What can you do if your tenant doesn’t pay rent?Jun 8 2023
For many businesses and homeowners, having a tenant can be financially rewarding and may even be necessary. A long-term tenant can provide a reliable source of income in both commercial and residential arrangements, but what can you do if your tenant stops paying rent?
In BC, tenants are required by law to pay rent when it is due. With rising interest rates and cost of living, unfortunately more and more families and businesses are facing the prospect of being unable to pay rent on time, failing to pay the full amount of failing to pay whatsoever. This post focuses on the options available to landlords in these situations.
As a landlord, if your rent is past due you may be entitled to end the tenancy once the using the 10-Day Notice to End Tenancy for Unpaid Rent or Utilities (click here for the fillable form). The notice must include an end date that takes effect no sooner than 10 days after the tenant has received it. Regardless of whether the tenant has paid rent, the landlord is not allowed to seize, prevent, or interfere in any way with the tenant’s access to their personal property during those 10 days.
When your tenant receives the 10-day Notice ending their tenancy, they have 5 days to dispute the notice by making an application for dispute resolution to the Residential Tenancy Branch or to pay the entire amount owing. If your tenant pays all overdue rent within 5 days of receiving the notice, their tenancy may continue. If your tenant applies for dispute resolution, the notice to move out remains on hold until the resolution process is finished.
If your tenant receives the 10-day Notice and doesn’t pay the overdue rent, move out, or make an application for dispute resolution within the designated time frame, you can make a request to the Residential Tenancy Branch for an order of possession or a monetary order for the unpaid rent. You can apply for what is called a “direct request” using the online or in-person dispute resolution application available by clicking here.
When compared to residential tenancies, commercial landlord-tenant relationships are governed more by the terms of an individual lease agreement than by legislation. For this reason, the first thing to do when faced with a non-paying commercial tenant is review your tenancy agreement for the specific requirements and available remedies.
As a landlord, there are a few standard contractual remedies you may be entitled to, including:
- Refuse to accept the “repudiation” (fundamental breach) of the contract and insist on the performance of the lease by suing for each missed payment;
- Accept the repudiation and termination of the lease, re-possess the premises and sue the tenant for rent owed or losses from the breach to the date of the termination;
- Give notice to the tenant that you intend to find new tenants on behalf of the existing tenant, obtain possession on that basis and sue for any shortfall in rent;
- Terminate the lease with notice to the tenant that damages will be claimed for any shortfall in future rent for the unexpired period of the lease.
In BC, a landlord might also be entitled to recover unpaid rent by seizing (typically through a licenced bailiff) and selling the assets of their tenant in a process called distraint; this however does not terminate the lease. There are strict rules around distraint such as there must be an appraisal of the goods and it must be the tenant’s exclusive goods. Through taking this action, the landlord is deemed to have affirmed the lease and cannot later change its mind and terminate the lease for the same breach resulting in the distraint.
Before terminating a tenancy, you should carefully review any notice provisions or default clauses contained in your lease agreement and in BC’s Commercial Tenancy Agreement. In some cases, the right to terminate a commercial tenancy agreement depends on prior written notice having been provided to the tenant and a certain period of time having passed. Often, the requirements for a notice of termination will not be the same as general notice requirements under your lease, so it is important to check.
If you’re a landlord and struggling to keep up with your financial obligations due to unpaid rent from your residential or commercial tenant, we can help. Reach out to our intake team at 778 666 3723 to schedule a consult with one of our real estate litigation lawyers to find out what options may be available to you and how to ensure you fulfil your legal obligations.