What legal aspects should be considered when renting out a property?

Renting out your property can be a reliable source of income and an investment strategy for property owners in Calgary. However, along with the potential benefits come numerous legal obligations, the violation of which can lead to costly litigation, fines, and loss of reputation. This article provides a detailed overview of the key legal aspects of rental relationships in Alberta to help owners protect their investments and establish transparent, balanced relationships with tenants.

Regulation of residential leases by Alberta law

In the province of Alberta, the main piece of legislation is the Residential Tenancies Act (RTA). This law sets out the rights and responsibilities of both landlords and tenants, from the drafting of the lease to the eviction process. It is important to remember that any conflicts between the terms of the agreement and the RTA are resolved in favor of the tenant if the terms of the agreement are more stringent than the legal requirements.

Any rental agreement must meet the minimum requirements of the RTA:

  • Clear identification of the parties to the agreement (full name of the property owner or legal entity and the tenant).
  • Description of the residential property with address and list of amenities provided.
  • Amount, timing, and method of rent payment.
  • Terms for the return of the security deposit, limited to no more than one month's rent.
  • Procedures for giving notice of early termination and renewal of the contract.

Although Alberta does not require a fixed form of contract, it is recommended to use the approved RTA form or the provincial government's electronic template to avoid omitting important points.

Deposit and guarantees: terms and obligations

Under Alberta law, the landlord may require a security deposit of no more than one month's rent, which must be returned within 10 days after the tenant's departure, less any amounts necessary to cover damages that exceed normal wear and tear. To protect yourself from unfounded claims, it is recommended that you:

  • Take video or photo evidence of the condition of the property before moving in and after moving out, with appropriate dated evidence.

  • Sign a joint handover report detailing the condition of each room, plumbing, appliances, and furniture.

  • Send a written report detailing all deductions from the deposit, if any.

Any disputes regarding the deposit are resolved by the Residential Tenancy Dispute Resolution Service (RTDRS), a conciliation system designed to resolve residential disputes quickly and inexpensively without going to court.

Eviction and termination rules

The eviction process in Alberta requires strict adherence to notice periods. The most common reasons for eviction are:

  1. Late payment of rent. The landlord must provide a written notice of default, after which the period for payment or move-out begins (depending on the terms of the lease).

  2. Breach of contract (excessive noise, keeping pets without permission, using the property for purposes other than those specified in the contract). In such cases, a separate written warning detailing the breach is required.

  3. Personal need: repair, renovation, or sale of the property. In such cases, the tenant is given at least 90 days' notice.

If the tenant does not respond to the warning, the owner can contact the RTDRS or the court to obtain an eviction order. Any action to forcibly evict a tenant without a court order is considered illegal.

Insurance and liability

Landlords must have a property insurance policy that covers risks associated with renting: fire, water damage, criminal acts. Most standard homeowners insurance policies do not cover commercial rental risks, so it is essential to notify your insurer of any change in the status of the property.

Tenants are often advised in contracts to take out renters insurance — liability and personal property insurance. Although this is not a mandatory requirement under the RTA, having such a policy significantly reduces claims against the owner in the event of damage caused by the tenant's guests.

Compliance with safety regulations and housing standards

Calgary has strict building and fire codes that apply to rental properties. The owner is responsible for:

  • Keeping electrical wiring, water supply, heating, and ventilation systems in good working order.

  • Installing and regularly testing smoke and carbon monoxide detectors in accordance with provincial regulations.

  • Make sure there are emergency exits and that evacuation routes are clearly marked (for multi-unit buildings).

  • Do annual maintenance on the water and heating systems and keep proof of service reports.

Failure to comply with these requirements may result in civil lawsuits and fines from municipal inspections.

Taxes and reporting rental income

Income from renting out a property in Canada is taxable. The owner must:

  • Include monthly rental income in the annual T1 General tax return (form T776 for details of income and expenses).

  • Keep all financial records for at least six years: agreements, repair bills, insurance payments, proof of tax payments.

  • In the event of a division of property between several owners, agree on the distribution of income and expenses in advance.

The Canada Revenue Agency (CRA) may verify the accuracy of tax returns and the correctness of deductions related to real estate.

Ensuring privacy and access to housing

Under the RTA, the landlord has the right to enter the tenant's premises only by prior agreement and at a reasonable time. Typical reasons for access:

  • Inspection or repair of life support systems (heating, water supply).
  • Inspection of the condition of the property for the purpose of renewing the contract.
  • Showing the property to potential new tenants (with 24 hours' notice).

Even in emergency situations (fire, flooding by neighbors), the landlord must act with caution and inform the tenant of their intention to enter the premises. Violation of the right to privacy can lead to civil lawsuits and compensation.

Conclusion

The legal aspects of renting a home in Calgary cover a wide range of issues, from drafting a contract in accordance with the Residential Tenancies Act to compliance with safety regulations, insurance, tax reporting, and tenant privacy protection. Careful compliance with legal requirements and procedures helps landlords avoid legal disputes, protect their financial investments, and build trusting relationships with tenants. It is recommended to consult with a lawyer or Alberta housing law specialist to develop customized agreements and implement best practices for property management.