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Fixed Term Rental Agreement VS. Month-to-Month

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In British Columbia, there are two main types of Tenancy Agreements. We’ll take a look at some of the similarities and differences between them and explain why one agreement may suit your situation better than the other.

Similarities Between Fixed Term and Month-to-Month Agreements

  • Typically, rent is due on the 1st day of each month, unless otherwise agreed upon in writing.
  • Security deposits. In B.C., security deposits cannot exceed one half month rent. The deposit is payable before the Tenancy begins. Likewise, Pet Damage Deposits, if applicable, cannot be more than half a month rent.
  • Whether or not they are permitted, what types of pets are allowed (if any), size, or the number of animals permitted should all be detailed in the Tenancy Agreement regardless of whether is it a fixed term or month-to-month agreement.
  • Rent increases. Tenants must be given three (3) whole months notice, in writing, of a rent increase.
  • For instance, if the Landlord wants to increase the rent on April 1, the notice must be received by the Tenant no later than December 31.
  • If the notice is issued on January 1, the increase would not be effective until May 1. Rent increases can only be given once per year and are limited to the amount set out by the Residential Tenancy Office. Exceptions to this rule relate to Fixed Term tenancies which we’ll discuss below.
  • Assigning or sub-letting the rental property. Whether or not this is permitted will be detailed in the Tenancy Agreement.
  • Both the Landlord and Tenant’s obligations will be clearly laid out in the Tenancy Agreement. These cover items such as maintenance of equipment or appliances, who is responsible for yard work and damages to the property depending on the cause or nature of the damage.
  • Landlord’s right to enter the rental property. Both types of tenancy are subject to the Residential Tenancy rules regarding when a Landlord can enter the rental unit and how often this can occur.

Differences Between the Two Agreements

The primary differences between Fixed Term and Month-to-Month tenancies relate to two key areas:

  1. Rent Increases.

In a Fixed Term tenancy rent increases cannot be issued during the initial term of the Tenancy. Although rare, if a Tenant signed a two-year Tenancy Agreement, then the Landlord could not increase the rent until the end of the two-year term. Increases are then subject to the same rules as for Month-to-Month tenancies and can only be given once a year.

  1. Notice to End Tenancy.

Fixed Term Tenancy Agreements cannot be terminated by the Landlord or the Tenant before the expiry date of the initial term. Even if the property is sold, the new owner cannot end the Tenancy before its expiry date. The only exception to this is if both parties agree to mutually end the tenancy in writing. If one side doesn’t agree, then the Tenancy continues.

Which One is Best?

This depends on a Tenant’s personal situation and needs, as well as a Landlord’s needs. Some Landlord’s want the security of knowing the Tenancy is for a fixed length of time, while some Tenant’s appreciate the stability of knowing they won’t have to move anytime soon.

Month-to-month tenancies may work for Landlord’s considering selling the rental property, or for Tenant’s unsure of whether they will like living in the property or neighborhood or because of possible work commitments or transfers.

Having an open, honest discussion with the Landlord is the best way to determine if a rental property and the terms of the agreement are acceptable to both sides. There may be room for negotiation with respect to the length of a fixed term tenancy and any uncertainty can be addressed before the agreement is signed.

Regardless of which type of tenancy is entered into, Tenants should always read and fully understand the Tenancy Agreement before signing it. Once it’s signed, it is legally binding and like it or not, the terms of the Agreement bind both sides to the obligations set forth.

A great source for accurate legal information and advice is the Residential Tenancy Office.

Reaching out to our Property Manager at 250-751-1223 for more information is a great option. We are happy to help and have years of experience with fixed terms and month-to-month rentals.

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