Corporate Law – The Impending Requirement for a Transparency Register in British Columbia

 

British Columbia Bill 24-2019: Business Corporations Amendment Act, 2019 (“Bill 24-2019”)‎ ‎received Royal Assent on May 16, 2019. A copy of Bill 24-2019 can be found here. While Bill 24-2019 is not in effect as of the date of writing this article, the anticipated requirements on businesses in British Columbia are significant.

 

This Bill requires many corporations to maintain a “transparency register” which must list significant individuals. For the purposes of Bill 24-2019, a significant individual is either someone who owns a significant number of shares (i.e. 25% or more of the issued shares of the company or issued shares of the company that carry 25% or more of the rights to vote at general meetings) or someone who can elect, appoint, or remove a majority of the directors of the company. The relevant provisions of Bill 24-2019 with respect to “significant individuals” are reproduced below:

 

Significant individual

119.11  (1) In this section, “significant number of shares”, in respect of a private company, means either of the following:

 

(a) 25% or more of the issued shares of the company;

 

(b) issued shares of the company that carry 25% or more of the rights to vote at general meetings.

 

(2) Subject to any prescribed class of exclusions, an individual is a significant individual in respect of a private company if any of the following apply:

 

(a) the individual has any of the following interests or rights, or any combination of them, in a significant number of shares of the private company:

 

(i) an interest as a registered owner of one or more of the company’s shares;

 

(ii) an interest as a beneficial owner of one or more of the company’s shares, other than an interest that is contingent on the death of another individual;

 

(iii) indirect control, within the meaning of the regulations, of one or more of the company’s shares;

 

(b) the individual has any of the following rights or abilities, or any combination of them, that, if exercised, would result in the election, appointment or removal of the majority of the directors of the private company:

 

(i) the right to elect, appoint or remove one or more of the company’s directors;

 

(ii) indirect control, within the meaning of the regulations, of the right to elect, appoint or remove one or more of the company’s directors;

 

(iii) the ability to exercise direct and significant influence over an individual who has the right or indirect control described in subparagraph (i) or (ii);

 

(c) the individual has a prescribed interest, right or ability in relation to the private company, or a prescribed criterion or circumstance applies to the individual in relation to the private company.

 

At least once a year, within two months of the anniversary the company was recognized as a company in BC, a BC company must update their transparency register. Steps a company can take to determine who significant individuals are may include requesting that a shareholder provide the company with information about significant individuals for the purpose of maintaining the company’s transparency register.

 

Particularly onerous on shareholders, directors, and officers of BC companies impacted by Bill 24-2019 are the new offence provisions under Bill 24-2019. These offence provisions state as follows:

 

Transparency register – incorrect entries and false information

427.1  (1) In this section:

 

“private company” has the same meaning as in section 119.1;

 

“significant individual” means a significant individual under section 119.11.

 

(2) Subject to subsection (4), a private company commits an offence if its transparency register

 

(a) identifies an individual as a significant individual who is not a significant individual in respect of the company,

 

(b) excludes an individual who is a significant individual in respect of the company,

 

(c) contains information about a significant individual that is false or misleading in respect of any material fact, or

 

(d) omits information about a significant individual, the omission of which makes the information false or misleading.

 

(3) If a private company commits an offence under subsection (2), any director or officer of the company who, subject to subsection (4), authorizes, permits or acquiesces in the commission of the offence also commits an offence, whether or not the company is prosecuted or convicted.

 

(4) No person is guilty of an offence under subsection (2) or (3) if the person

 

(a) did not know that the identification or exclusion of the individual was incorrect or that the information about a significant individual was false or misleading, and

 

(b) with the exercise of reasonable diligence, could not have known that the identification or exclusion of the individual was incorrect or that the information was false or misleading.

 

(5) Subject to subsection (6), a shareholder of a private company who sends information to the company for the purposes of the company’s transparency register commits an offence if the information

 

(a) is false or misleading in respect of any material fact, or

 

(b) omits any material fact, the omission of which makes the information false or misleading.

 

(6) No person is guilty of an offence under subsection (5) if the person

 

(a) did not know that the information was false or misleading, and

 

(b) with the exercise of reasonable diligence, could not have known that the information was false or misleading.

 

In addition to the proposed amendments Bill 24-2109 proposes to make to the Business Corporations Act, regulations with respect to the transparency register are also anticipated to come into force. Due to the prospective liability under the proposed amendments, and the uncertainty with respect to the regulations which have not yet been passed, shareholders, directors, and officers in BC companies should remain vigilant to ensure the requirements of the transparency register are met accurately and within the mandated timelines.

