control and management of the strata lots and common property. (3) When a bylaw or rule violation relates to the use of a recreational facility that is common property or a common asset, the strata council may require the sale of the owner's interest in the condominium complex. (4) All of the above

5 4.4 Real Estate Trading Services Licensing Course Workbook 4. Gretel and Hansel have decided to jointly purchase a strata lot as their new residence. They choose a brand new two-bedroom suite located in Dessert Village, a strata development that includes such amenities as a gym, tennis courts and saunas. To finance their purchase, Gretel and Hansel grant a mortgage to Grimm, who also owns registered mortgages for 75% of the other strata lots in Dessert Village. Recently, the residents of Dessert Village have been in disagreement with respect to the use of the tennis courts. The strata corporation has called a meeting to determine whether there should be an appointment system for the use of the sports facilities. Gretel thinks that people should have to make a reservation to use the tennis courts; Hansel thinks it should be first come, first served. Which of the following is TRUE? (1) Both Gretel and Hansel have lost their right to vote by granting the mortgage to Grimm; only Grimm will have the right to vote. (2) There is only one vote per strata lot; therefore, either Gretel or Hansel may cast a single vote on this matter. Regardless of any provision in the mortgage agreement, Grimm has no right to vote on this issue because it does not affect the security for the mortgage. (3) Gretel, Hansel and Grimm have one vote between them. If they cannot all agree on how to vote, then the chairperson will discount their vote on this matter. (4) Grimm has no right to vote because he has not provided at least five days written notice to the strata corporation that he will be exercising his voting power. The result is that both Gretel and Hansel will have one vote each. 5. Naomi is thinking of purchasing a condominium. She has obtained a copy of the rules and regulations and reviewed the bylaws registered at the land title office. She has more questions about the strata corporation and she asks Tina, the licensee, how she can get this information. Tina suggests that Naomi request an Information Certificate in Form B from the strata corporation. Which of the following questions would NOT be answered by the Information Certificate? (1) What is the amount in the strata corporation's contingency reserve fund? (2) Are there any legal proceedings pending against the strata corporation? (3) Are there any judgments registered against the strata lot Naomi is thinking of purchasing? (4) Are the expenses of the strata corporation for the current fiscal year expected to exceed the expenses budgeted? 6. Which of the following statements concerning the difference between a lease and a licence is FALSE? (1) A lease is both a contract and an interest in land, whereas a licence is only a contract. (2) Both leases and licences always confer an exclusive right to possession of the premises. (3) A lease runs with the land and can bind third parties, whereas a licence is only binding on the parties to the contract. (4) While licences and leases may appear to be similar, the legal rights involved are very different. 7. Dorinda rents a shop in a commercial building owned by Muhammad. She operates a fabric art studio and sells crafts there. Which of the following provisions of Dorinda's lease would be enforceable? A. The rent is $1,000 per month and the damage deposit is $3,000. B. Dorinda agrees not to assign the lease. C. The landlord may exercise the remedy of distress. D. The lease term expires at the end of one year, and no notice of termination is required. (1) A, C, and D only (2) A, B, and D only (3) B and D only (4) All of the above

6 Lesson Which of the following is an allowable rent increase under the Residential Tenancy Act? (Assume $50 is the maximum allowable increase according to the Consumer Price Index plus 2%). (1) On July 1, Linus lawfully raises Lucy's rent from $1,000 to $1,050 per month. Five months later, Lucy moves out and Linus rents to Charlie for $1,050. Two months later, Linus gives notice to Charlie of another $50 per month increase. Charlie objects to the increase. (2) Linus raises Lucy's rent by $50 per month; seven months later, he loses his job and gives Lucy three months' written notice of a further $50 per month increase. Lucy objects to the increase. (3) On July 1, Linus raises Lucy's rent from $1,000 to $1,050 per month. Two months later, Lucy is transferred to Campbell River and Linus re-rents to Charlie, but at a monthly rate of $1,200. Charlie knows Lucy only paid $1,050 and objects to the increase. (4) Lucy has been paying $1,000 per month for the last three months, prior to which she paid $950. Her landlord, Linus has sold the premises to Charlie, who immediately gives Lucy notice of a rent increase to $1,050 per month effective in two months. Lucy objects to the increase. 9. Charles was in the habit of playing his stereo too loudly at night after 10:00 p.m. He has received a notice that the strata corporation has a bylaw providing that no strata lot owner may play a stereo in a strata lot after 10:00 p.m. When Charles seeks his lawyer's advice she correctly states that: (1) the bylaw is not valid because it was not passed by the strata council. (2) the bylaw is not valid because bylaws passed by the strata corporation may only regulate the operation of the common property. (3) the bylaw is void because it infringes on an owner's use of his or her strata lot. (4) the bylaw is valid. 10. Shannon rents a basement suite from Graham on a month to month periodic tenancy. Eight months ago the rent was lawfully raised to $750. Graham has recently agreed to sell his house to Robert, and in the agreement Robert has stipulated that he intends to occupy the basement area. Robert has requested in writing that Graham give the tenant a notice of the end of the tenancy agreement. Which of the following statements is FALSE? (1) Graham must provide at least 2 months' notice to Shannon of the end of the tenancy, but he cannot do this until all conditions precedent in the contract have been satisfied. (2) Graham may provide notice ending the tenancy to Shannon; however, the effective date can be no earlier than 12 months from the last rental increase. (3) If Shannon can prove that instead of occupying the basement after his purchase, Robert rented it out to an unrelated tenant, she may be entitled to compensation from Robert in the amount of two months' rent. (4) On or before the effective date of the notice, Graham must provide Shannon with the equivalent of $750 as compensation.

