When flooding, a fire or some other disaster makes your rental unit uninhabitable, you’re probably wondering what you are required to do and what you can do for your tenants. Read on for a summary of whose insurance covers various kinds of damages, what your legal obligations are and some ways you can help your tenants. Keep in mind that provincial laws, municipal regulations and insurance policies vary.
Landlord insurance
Let’s hope that you’re reading this section about insurance under the aegis of “prevention is the best medicine” rather than “hindsight is twenty-twenty.” Homeowner’s insurance and landlord insurance are not required in Canada. That said, it’s usually a stipulation from lenders. Of course, insurance protects your investment and makes life easier when major damages occur.
When landlord insurance protects you
Landlord insurance covers your property, including the structure of the building, fixtures, and heating and cooling systems.
When your renters need tenant insurance
Your insurance doesn’t cover your tenants’ belongings, which fall under their tenant insurance. Along with protecting renters’ property, tenant insurance usually gives them liability protection in case they damage your or someone else’s property.
Is tenant insurance mandatory?
In Canada, tenant insurance isn’t mandatory, but you can require proof of tenant insurance in the lease. This can be the best way to protect them from the risk of financial losses if they’re liable for damages. This type of coverage can also help you avoid the sticky situation of having renters with severe financial hardships after a disaster strikes. It also protects you by ensuring that you’ll be paid when they’re responsible for damages to your property.
What are a landlord’s obligations?
Across Canada, landlords are required to maintain their property and meet all provincial and municipal health and safety standards. Tenants aren’t responsible for the normal wear and tear that comes from residing in the property. That type of upkeep falls to the landlord.
Both landlords and tenants must make emergency repairs when needed or either party can be held responsible for damages. Beyond that, when a serious disaster or damages affect your property, your obligations vary depending on the province or municipality where your property is located.
British Columbia and Alberta, both of which have had major natural disasters with large-scale property destruction within the past few years, are examples of provinces with some specific rules governing a landlord’s rights and responsibilities.
British Columbia
When a disaster makes a rental unit unlivable, the province encourages both parties to come to a written agreement about rent payments. If they can’t, the tenant must continue paying the rent. However, in this case either party can apply to the provincial government’s Residential Tenancy Branch for a dispute resolution.
An unexpected disaster can cause a tenancy to become “frustrated.” No, this doesn’t have anything to do with a landlord’s frustration over late rental cheques. The term applies to the rental agreement itself. It means that the event in question is preventing one or both parties from fulfilling the terms of the lease—namely, in the landlord’s case, providing an inhabitable dwelling meeting safety and health standards. At that point, either one can terminate it. If tenants have already paid for a period after the lease has ended, landlords must reimburse them.
Tenants whose primary residence is damaged may be eligible to receive compensation from the province’s disaster financial assistance for losses to their home and belongings, among other things. This program helps people recover from events that aren’t covered by private sector insurance policies.
Landlords must provide emergency contact information to their tenants. They can give it to each tenant, or if they have a property with multiple units, they can post it in a common area, such as a hallway or laundry facility. If the tenant makes two phone calls and allows a reasonable amount of time to pass without being able to reach the emergency contact, the landlord must reimburse the tenant for repairs.
In Alberta, a disaster that neither party could have controlled can cause a tenancy to become frustrated. If a rental unit is damaged to the point that a reasonable tenant wouldn’t continue living there and a reasonable landlord wouldn’t make repairs (or authorities deem it unsafe to live in) the tenant may be able to end the lease. He or she must provide notice at least 30 days beforehand. A lease also becomes frustrated if a local environmental public health official inspects the residence and indicates that it’s unsafe. When the lease is frustrated, landlords must return the security deposit. However, when tenants fail to provide proper written notice, landlords can keep the security deposit. However, tenants who can prove that the unit was uninhabitable will be able to recover this money.
If the landlord and tenant share a living space, the rules for a frustrated lease and terminating a tenancy don’t apply.
If tenants can’t live in their home during repairs, they can ask landlords for a rent reduction (aka an abatement). If the landlord doesn’t agree, tenants can apply to the Tenancy Dispute Resolution Service or go to court for a ruling.
Landlords must put all their tenants’ belongings valued at $2,000 or more in storage for at least 30 days (unless the items are in a condition that would make storage unsafe). They should keep a record of them for three years. They can handle less valuable items as they wish.
Alberta
How to help your tenant relocate during repairs
Whether it’s a legal obligation or you simply feel it’s the right thing to do, you may need to help your tenants relocate during reconstruction. SiniSTAR is a Canadian company that can quickly find furnished, fully equipped temporary housing in your area. A comfortable, convenient short-term home will allow them to get back to their normal lives.