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: Client Update: New Rules to Live By

December 27, 2012

Amendments to the Residential Tenancies Act come into effect

Two new bills, that came into force Nov. 15, 2012, represent the first overhaul of the Residential Tenancies Act in several years. The Nova Scotia government says it believes these changes are long overdue and bring greater protection to both landlords and tenants, although the process of approving the amendments has not been without controversy.

The proclamation of Bills No. 119 and No. 110 (collectively, the "bills") was a long-time coming. Bill 119 initially received royal assent on December 10, 2010, while Bill 110 was somewhat shorter, receiving royal assent on December 15, 2011. The cause of the delay was to further study the impact of the changes to the Residential Tenancies Act R.S.N.S. 1989, c. 401 (the "Act") on both landlords and tenants.

The bills amend a number of provisions of the Act and the changes must be well understood by landlords and tenants. Below we have highlighted some of the significant differences (including one significant omission that tenants' groups were very eager to see included) contained in the new Act.

1. Notice to Quit: 15/15

Under section 10(6) of the current Act, on a yearly or monthly tenancy the landlord can give the tenant a notice to quit on 15 days' notice if the tenant is in arrears for 30 days or more.

The bills will now allow a landlord to provide a notice to quit if a tenant is in arrears for 15 days, half the time allowed under the current Act. Upon notice, the tenant can either pay all rent that is in arrears or apply to the director of residential tenancies (the "director") for an order to have the notice set aside.

If the tenant fails to do either, the tenant "is conclusively deemed to have accepted that the tenancy is terminated on the effective date of the notice," and must vacate the premises by that date.

Should the tenant not vacate the premises upon the expiration of the notice period, the bills then allow a landlord to make an application to the director for vacant possession and all outstanding rents.

The bills streamline this process, allowing the director to "grant the order without investigating and endeavouring to mediate a settlement and without holding a hearing." This shortened process greatly curtails the time period and agency costs associated with evicting tenants who fail to pay under the current Act.

2. Notice to Quit: Statutory Conditions

A landlord can also give a notice to quit immediately upon the tenant breaching any of statutory conditions (3), (4) and (5) of section 9(1) of the Act. These conditions are as follows:

Good Behaviour - A landlord or tenant shall conduct himself in such a manner as not to interfere with the possession or occupancy of the tenant or of the landlord and the other tenants, respectively.
Obligation of the Tenant - The tenant is responsible for the ordinary cleanliness of the interior of the premises and for the repair of damage caused by wilful or negligent act of the tenant or of any person whom the tenant permits on the premises.
Subletting Premises - The tenant may assign, sublet or otherwise part with possession of the premises subject to the consent of the landlord which consent will not arbitrarily or unreasonably be withheld or charged for unless the landlord has actually incurred expense in respect of the grant of consent.
While there was discussion when the bills were in committee whether there was a need to clarify what amounted to a tenant's violation of conditions (3) and (4), the Nova Scotia government decided to pass the bills as they were drafted.

Landlords must, therefore, take caution not to be overly aggressive in their use of notices to quit for breaches of statutory conditions until this power has been more thoroughly explained by the Residential Tenancies Tribunal and the Nova Scotia Small Claims Court.

3. Security of Tenure

The current Act only provided security of tenure to tenants who resided in the leased premises for five years or more. For instance, in that five year period, a landlord could opt not to renew a tenant's lease without reason. The bills completely change that, offering immediate security of tenure to all tenants within the province, bringing Nova Scotia in line with other jurisdictions in Canada. The impact is that landlords may only provide tenants with a notice to quit in certain circumstances enumerated in the new Act.

4. Security Deposits

The bills do not amend section 12 of the Act that deals with security deposits. There had been a significant push by many tenants' groups to do so, but the province chose not to amend this provision. Therefore, landlords may continue to require tenants to pay half of the cost of one month's rent at the beginning of the tenancy to be held as a security deposit until the end of the tenancy.

Click here to read the fully amended Act.

5. Bill 150

Bill 150 was introduced to the Legislature for first reading on Nov. 26, 2012. The bill has not yet passed the committee stage and is subject to potentially significant amendment prior to it becoming law. However, as it currently stands the bill operates to allow a tenant to quit his or her lease upon one month's notice if the tenant is a victim of domestic violence and can furnish to the landlord a certificate from the Director of Victims Services evidencing their claim.

Certificates may be issued by the Director of Victims Services in two specific circumstances: (1) if an emergency protection order relating to the tenant has been issued under Section 11 of the Domestic Violence Intervention Act (Nova Scotia); or (2) the Director of Victims Services is satisfied that the victim has filed a report with the police, a court has issued an order for the alleged aggressor to have no contact with the tenant, and the Director of Victims Services has reason to believe that the tenant is a victim of domestic violence in relation to the complaint and order previously mentioned.

There is currently no provision contained in Bill 150 for a landlord to challenge the veracity of a certificate. The landlord may only apply to the Director of Residential Tenancies to have the notice set aside on grounds that the notice and certificate were improperly given. Landlords must also be aware that Bill 150 obligates them to keep the details of the certificate in confidence, although it does not state a specific penalty for failing to do so.

The foregoing is intended for general information only. If you have any questions, or for more information on our practice group visit our Commercial Real Property and Lending page. For more on our firm see www.stewartmckelvey.com.

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