The SFAA Residential Tenancy Agreement Explained
The Strata Finance Authority of Australia provides a simple and low-cost way for landlords to complete residential leases online, making them immediate and legally binding on both parties.
This agreement is known as the SFAA Residential Tenancy Agreement. Comprising six critical parts, the agreement allows landlords to simply and swiftly enter into an agreement with commercial parties with a minimum of fuss and without significant additional documents.
The SFAA Residential Tenancy Agreement contains the following:
- Details of the premises to be leased.
- Basic tenancy conditions, similar to those found in a lease from a real estate agent.
- Details of what the premises may or may not be used for.
- Details about the amount of rent payable and when it is due.
5 . At least 17 standard additional special conditions can be added as part of the agreement, such as special conditions relating to the use of facilities or rules that may apply.
6. Attachments relevant to the lease are included.
This easy-to-complete online form system means that once the agreement is submitted, the landlord prints off hard copies, signs it and sends a signed hard copy to the tenant for their signature. Once both parties have signed, the deal is done.
Why landlord and tenants need the SFAA Residential Tenancy Agreement
Commercial leases will often have terms and conditions that vary from business to business, so the SFAA Residential Tenancy Agreement form not only makes it simple and quick for landlords to lease their premises but also adds valuable flexibility for the type of leasing options that they can provide.
The Basic Terms of the Agreement
The agreement starts with basic information such as the names of the landlord and tenant, the property address, and the nature of the tenancy (the type of room or apartment). An important aspect at this stage is the information about the type of rent payment: fixed or variable amount, with a variable payment usually linked to a point in time such as based on the previous month’s CPI. For instance, if the monthly rent were $400 and the CPI were 3%, the rent for the next month would be $412 or whatever is a 3% increase from the previous amount.
There is also space for information about any utilities included in the rent, for example heat, electricity, telephone, and whether the tenant is responsible for purchasing and filling the propane or oil tanks for heating.
If there is parking offered, the number and description of parking spaces is also included. Included in many leases, but not all, is a clause stating that pets of any kind are prohibited. Many landlords prohibit pets for either the whole building or just the apartment being rented. If pets are allowed, additional charges may be either a monthly fee per pet or a damage deposit.
There are several clauses concerning insurance and responsibilities of the occupants for liability and care of the property. Tenants are required to hold the landlord harmless for any claims caused by the tenant’s use or intended use of the property. However, the landlord must also hold the tenant harmless for any claims on the property as long as the claim was not caused by the tenant’s actions. Tenants are also required by lease terms to provide proof of insurance covering losses caused by themselves or their guests.
Termination and renewal terms are provided, along with details of what happens to possessions of the tenant in the event of termination.
These are basic components of the lease, and these terms will be approved by Landlord and Tenant Board when they approve the landlord to be licensed to rent out apartments in SFAA apartment buildings. There are other forms that are provided in aid to this form and listed on the website.
The Legal Consequences for the Parties
The SFAA Residential Tenancy Agreement is a legal contract which both the landlord and tenant must adhere to whilst viewing their rights and responsibilities. The agreement includes a number of underlying legal obligations which may be outlined under specific state/territory laws or could be listed in the actual residential tenancy agreement. Landlords are responsible for maintaining certain aspects of the property otherwise the tenant is able to seek compensation. This is particularly important when it comes to providing hot water, heating and cooling to the premises along with general maintenance tasks such as broken plumbing and leaking roofs. Another common issue is illegally taking back possession of the property, if the tenant fails to pay rent or breaches the rental agreement, which is illegal and can result in significant fines for landlords if the tenant lodges a complaint with the relevant authority. Tenants must not be arbitrarily evicted or pressured into breaking the lease early, which normally results in the payment of high fees to the landlord. If there are issues with the property the landlord is required under law to offer temporary accommodation while the repairs are being undertaken and should not undertake actions that could decrease the value of the property. Dispute resolution processes for the landlord and tenant are listed in the SFAA Residential Tenancy Agreement. These include avenues for addressing issues such as bond disputes, breaches of the Residential Tenancies Act, property damage and breaches of the agreement, with the Residential Tenancies Authority (RTA) or Residential Tenancies & Rooming Accommodation Tribunal (QCAT) being responsible for resolving landlord/tenant complaints. The RTA can make requested investigations into possible breaches of the Residential Tenancies Act and if problems persist a complaint can be made which will then be heard by a tribunal. If a tenant is not renewing a lease or is intending to vacate the property for any reason, a minimum of two months’ notice may be required to terminate the agreement otherwise penalties like the loss of the bond may be incurred. Under the residential tenancy agreement a tenancy agreement less than six months can also be terminated by the landlord or the tenant without cause. However, a tenant’s employment may also be terminated at any time, causing the tenancy to come to an end as long as fair notice is provided.
