One of the reasons you sign a lease agreement with a tenant is that you want to know for certain how long a person will be in place, paying rent. Every lease agreement in BC, Canada includes the term of the lease – whether it’s one year or 18 months or two years or something else.
Both of you are bound to the timeline of the lease agreement, unless something happens to nullify the lease such as nonpayment of rent or the landlord not maintaining the home to habitable standards.
When your tenant wants to break the lease and move out of your rental unit early, you’ll need to take the necessary steps to mitigate your own financial losses and those of your tenants, while abiding by the Residential Tenancy Act.
Here’s our best advice as your Kelowna property management experts.
Communicate With Your Tenants
Lease breaks are frustrating but they shouldn’t escalate into a huge conflict with your tenants. Well-screened renters typically don’t break a lease unless there’s a very good reason. So first, listen to them and find out what’s happening.
If you’re willing to come to a mutual agreement with your tenants, make a firm decision about when they will move out, and have them agree to settle any unpaid rent. Ask them to help you keep your property well-maintained and available for showings so you can get a new tenant moved in as soon as possible.
The written agreement should include a specific date the tenancy will end. You can use the Agreement to Terminate a Tenancy Form, or you can create your own written notice.
Assigning the Lease to a New Tenant
Maybe your tenant has someone in mind who is willing to move into the property and take over the lease. This can be a great solution to the problem of a lease break, providing that the tenant is qualified and meets your standards.
When the tenant makes a request to transfer the lease to a new tenant, all the rights and obligations will be transferred when your existing tenant moves out and the new tenant moves in. You’ll want to be sure that the replacement tenant is able to fulfill all of the conditions in your tenancy agreement – including pay the rent amount when it’s due.
You don’t have to agree to this, but it might be in your best interest. Not only will you get a new tenant in place without losing a lot of money on vacancy, you also run the risk of having your departing tenant apply to the Landlord Tenant Board for approval of the transfer. This takes the decision completely out of your hands.
Finding a Replacement Tenant
While you can pursue legal action against your tenant who is leaving early and hold them accountable for the outstanding rent payments throughout the lease agreement, the Residential Tenancy Branch Arbitrator will only only enforce payment of select expenses owed to the landlord.
Is There a Penalty for Breaking a Lease in BC?
If your tenant breaks the lease early, you can charge them for liquidated damages, which should be set out with a reasonable pre estimate in your rental agreement before finding a tenant. In BC, precedent cases that were resolved through arbitration have forced the tenant to pay a fair price for the advertising costs of finding a new tenant, the difference in rent between the broken lease agreement and what you’re able to charge a new tenant, plus the legal costs associated with resolving the case via arbitration.
For example, if the broken lease was agreed to at $1,500 per month and you’re only able to rent at $1,400 to your new tenant, then you can charge the previous tenant for the sum of $100 multiplied by the number of months remaining on the lease agreement. As a landlord in British Columbia, it’s your legal responsibility to find a new tenant and re rent as quickly as you can to mitigate losses following a lease break.
Tenants who break a lease can also be responsible for paying for cleaning, painting, and any damages caused deliberately or as a result of neglect – but not due to normal wear and tear.
For more details on what you can expect through arbitration, any to see why we prefer coming to a mutual agreement whenever possible – check out this 2010 RTB decision.
Legal Considerations for Lease Breaks
While legal action against tenants breaking a lease is an option, it’s often not the most efficient use of time. Seeking advice from legal experts is advisable, but maintaining a cooperative approach is generally more beneficial. Kelowna property managers understand the balance between legal considerations and fostering positive landlord-tenant relationships.
However, we aren’t attorneys and we’d recommed consulting a legal expert to advise you on what actions to take in the event of arbitration and money owed. We believe it’s best to keep things as cooperative as possible, even though it’s frustrating to have your tenant break a lease agreement.
In 2016, British Columbia updated its residential tenancy rules to provide more support for victims of family violence and those in need of long-term care. The change allows tenants in such situations to end fixed-term leases early with one month’s notice and third-party verification, removing the need for landlord agreement and financial penalties. Eligible third-party verifiers include professionals like transition house workers, police officers, and healthcare professionals.
If you own property in the Okanagan Valley, British Columbia, our team of Kelowna property managers can help you avoid lease breaks by keeping your properties filled with great tenants. Contact our team at Vantage West Property Management, winner of 2 consecutive Consumer’s Choice Awards in 2021 and 2022.