7 4.6 Real Estate Trading Services Licensing Course Workbook 11. Alex leased a shop from Geoffrey for a term of 48 months at an expressed rent of $6,000 per month, commencing January 1, 2000 and terminating on December 31, On January 1, 2004 Alex paid Geoffrey $6,000, which Geoffrey accepted. On the first day of the next 8 months Alex paid the rent to Geoffrey who continued to accept it. On September 20 Geoffrey had an offer from Peter to lease Alex's shop for $6,800 per month. Geoffrey immediately faxed notice to terminate to Alex, effective October 20, Which of the following statements is/are TRUE? A. Because this is a commercial periodic tenancy, either party can terminate. B. On January 1, 2004 a new periodic lease was created by the actions of Geoffrey and Alex. C. Geoffrey is entitled to terminate the lease because Alex did not increase his rental payments when the lease was renewed. D. The notice period will be whatever is reasonable in the circumstances. (1) A, B, and D only (2) A, B, and C only (3) C and D only (4) All of the above 12. Henry lives in an entirely residential strata complex and owns a large dog. Under a section of the bylaws, he has been given notice by the strata corporation to remove his dog. Henry has kept the dog in his strata lot since he purchased the lot three years ago. It has never caused any complaint, until now. Henry is the only owner who has an animal. Which of the following courses of action is available to Henry? (1) If he could obtain support of 75% of the owners, he could have the bylaw amended. (2) He could apply to a court for an order under section 164 of the Strata Property Act prohibiting the corporation from exercising its powers in this way because it is significantly unfair to him. (3) He could have an arbitrator appointed. (4) All of the above courses of action are available to Henry. 13. Bill owns a strata lot. His unit is 2,200 square feet. The other seven units have a combined area of 17,350 square feet. The common property has an area of 4,200 square feet. The annual common expenses are $45,000. What is Bill's monthly share of the common expenses? (1) $ (2) $5, (3) $ (4) $ A commercial lease contains the following clause: The Landlord shall have the right at all reasonable times to inspect or to authorize in writing an agent to inspect the Premises. Which one of the following correctly describes the reason for including such a clause? (1) The clause allows the landlord to avoid the notice provisions of the Residential Tenancy Act and ensures access to the property at any time. (2) Without the clause, a lease would grant the tenant exclusive possession of the property, with a legal right to exclude even the landlord from the property. (3) The clause is included to allow a real estate agent to inspect the premises for the purposes of writing a listing contract. (4) The clause allows a hotel landlord to enter a hotel tenant's room without the tenant's permission to provide cleaning services.

8 Lesson Strata Corporation VRX123 has adopted the standard bylaws set out in the Strata Property Act. Assume the annual total contribution to the operating fund is $50, In the annual budget, an expenditure of $2,000 for window cleaning has been authorized. Which of the following statements is TRUE? (1) The strata council may pay the $2,000 window cleaning fee without any further consent. (2) Because the fee is higher than $500, the strata council will need to call a meeting of the strata corporation and obtain approval by special resolution. (3) Under the Standard Bylaws, a strata council may pay any amount up to $2,500 without permission from the corporation, whether or not it is contained in the budget. (4) If this is a common property expense, the strata council has complete authority to any amount. 16. Kyle rents a house from David under a periodic tenancy. Which of the following terms in their lease would contradict a provision of the Residential Tenancy Act? (1) The landlord claims the right to distrain for rent that remains unpaid for 15 days after the date that it is due. (2) Kyle agrees to vacate the premises upon one months' notice should David require the house for personal occupation or should David sell the house. (3) Kyle agrees to paint the premises and have the carpets professionally cleaned, regardless of their condition. (4) All of the above terms contradict a provision of the Residential Tenancy Act. 17. Which one of the following actions does NOT generally require a vote by the strata corporation? (1) An amendment to the bylaws (2) The decision to waive the requirement to obtain a depreciation report. (3) An amendment to the rules governing common property (4) A designation of limited common property by the owners 18. Strata Corporation VRX123 just finished its third fiscal year. The amount of money in the contingency reserve fund (CRF) at the end of the third fiscal year was $6,000. The total budgeted contribution to the operating fund in the third fiscal year was $30,000. The total budgeted contribution to the operating fund for the current (4 th ) fiscal year is $35,000. Is the strata corporation required to make a mandatory contribution to the contingency reserve fund? If so, what is the minimum amount of this contribution? (1) The strata corporation is not required to make a mandatory contribution to the CRF. (2) The strata corporation is required to make a mandatory contribution to the CRF of at least $2,500. (3) The strata corporation is required to make a mandatory contribution to the CRF of at least $3,500. (4) The strata corporation is required to make a mandatory contribution to the CRF of at least $2, Lucas, the owner of a movie theatre, agrees to let Spielberg sell popcorn, candy and soft drinks from a small room opening off of the lobby. The oral agreement between Lucas and Spielberg provided that Spielberg may only use the room while there is a movie in progress and that for this right Spielberg will pay a monthly fee of $500. Which of the following statement is TRUE? (1) The agreement between Lucas and Spielberg is probably a licence because Spielberg is not given exclusive possession of the room by Lucas. (2) The agreement between Lucas and Spielberg, if a licence, is not enforceable against a bona fide purchaser of the theatre. (3) The agreement between Lucas and Spielberg, should be in writing and signed by both parties to ensure that it is enforceable. (4) All of the above statements are true.

9 4.8 Real Estate Trading Services Licensing Course Workbook 20. Laura, a commercial tenant, may sublet her lease: (1) unless all subletting is specifically prohibited in the lease. (2) provided the landlord approves of the new tenant. (3) even if all subletting is prohibited in the lease. (4) where the term of the lease is for greater than one year. End of Assignment 4