Are electronic signatures Legal?

Each province has enacted functionally equivalent electronic commerce legislation.  BC’s is called the Electronic Transactions Act (ETA).  The ETA states that if there is a requirement under law for the signature of a person, that requirement is satisfied by an electronic signature.  There are however exceptions, as electronic signatures are not accepted for wills, trusts created by wills, powers of attorney, and documents that create or transfer interests in land and that require registration to be effective against third parties.   Besides those documents just mentioned, electronic signatures can seemingly be used for all other types of documents that require signatures.

The ETA provides that consent is required for electronic commerce to be effective.  “Nothing in the ETA requires a person to provide, receive or retain information or a record in electronic form without the person’s consent”.

The definition of electronic signature under the ETA, is quite vague, “[I]nformation in electronic form that a person has created or adopted in order to sign a record and that is in, attached to or associated with the record”.

An electronic signature to meet the rigors of the ETA therefore could be a digitized image of a handwritten signature, a biometric signature such as an electronically recorded thumbprint, a digital signature using a public key infrastructure and a certification authority, or a voiceprint of a person saying his or her name.

The imprecise requirement under the ETA is unlikely to encourage clients nor law firms of the surety of that signature.  A system that guarantees the electronic signature and ensures that the document has not been amended is required.  This is where digital signatures come in.

A digital signature gives the recipient reason to believe that the message was created by a known sender in a way that they cannot deny sending it (authentication) and that the message was not altered in transit (integrity).

 

 

 

This blog will discuss the disclosure that is required in a real estate transaction when a home has a stigmatized history.

The case which highlights this issue is Wang v. Shao, 2018 BCSC 377.

The facts of this case were as follows:

  • The case surrounded the purchase of an upscale home in Vancouver in 2009 (the “Shaughnessy Home”)
  • The seller of the Shaughnessy Home was Ms. Wang (the “Seller”) who was an immigrant from China
    • The Seller lived with her daughter, Ms. Yuan, Ms. Yuan’s husband Raymond Huang and their children
  • In 2007, Raymond Huang was shot to death on the sidewalk in front of the property
    • It was believed that this was a gang affiliated attack
  • As a result of the murder, the children were asked to leave the private school they were attending and started attending a private school in West Vancouver
  • Yuan then purchased a house in West Vancouver
  • The Seller meanwhile had gone back to China and Ms. Yuan moved to West Vancouver, meaning the Shaughnessy Home was empty and as a result, put on the market
  • When the Shaughnessy Home was put on the market, Ms. Yuan asked the realtor whether it was necessary to disclose the murder to prospective purchasers and the realtor said that unless a prospective purchaser specifically inquired about a death, there was no need to disclose
  • The eventual purchaser was a Ms. Shao (the “Buyer”) who received this answer when asking why the seller was selling:
    • the reason for selling was that the daughter had moved to a school in West Vancouver where she would have a better chance to practice her English
  • Eventually, a contract of purchase and sale dated September 3, 2009 was signed specifying a price of $6,138,000 and a closing date in November, 2009
  • On September 30, 2009, the Buyer learned through a friend that “a death had occurred” at the front entrance of the property. The Buyer then conducted a Google search and discovered that an alleged gangster had been shot fatally near the front entrance of the Shaughnessy Home
  • The Buyer informed the Seller that she would not be not be completing the transaction due to a breach of the Contract of Purchase and Sale
    • The breach being that the Seller expressly stated that there were no latent defects on the property that render the property dangerous or potentially dangerous to the occupants
  • The Seller then initiated a claim against the Buyer for breach of contract and the Buyer filed a counterclaim for fraudulent misrepresentation

There were two issues that the court had to decide on:

  • whether there was a latent defect on the property; and
  • whether there was a fraudulent misrepresentation

On the first issue, the court determined that there was not a latent defect on the property relying chiefly on the caveat emptor doctrine which basically means buyer beware.   The court reasoned that subjective concerns of this kind were not amenable to measurement on an objective standard and would impose an impossible standard of disclosure in circumstances such as this.  The court also said that latent defects dealt with defects or imperfections in respect of the property itself or any measurable condition or quality of the property and that the murder did not affect the property itself.

