Elevator Replacement

Replacing or retrofitting an elevator is one of the costliest repairs that a building owner will undertake. Aside from the capital costs, an elevator replacement can cost an owner in other ways; lost rental revenue, penalties, and the loss of good will that is so important in running a successful building.

I talked to two owners that had experiences with elevator replacements. The first, Steve K., had a planned replacement, and the second, Karen R. had a sudden and irreparable failure of her elevator. Both elevators were the only elevators in the building.

Steve thought that he was being fair and forthright with his tenants. Six months before the replacement started he let the tenants in his building know that they were going to be replacing the elevators. He followed that up with a letter 2 months prior to the work that gave the tenants an option of either the Residential Tenancy Branch mandated two months notice with one month’s free rent, or, if the tenant wanted to stay, a tiered discount, with tenants on the upper floor receiving a rent reduction of 30% and tenants on lower floors receiving a scaled discount. He had also arranged with the building manager to provide assistance as needed.

No one took Steve up on the offer to move. He thought he had covered his bases. He had given plenty of notice, given a discount on rent, and communicated with his tenants.

As the scheduled replacement went ahead, one of the tenants decided that the inconvenience was more that they discount they had been offered and took Steve to arbitration through the Residential Tenancy Branch. The arbitrator agreed with the tenant, and awarded at 60% discount for the repair period. This set off a chain reaction. In the end, Steve faced 27 separate arbitrations, with decisions in the favor of the tenants in all cases, but with essentially random results of 10% to 60%, depending on the arbitrator. “I would have been money ahead if I would have evicted everyone and done the work without any tenants in the building. I think my big mistake was not having people sign a legal document that clearly laid out the two choices, and made them agree to one or the other options.”

Karen’s situation was slightly different. In her case her elevator failed without warning, and she worked with the tenants to mitigate the inconvenience. She installed rest stations on stair landings. She hired students for a few hours a day at $20 per hour to help carry groceries up the eleven floors, and instead of giving tenants a rent reduction, she delivered cheques averaging 20% of the rent. While it amounted to a reduction in rent, Karen had taken the step of attaching a caveat to each cheque that made it clear that by cashing the cheque the tenant was agreeing to compensation as offered. She did not face any arbitrations or immediate complaints from the tenants, but several people asked to be let out of their leases, and even years later, there is residual resentment from the tenants that remained. Sometimes no amount of sugar is enough.

So are there rules? I spoke with a representative of the Residential Tenancy Branch and when pressed they disclosed that they did not have any specific legislation that tenants rights during an elevator replacement and could only point me to Form RTB #24 . Form 24 is Notice Terminating or Restricting a Service or Facility which is used to provide 30 days notice of the elevator, boiler, or any other essential service in a building being stopped for repair or replacement. The representative that I spoke to reinforced the need for clear and consistent communication with the tenants, and to do it in writing. He indicated that there was no specific rules regarding the reductions of rents, and each case would be adjudicated by individual dispute resolution officers.

Best practice would indicate three things.

First, evaluate the tenants that live on each of the floors. If there are any seniors or disabled tenants on the upper floors it should be a prime concern of the landlord to communicate with those tenants about the hardships that will be encountered over the period of the repair. Because tenant safety and security is the prime concern of the landlord it is in everyone’s best interest for elderly and disabled tenants to be relocated to the ground floor, where possible. No one wants to invoke the 2 month eviction clause, but there are situations where it is in the best interests of both the tenant and the landlord.

Second, put in place a schedule for helpers to aid people carry groceries or fetch mail to tenants on the upper floors that require assistance. Any other little conveniences that can be implemented or offered will go a long way to maintain a positive relationship between the tenants and the landlord.

Third, communicate to the tenants early and often about the upcoming repair or replacement. As part of the communication strategy, get agreements in writing, and make those agreements fair. If a tenant does decide to take you to arbitration you will have a complete record of the communication between you and all the tenants, and a signed legal agreement between the tenant and yourself with an agreed to payment for the inconvenience of the elevator being shut down.