Residential Tenancy Act #225

By Gerry Neely
B.A., LL.B.

Landlords will have to be as quick off the starting blocks as Linford Christie, in the 100 meters at the Commonwealth games, if they are to retain the benefit of a security deposit for unpaid rent or damages owed by a departing tenant. A section of the Residential Tenancy Act, which is in force from September 18th, 1994, requires a landlord to pay the security deposit before the 15th day following termination of the tenancy, unless the tenant agrees in writing that the landlord may keep all or part of it, or an arbitrator has ordered the tenant to pay an amount to the landlord.

If neither of these circumstances exist the landlord must apply to the residential tenancy branch, within the 15 day period, for an order for unpaid rent or damages. Failing that the landlord's remedies to retain the security deposit are lost. The tenant is then entitled for a period of up to two years following the end of the tenancy, to claim the deposit.

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Section 50(8) of the Real Estate Act states that no person, and no person on behalf of a developer, shall sell in British Columbia subdivided land unless that person is licensed as an agent and is acting on behalf of the developer, or is a licensed salesperson employed by that agent.

This section was the basis for a successful defense to an action for damages for $53,000 brought by a developer against a purchaser who refused to close. The corporate developer employed company "A" to market condominium units. Company "A" in turn employed company "B" to do the on-site marketing, and the latter company retained sales representatives who were paid a referral fee for each successful offer to purchase they brought to the developer. All of the companies were associated in one way or another through shareholders or directors. None of the companies and individuals were licensed under the Real Estate Act.

One of the judge's finding of fact was that the sales representative who introduced the defaulting purchaser was not a part of any of the companies, but worked independently when she offered the units for sale. The judge concluded that this brought her actions within the definition of a person, who on behalf of a developer offered for sale subdivided lands. Since she was unlicensed this was a breach by the developer of Section 50(8). Section 62 of the Act prevents a person such as this developer, who has breached part two, from enforcing a contract made between a purchaser and that person.

The purchaser had alleged misrepresentations which the judge found to be unproven. In the course of reciting the facts the judge referred, without further comment, to evidence which disclosed that the purchasers were given untrue information that a number of units were sold and a number were subject to pending sales. The purpose of providing this information was, as the judge said, "to create for potential buyers the erroneous impression of activity on the market."¹ (The decision is being appealed.)

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Another case (see column #61) indicating the importance of making it clear to another party to a proposed contract, that the contract is to be with a limited company rather than the principal of that company. The case involved an action against the builder of a home by purchasers who claimed damages for the cost of repairing defects. The action was brought against the limited company that owned the land and the principal of that company. His denial of personal liability was unsuccessful because he signed the offer to purchase without indicating that he was signing in any corporate capacity, and he presented himself to the vendors in such a way that they understood that her personally was the vendor and the builder of the house.²

	1.	Ocean Park Towers Ltd. v. Hansen, S.C.B.C., Vancouver Registry #C914909, Reasons for Judgement, June 24, 1994.
	2.	Liddell v. Van-City Electric Ltd., 91 B.C.L.R., (2) 331.

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