On the second issue, the court determined that the incomplete representation was a misrepresentation upon which the Buyer relied to her detriment. The court accepted the Buyer’s evidence that she would not have agreed to purchase the property had she known that a reputed gang leader had been murdered at the property’s front gate. The fraudulent misrepresentation vitiated the contract for purchase and sale and the Seller’s action was dismissed.

However, there was an appeal, Wang v Shao, 2019 BCCA 130.

The latent defect issue was not appealed and the fraudulent misrepresentation was overturned.

The court reasoned that If the law were now to be modified to require that upon being asked a general question like the one asked in this case, vendors must disclose all of their personal reasons and explain the causes for those reasons, even when they bear no relationship to the objective value or usefulness of the property, the door would be open to a huge number of claims. Buyers, perhaps unhappy with their purchases, could claim that information was ‘concealed’ or that a misrepresentation by omission had occurred — despite the fact the undisclosed information is, on an objective view, completely irrelevant to the value and desirability of the property.

In conclusion, latent defects are only those defects that affect the actual property and are not discoverable through reasonable inspection and if you have any particular concerns about the property you should ask outright.

It should also be noted that leave to appeal has been filed in the Supreme Court of Canada.

 

What is the Duty of a Driver to Yield to an Emergency Vehicle?

 

When travelling on a roadway or highway it is inevitable that you will encounter an emergency vehicle.  What are your obligations on the road in relation to this emergency vehicle?  Section177 of the British Columbia Motor Vehicles Act (MVA) states:

 

On the immediate approach of an emergency vehicle giving an audible signal by a bell, siren or exhaust whistle, and showing a visible flashing red light, except when otherwise directed by a peace officer, a driver must yield the right of way, and immediately drive to a position parallel to and as close as possible to the nearest edge or curb of the roadway, clear of an intersection, and stop and remain in that position until the emergency vehicle has passed.

 

In short, section 177 states that if the emergency vehicle is giving an audible signal and showing a visible signal there is an obligation on drivers of the road to yield to the emergency vehicle.  However, as stated in the BC case of Watkins v Dormuth, 2014 BCSC 543:

 

”The duty imposed by s. 177 of the MVA to yield to an emergency vehicle is not absolute. A driver must have time to perceive and react.”

 

In Watkins, a police officer crashed into another driver while attempting to overtake the vehicle.  The police officer claimed that the other driver should have pulled over by virtue of s.177 of the MVA.  The court placed 100% of the blame on the police officer as the police car was behind her for only a short period of time. The driver of the police car did not show that this time was long enough such that a reasonably alert driver would have perceived the lights and sirens of the police car and pulled over.

 

Emergency vehicles do not have free rein in exercising their driving privileges.  They are constrained by the duty to drive with regard for due safety.

 

If you would like legal advice as a result of a car accident, please contact Heath Law LLP at 250-753-2202 or toll free: 1-866-753-2202.

Has Someone Failed to Pay You?

The following will outline some basic information for recovering money owed to you under a contract.

The first thing that must be considered is the likelihood of recovering the debt owed.  It is important to remember that just because someone owes you money, it does not mean that they necessarily have the ability to pay you.  It is important to weigh and consider the amount owed to you versus the time and costs of recovery.

The next thing to consider is the limitation period for collecting the debt.  Generally speaking, the limitation period for an action in debt is two years after the claim is discovered.  A claim is discovered when one knew or ought reasonably to have known that injury, loss, or damage had occurred.  If one fails to bring a claim within the limitation period that claim becomes time barred. Note that there is a special rule contained in the Limitation Act as to when a claim on a demand loan is discovered. A demand loan is discovered on the first day there is a failure to perform the obligation after a demand for the performance has been made (s. 14).

Following a determination of the likelihood of recovery and ensuring there is compliance with the limitation period, a demand letter should be sent to the debtor.  This demand letter should outline the name of the creditor, the amount of the debt and the authority of the creditor to collect the debt.  It should also be noted that some contracts provide that a demand has to have been made before any legal action is commenced.

If no payment is received as a result of sending the demand letter it may be advisable to pursue legal action against the debtor.

Before legal action is commenced, one important consideration is which court to sue in.  In BC, there are three different levels of court one can use to recover money owed to them.  The decision as to which court to elect usually comes down to the amount of money the debtor owes.

The three courts are as follows, the Civil Resolution Tribunal (“CRT”), Small Claims Court and Supreme Court.  The CRT has a monetary cap of $5,000, the Small Claims Court has a monetary cap of $35,000 and there is no cap for Supreme Court.