Proper Drafting of the Agreement
The SFAA Residential Tenancy Agreement is legally prescriptive. This means that there are very specific legal requirements which are absent from other tenancy agreements. In particular, amendments cannot alter the parties legal rights, duties and obligations. To address specific needs of the landlord, a number of schedules are contained in the Agreement. These schedules contain a large range of clauses that can be used, and allow the parties flexibility without breaching legislated requirements.
The language of the written agreement is important as well. The Landlord and Tenant (Guarantors and Tenancy Information) Instruments Regulation, SI/2012-78, requires landlords to use specific words and phrases, and the SFAA Residential Tenancy Agreement provides guidance (in the form of capital letters and bolding) of what words to use. As an example, the Agreement advises that the Rental Unit number, Civic Address or other description of the property being rented, must appear in bold and in a particular section of the first page of the Agreement. If the written Agreement does not include these requirements , it may be deemed to be void.
When preparing a tenancy agreement, landlords should ensure that all parties are given sufficient time to review it, so they have an opportunity to understand what they are agreeing to. Giving the Tenant an opportunity to have the Agreement reviewed may avoid issues down the road.
Landlords should prepare the tenancy agreement, have it signed by the landlord or a duly authorized agent and keep the copy that is delivered to the tenant. It is imperative that the written agreement is signed and dated by the parties, or in the case of an authorized agent, the landlord and the Tenant before the Tenant moves into the property. It is important that the correct date is noted, so that the end date of the tenancy is clear, as well as the exact payment period. Avoid using an anniversary date for the last day of the tenancy.
Timing is important for both parties to the residential tenancy agreement so that the tenant can establish their rights to the rental unit as soon as possible. The SFAQ’s website is very useful in determining whether or not there is a residential tenancy agreement in place.
Potential Pitfalls to Avoid
Common mistakes to avoid when completing the SFAA Residential Tenancy Agreement and advice on how to avoid them
Neither landlords nor tenants should rely on the Residential Tenancy Agreement (Form 1) being a comprehensive contract already created by the Ministry. Before execution, you must add certain clauses and language, and remove other language, to create a valid contract that is right for your tailored needs.
Gymnastic fees – You may not realize that under our recommendations for best practices, gymnastics fees (i.e. late, returned payment, early lease termination, etc.) have been deemed to be unenforceable penalties at law. While the B.C. Supreme Court has refused to strike down such clauses, the penalties can have an impact in the event a successful Order of Possession is obtained. We still recommend including them in your Form 1 and other agreements, but only as an indication that if the provision is not adhered to, there will be a charge or penalty of some sort as a courtesy. The tenants may be able to challenge the amount of the penalty as a matter of quantum, but you will be justified in assessing the penalty.
Extra security deposit – Some landlords attempt to include more than one month’s rent in their security deposit, which is prohibited under the RTA. Others will attempt to add a pet fee or "pet damage deposit". Similarly, these funds can only be held as a security deposit under the RTA. Beware also of collecting pet rent as you prove no connection to an "agreed upon penalty" for breaking the agreement and just assess actual damages for the damage caused by the pet.
Clause 6 – Rent must be reviewed with a fresh set of eyes. It is a land-mine for litigation if not completed fairly. If omitted, the tenant could argue no rent is due and owing during the currency of the first term of the tenancy. If completed correctly, the landlord retains the discretion on whether to increase the rental amount or allow the tenant to passively renew the term at fair market value.
Utilities – Most often under litigation this clause becomes onerous to complete because it needs to contemplate large issues such as insurance, blind cleaning and forced entry due to fire code. This clause is a significant source of legal fees. It is imperative that landlords include the need for rules and regulations to be included in the award of tenancy or the landlord then has the right to remain in possession without the burden of taking down those rules afterwards. Furthermore, without the ability to enforce the housekeeping or rule provisions, the landlord may suffer damages in the event a tenant breaches the rules such as smoking and/or hoarding.
Pets – whether you are a tenant or a landlord, if you intend on having pets in the midst of the tenancy it is important to carefully read clause 4(g) and 4(h) and draft the lease accordingly. Otherwise, you are up for lengthy litigation not only at the RTA but potentially at the SPCA and different municipal bodies.
Reading List for Further Information
The SFAA provides a number of resources that offer further guidance and support when preparing and administering the SFAA Residential Tenancy Agreement: SFAA website – Within the website, you will find downloadable versions of all of the SFAA lease forms, including Form 3 (Residential Tenancy Agreement), as well as descriptions and explanations of the forms. The SFAA also provides free training programs for landlords and tenants as well as a monthly newsletter providing information on various aspects of the rental process .
Tenancy Compliance and Technology Team ("TCTT") – The TCTT is available to assist landlords and tenants in meeting their legal duties under the RTA, and to provide guidance and technical assistance regarding the use of technology to fulfil those obligations. The TCTT will also review and provide feedback on electronic templates as well as web and mobile technology supporting the RTA.
Tenant Resource Centre ("TRC") – The TRC provides up-to-date resources related to residential tenancies in British Columbia, including information about the law, research tools, administrative rules and supportive programs. The TRC offers in-person and online workshops, webinars, guides, pamphlets and tip sheets.