Residential Tenancies: Month to Month or Fixed Term Contracts

By: Simon Irving

When entering into a residential tenancy contract there are two options with regard to the rental period of the agreement. A landlord and tenant can agree that the tenancy period will be on a month to month basis or for a set term. As the rental market becomes more competitive it is becoming increasing more common that the rental period is set to a minimum of one year. It is important when entering into a tenancy agreement that you understand the terms of the contract and the legal obligations you are agreeing to.

Month to month contracts set out that the contract exists on a monthly basis and could potentially be terminated by either party in accordance with the Residential Tenancy Act of BC. A landlord has the right to end a tenancy with 10 days’ notice if non-payment of rent occurs. They also have the right to end a tenancy with 30 days’ notice if given cause including repeated late payment of rent, illegal activities, or damage to the property. If a landlord wishes to move into the rental property or undertake substantial renovations, they must provide 60 days’ notice. A tenant needs to only provide 30 days’ notice to end the tenancy. It is important for both landlords and tenants to be aware that during an active month to month tenancy, a landlord is only able to increase the rent annually by 3.7% unless the increase is consented to by the tenant or ordered by an arbitrator.

A fixed term contract sets out the time period the tenancy contract is to exist; the most common term being a period of one year. If a tenant has entered into a fixed term tenancy agreement, they are legally responsible for the rent for the entire year regardless of if they continue to reside in the property. A landlord should be aware that unless they have cause, they cannot terminate a tenancy contract during the fixed term. At the end of the fixed term a contract can either end or convert to a month to month arrangement. If the contract does terminate at the end of the fixed term, a new contract needs to be entered into for the new tenancy term. Since a new rental contract is entered into at the end of the period, a landlord is not restricted by the maximum 3.7% increase as set out in the Residential Tenancy Regulations.

There are numerous advantages to both forms of contracts but it is essential for every potential tenant and landlord to understand the nature of the relationship they are entering into and the legal ramifications of such contracts.