After court election and assuming you are successful and achieve a judgment against the debtor, the method and availability of executing on that judgment is crucial.  It is possible that you go through the entire legal process and receive nothing because the debtor has no exigible property (property that can be realized on).  This is why it is very important at the initial stage to determine whether or not the debtor has the ability to pay.

The common methods of realizing on a judgment for a debt are through seizing and selling the debtors personal property, registering the judgment against the debtor’s real property or through garnishment (a process by which money owed to the debtor gets paid to you instead).

If you would like legal advice with regard to collecting money owed to you, please contact Heath Law LLP at 250-753-2202 or toll free: 1-866-753-2202.

 

 

The purpose of this blog is to make you aware of a recent change in the law with regard to Wills.

The BC Wills Estates and Succession Act (WESA) permits “Multiple Wills” to be used to deal with the assets of a deceased person located in BC.  The purpose behind creating Multiple Wills is to avoid the costs of applying for Probate of the Will.

Probate of a Will is a court process that confirms the validity of a Will and the Executor’s authority to act under it.  If there are assets under the Will that are controlled by third parties such as the Land Title Office (real estate) or a financial institution (bank accounts), these parties are not usually willing to accept the Executor’s authority based solely on the Will.  They require that the validity of the Will and the Executor’s authority also be confirmed by the Court.  The process of securing that confirmation is called “Probate”.

Applying for Probate can be a cumbersome and often costly procedure.  The Executor must list all of the deceased’s assets that are to be dealt with under the Will.  There is also a tax associated with applying for probate of 1.4% of all assets that have been listed ($14,000 per $1,000,000).

Shares of closely-held private companies do not require the consent of third parties.  The title of the shares is not controlled by a third-party, but rather by the company’s Directors.  The BC Business Corporations Act specifically confirms that these Directors can authorize a transfer of the deceased’s shares based on the Will alone, without requiring a Probate of the Will.  Shareholder loans due to the will-maker also do not require Probate.

It is for this reason that it may be advisable to create Multiple Wills.  One Will shall deal with almost all of your assets (the “General Will”) and another Will can be created that deals exclusively with your private company shares and any shareholder loans that are due to you (the “Restricted Will”).  By having the Multiple Wills, only the assets under the General Will would be subject to Probate which will allow you to avoid significant probate taxes on the value of your private company shares and shareholder loans (as these assets are covered off by the Restricted Will).

If you only have one Will that deals with all of your assets then the 1.4% probate tax would apply to all of the assets under the Will.

A Multiple Will estate plan can save a significant amount of probate taxes and can provide some privacy for company related matters.  If you have significant assets in the form of private company shares or shareholder loans and you wish to save Probate taxes you should consider Multiple Wills.  The savings in Probate taxes should significantly exceed the legal costs associated with preparation of the General Will and Restricted Will.

Do Good Easements Make Good Neighbours?

In Mending Wall, the American poet Robert Frost famously asked: Do good fences make good neighbours? In the poem, two neighbours are walking in tandem on either side of their fence, laboriously re-stacking fallen stones. The narrator questions this customary practice because their lands respectively contain apple and pine tree orchards. In response, the neighbour reiterates the adage: good fences make good neighbours. Here, Frost hints at the complexity of property rights. But, let’s suppose the fence was intruding two meters into the narrator’s property. What then?

Often, properties are subject to easements which—broadly stated—grant the right of use, enjoyment, and/or access to others. There are two general categories of easements: public and private. First, public authorities can acquire by expropriation an easement-like right of access for the maintenance of public services and utilities, what is known as a statutory right of way. Once established, these rights-of-way may limit where you can build permanent structures on your property (e.g. a patio, pool, carport, etc.).  For example, Frost’s narrator may have powerlines over a portion of his property; this could restrict the size of his orchard to ensure the utility company’s access.

Second, easements may be granted privately between property owners. These agreements run with the land, insofar as the right-of-access (or otherwise) is registered against the granting land (the servient tenement). Consequently, the easement will persist even when the initial property owners have sold their lands. The benefiting lands (the dominate tenement) carries the right for each subsequent owner’s or inhabitant’s enjoyment. For example, the narrator’s neighbour may be so content with fence mending because he inherited lands that benefit from an easement; whereas the narrator questions the custom because he has inherited lands that grant this benefit.

