Previous Owner Skeletons.
In a recent purchase of an Alberta fourplex, our client took over existing tenants. There was one utility service and utilities were apportioned between the tenants. The arrangement was that tenants would pay their rent plus an estimated portion of utilities. At the end of the year, the landlord would add up the actual utilities and either refund money or collect extra money from each tenant.
When our client took over, one particular tenant was on a month-to-month tenancy. It became immediately apparent that she was “one of those tenants!!” She paid her rent late, complained about everything, and was generally a nuisance. Finally, our client gave notice for substantial breach and the tenant had to leave.
The tenant disappeared after moving out, leaving no forwarding address. Four months later, our client was served with an Alberta Small Claims Court Statement of Claim. The tenant was claiming for her entire security deposit plus a sum of money for what she believed was 4 years of utility overpayments. Remember, our client had only owned the property for 6 months. The total claim was for $2,800.
The client was upset and wanted to retain my Edmonton-based firm, RMLO Law LLP, to fight the case. My advice was as follows:
How to Deal With Tenant Problems After They Leave
- You don’t need a lawyer for Small Claims Court.
It generally doesn’t make economic sense for you to retain a lawyer to fight Small Claims cases. Small Claims is people-friendly, and they have a pre-trial settlement process that often gets rid of cases before they go to trial.
- Don’t take responsibility for the previous landlord.
The troublesome tenant was previously on a series of four, fixed-term, one-year leases. The fixed-term leases had finally turned into a month-to-month tenancy. Our client should argue that any utility adjustments or arrangements are outside the unwritten month-to-month tenancy, and he can only be responsible for those utility adjustments while he was landlord.
- Provide evidence of having followed correct procedure.
The tenant disappeared immediately after moving out, leaving no forwarding address. The landlord made deductions from the security deposit. The tenant is now claiming a full security deposit refund. Alberta’s Residential Tenancies Act (RTA) has a security deposit process that a landlord should go through, whether the tenant is available on move-out or whether they are not. To protect yourself, you should follow all RTA procedures to the letter. Have a great file. This will assist your defence against a tenant who has not followed RTA procedures.
How to Avoid Claims on the Previous Landlord
After Buying a Rental Property
This is a situation where our client would have been very happy to have on his file a “Rental Information” form. The Rental Information form is something you get the tenant to sign when you take over a property. It asks whether or not there is anything owing to the tenant from the previous landlord. If the tenant says, “No, my previous landlord doesn’t owe me anything and we don’t have any side deals,” then it is difficult for them to claim later that you as the new landlord owe them something from the old landlord.
When it comes to real estate, having a good lawyer on your side can save you a lot of trouble. Get in touch with if you’re thinking about buying or selling real estate in Alberta.