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For many tenants and landlords in British Columbia, navigating the complexities of the Residential Tenancy Act [SBC 2002] CHAPTER 78 (“RTA”) can be a challenge. One area that historically caused significant confusion and legal risk was the use of "vacate clauses" in fixed-term tenancy agreements.
If you’re a tenant, understanding this clause and your rights against it, is crucial. If you're a landlord, knowing the law around its use is vital to avoid hefty f inancial penalties.
In the context of a residential tenancy in BC, a "vacate clause" is a term within a f ixed-term tenancy agreement that automatically requires a tenant to move out on the date the fixed term ends.
Under the RTA, a standard fixed-term tenancy agreement without a proper vacate clause does not automatically end. Instead, at the end of the fixed period, the tenancy automatically continues on a month-to-month basis under the same terms and conditions.
A landlord can only end this new month-to-month tenancy by issuing a valid Notice to End Tenancy for reasons allowed under the RTA (like landlord's use of property, non-payment of rent, etc.).
The law tightly restricts when a vacate clause can be legally included and enforced. According to the Residential Tenancy Regulation, a landlord can only include a vacate clause in a fixed-term tenancy if:
1. The landlord is an individual who or whose close family member (as defined by the RTA) intends in good faith to occupy the rental unit at the end of the term; OR
The tenancy is a sublease agreement.
In the case of personal occupancy, the landlord or their close family member must intend to occupy the unit for at least six months.
The main problem with a vacate clause is the risk of it being illegal or used in bad faith, leading to what is often called a "bad faith eviction".
If a landlord includes a vacate clause in a fixed-term agreement for any reason other than the two legal exceptions listed above, the clause is unenforceable. The tenancy will simply revert to a month-to-month agreement when the fixed term ends, and the tenant does not have to move out.
For the vacate clause to be enforceable, it must:
a. Indicate the reason for including a vacate clause on the tenancy agreement
b. Both parties must have their initials next to this term for it to be enforceable
The most significant problem arises when a landlord uses a legally permitted vacate clause (i.e., claiming they or a family member will occupy the unit) but then fails to follow through with the stated purpose.
If a landlord ends a tenancy based on a vacate clause for personal occupancy and then does not:
a. Take steps to accomplish the stated purpose within a reasonable period.
b. Use the rental unit for that stated purpose for at least six months.
The landlord may be ordered to pay the tenant compensation equal to 12 months' rent. This is a powerful deterrent against evicting tenants under false pretences simply to re-rent the unit at a higher price.
If you issue an eviction notice or use a legal vacate clause for personal occupancy, you must be prepared to prove your intention was genuine and that you or your close family member occupied the unit for the required term. Extenuating circumstances are the only defense for failing to comply, and they may be interpreted narrowly by the RTB and courts.
If your fixed-term tenancy contains a vacate clause, confirm that the stated reason for it is legal. If the stated reason is for the landlord or a family member to move in, and you find the property is re-rented or left vacant shortly after you move out, you have a strong basis to file an application for dispute resolution seeking the 12 months' rent compensation.
The RTA is remedial legislation, meaning it is generally intended to protect the weaker party - the tenant. The stringent rules around vacate clauses and the harsh penalties for bad-faith evictions are designed to prevent landlords from exploiting fixed-term tenancies to circumvent rent control and increase rental prices.