There are three elements required for an easement to be valid. First, there must be servient and dominate tenements. Private easements cannot exist in gross (“thin air”). These lands need not be contiguous, but they must be close enough to allow the one to benefit the other. Second, because easements impose a burden on the servient tenement, courts will not enforce one unless it improves the dominate land somehow. Third, an easement must be capable of forming the content of a grant. In other words, easements may only concern property rights, such as access to or use of lands. It cannot grant the right to a spectacular view, for instance. Nor can an easement impose a positive obligation on the servient tenement-holder. In Frost’s Mending Wall these three elements appear to be satisfied. Does that mean the narrator’s neighbour can fence the easement lands? Maybe.

Easements grant a property right, not a type of ownership. As such, they never grant the benefiting landowner exclusive possession of the subject lands. Where sufficient access remains for the servient tenement-holder, a dominant tenement-holder may fence easement property—provided it contributes to the easement’s purpose. In Beyer v. Clarke, for example, the B.C. Supreme Court permitted such a fence because it improved the land’s safety for the dominant-tenement holder and their dog. The easement at issue granted a general right of use and enjoyment. To that end, the dominant tenement-holder constructed an ornate garden. Because the fence contained a gate which allowed garden access to the servient tenement-holder and because the fence contributed to the easement’s general purpose, the court refused to order its removal. From this precedent, the narrator’s neighbour may fence the easement lands, provided it contains a gate and contributes to the easement’s purpose.

How do easements end? First, the tenement-holders may agree to remove the easement from the land titles registry. Second, the benefitting landowner may abandon the easement. This requires more than mere disuse. Rather, it requires an action which clearly demonstrates their intention to abandon the right. They may, for example, fence over their access route. And lastly, the easement’s purpose may be rendered obsolete.  An easement allowing for septic truck access, for instance, may become obsolete when a city installs sewage lines.

As Robert Frost’s Mending Wall suggests, property law is complex. Maintaining good relations with your neighbour often requires more than a fence. If your property is subject to an easement and you are hoping to make changes, call our office for more information about your rights and your property’s restrictions.

“This contract represents the entire agreement between the parties. The contract supersedes all prior negotiations, representations or agreements, either written or oral, including the bidding documents.”

This clause, or something similar to it, is known as an entire agreement clause. It is often included within commercial contracts to limit the parties’ liability to the contract’s four corners. In other words, it prevents one party from asserting that the other breached a contractual promise made but not recorded within the contract. This creates legal certainty by lifting the final contract out of the messiness of negotiations. However, there are several circumstances where entire agreement clauses will not be strictly applied.

Where the parties are sophisticated or where they have legal representation during the contract’s negotiations, an entire agreement clause may be strictly enforced.[1] Where there is an asymmetry of bargaining power between the parties, however, the entire agreement clause must have been brought to the weaker party’s attention prior to the contract’s formation.[2] Following from this reasoning, courts have held that an entire agreement clause within a standard form contract will be given less weight; this is because the parties are less likely to have read and understood the clause’s meaning.[3]

Entire agreement clauses will not necessarily prevent a party from suing for negligent misrepresentation of terms not included within the contract. Between sophisticated parties or parties with legal representation, the Supreme Court of Canada has held that protection from liability for negligent misrepresentation is implicitly included within an entire agreement clause.[4] For unsophisticated or unrepresented parties, the possibility remains open. That is, they may sue the other party for breaching a representation made prior to but excluded from the final written contract. Such lawsuits are especially likely to succeed where that representation induced them to enter the contract.[5]

Finally, entire agreement clauses will not shield parties from liability for acting in bad faith. In the 2014 decision of Bhasin v. Hrynew, the Supreme Court of Canada created a new common law duty of honest performance in contracts.[6] Parties cannot use an entire agreement clause to contract out of this duty. Therefore, fraudulent misrepresentations during a contract’s formation will always remain actionable.

If you’re entering a commercial contract be mindful of the entire agreement clause and its effect on any representations the other party has made to you during the negotiations. For more information please call our office at (250) 753-2202.

 

[1] No. 2002 Taurus Ventures Ltd. v. Intrawest Corp., 2007 BCCA 228; Power Consolidated (China) Pulp Inc. v. British Columbia Resources Investment Corp., [1989] B.C.J. No. 114 (B.C.S.C.).

[2] Zippy Print Enterprises Ltd. v. Pawliuk, [1995] 3 W.W.R. 324.

