Landlords try to charge fees, both refundable and non-refundable, for lots of things, but are these rental fees legal?
CPLEA has been hearing lately about confusion over fees that landlords are charging tenants. There also seems to be confusion about whether increasing fees triggers rent increase notice rules under the Residential Tenancies Act (RTA) in Alberta. While we may not have answers as to why there is such confusion, we hope to at least clarify the general law about fees through our two-part article series. The first part of this series will cover the law as it relates to refundable fees and non-refundable fees. Part two of this series will cover parking fees as well as fees for late payment of rent and breaking a lease.
To understand this area of the law, let’s go back to basics. Forget about the different types of possible fees such as pet fees, key fees, re-rental fees, lake fees (yes, we saw this one in the caselaw) or fill-in the-blank of whatever fee you can think of. The very first question to consider is whether a fee is refundable or non-refundable.
Refundable fees: subject to security deposit restrictions
If a fee is refundable, then it forms part of the security deposit. The security deposit restrictions under the RTA apply – meaning that the total security deposit including refundable fees cannot be more than one month’s rent. Key fees and pet fees are sometimes refundable fees or charges. For example, if a landlord charges $1800 a month for rent, then the total security deposit including any refundable fees cannot exceed that amount.
Since we are talking about pet fees, what about pet rent? Sometimes we hear rumors about landlords charging pet rent. The RTA is not clear about whether it allows pet rent, and a judge has not clarified the issue. Depending on what the lease says though, it may be possible that a tenant renting with a pet will pay more rent than one renting without a pet.
Non-refundable fees: likely enforceable if agreed to but must be reasonable
Unlike refundable fees, the security deposit restrictions under the RTA do not apply to non-refundable fees. The caselaw suggests that if parties agree to a non-refundable fee (such as a re-rental fee) in a rental agreement and it does not go against the RTA, then it is likely enforceable.
For example, in a case before Alberta’s Residential Tenancies Dispute Resolution Service (RTDRS), one of the issues was whether the landlord was entitled to an unpaid non-refundable pet fee. The dispute resolution officer recognized that the RTA is silent when it comes to non-refundable fees. The officer decided that if the parties agree to pay a non-refundable fee for bringing another pet into the premises, then the agreement does not go against the RTA and is therefore enforceable.
Does this mean landlords can be a little creative and charge non-refundable fees at will? Not necessarily. Just because a landlord can charge a non-refundable fee does not protect them from a court or RTDRS reviewing the fee for reasonability. Any fees should reasonably reflect an actual cost recovery. The courts or RTDRS may not enforce a fee if it does not reflect actual cost recovery or if it exceeds cost recovery.
Practical tips for refundable and non-refundable fees
What are some best practices for refundable and non-refundable fees? As mentioned in the RTA handbook, if a tenant feels a fee or charge is unreasonable, they can apply to the court or RTDRS for a remedy. As such, during the tenant application process and taking of the security deposit, landlords should clearly state:
- any additional fees or charges
- circumstances that will give rise to fees/charges, and
- whether the fees/charges are refundable or non-refundable.
Looking for more information?
Looking for articles like this one to be delivered right to your inbox? SUBSCRIBE NOW!
DISCLAIMER The information in this article was correct at time of publishing. The law may have changed since then. The views expressed in this article are those of the author and do not necessarily reflect the views of LawNow or the Centre for Public Legal Education Alberta.