[3] Turner v. DiDonato, 2009 ONCA 235, at para. 46; Wright v. 2137737 Ontario Inc., 2010 ONSC 2956;

Parkland Industries Ltd. v. Smart Gas and Auto Detailing Ltd., 2013 BCSC 1046.

[4] Bow Valley Husky Ltd. v. St. John Shipbuilding Ltd. [1997] 3 SCR 1210, 1997 CanLII 307 (SCC)

[5] Tilden Rent-A-Car Co. v. Clendenning, 1978 CanLII 1446 (ON CA)

[6] 2014 SCC 71

When non-medical cannabis became legal on October 17, 2018, provincial and municipal governments were handed the responsibility of regulating cannabis retail stores.  British Columbia has one of the most progressive stances of cannabis, but that does not mean that applying for a retail store is easy.  Applications for cannabis retail store licences are time consuming, costly, and extremely detailed.

The precise requirements for applicants will depend on whether they are applying as a sole proprietor, partnership, corporation, or as an Indigenous Nation.  There is a financial integrity check and a criminal record screening.  These steps are to ensure that the applicants are not connected to organized crime.  Applicants should be prepared to share their past addresses, employment history, corporate associations, financial accounts, and any connections they have with federal producers of cannabis.  Applicants must also prepare floor plans and site plans of the proposed retail store.

A critical step in the process will be getting the approval of the local government or Indigenous nation whose land the store will be on.  Local governments and Indigenous nations can set restrictions for these licences, such as location and hours of operations.  They can even outright ban non-medical cannabis retail stores in their area if they wish.  This process may be a simple application or it could develop into a full community consultation.  For an Indigenous nation that wants to build a store on its own land, this step is rather straightforward.  For everyone else, it will be important to check the relevant bylaws and policies before starting an application.

Finally, the licence application fee is $7,500.00.  This is in addition to the annual retail store licence fee of $1,500.00.  Applicants will also want to consider whether they will need to create a corporation or a partnership, purchase or lease the property, and construct a store that meets the specifications set by the provincial government.

If you have any questions about how to apply for a cannabis retail store licence, please contact Heath Law LLP at 250-753-2202 or toll free: 1-866-753-2202.

Renovictions in BC

In April 2018, Premier John Hogan created a Rental Housing Task Force, comprised of three MLAs: Spencer Chandra Herbert, Adam Olsen, and Rae Leonard. One of their major recommendations regarding the issue of “renovictions” has been adopted by the Provincial government and came into force in May 2018. A renoviction occurs when a tenancy agreement is prematurely ended for renovations or repairs. While this is permitted under 49 of the Residential Tenancy Act, the Task Force’s public consultations suggested that this section was often misunderstood or abused by landlords. For example, cosmetic upgrades and minor renovations to electrical or plumbing systems were often being cited as justifications for evicting tenants. The Task Force claimed that this created housing insecurity for renters. To mitigate this issue, they recommended that agreements should persist where possible. Where health and safety concerns necessitate the tenant’s absence from the property, the Task Force further suggested that they receive a right of first refusal upon the work’s completion. The Province quickly adopted these recommendations, as follows:

  • Landlords must provide 4-months’ notice to end a tenancy for demolition, renovation or repair, or conversion. The tenants have 30 days to dispute this notice at the RTB.
    • Before the notice is filed, the landlord must have all the applicable permits and approvals to renovate.
  • If the landlord ends the tenancy under section 49 (landlord’s use) and they do not:
    • take steps towards accomplishing the stated purpose within a reasonable time;
    • use the property for less than 6 months after the tenancy ends;

they will be required to compensate the tenant for 12 months’ rent; unless an arbitrator finds that extenuating circumstances excuse the landlord of liability.

  • Where major renovations require the tenant to vacate the property, the tenant will have a right of first refusal to re-enter the property under a new tenancy agreement.
    • However, this only applies to tenancies within a residential property with more than five or more rental units.
    • Should the landlord fail to recognize this right by not giving the tenant 45 days’ notice of availability and a new tenancy agreement, they will be required to compensate the tenant 12 months’ rent (again, subject to a valid excuse from extenuating circumstances).

For commercial residential rental companies, these new rules introduce a risk of significant liability when renovating or repairing a building, for each tenant has a potential claim of 12 months’ rent. With five tenants at $1,000 per month, the landlord may be liable for $60,000 for failure to adhere to these rules. As such, we recommend seeking legal advice before issuing notices and swinging hammers.