Sellers of $3.9M Vancouver house a year ago fight eviction from buyers

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The folks who sold a $3.9 million home on Vancouver’s west side last June, but continued to live in it, can continue to stay for now, according to a recent court decision.

In April 2023, Feng Xia Liu and Lian Bin Feng, owners of a home on West 36th Avenue, agreed to sell the home to Shan Guang Wang and Hua Yun Zhang, according to a B.C. Supreme Court decision by Justice Kevin D. Loo.

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The sale was completed on June 15, 2023, but before it did, the two sides agreed that the sellers, Liu and Feng, could stay in the home until the end of September 2023.

The two sides entered a rental agreement, which started on May 1, 2023. It stated that Liu and Feng would pay $5,500 a month, keep up the property and pay utility bills. The buyers, Wang and Zhang, would pay property tax and home insurance.

The contract for the sale noted the rental deal and crossed out the requirement that Liu and Feng had to pay a security deposit. But it did specify that the buyers would “hold back” $100,000 from the purchase price until Sept. 20, 2023.

Since the end of the rental period, however, the petitioners, Liu and Feng, “have taken the position that they are entitled to continue to live in the property on a month-to-month tenancy and that rent is to be paid from the $100,000 holdback from the end of September 2023 forward,” according to the court decision.

The court document said that Liu and Feng continued staying in the house and applied for dispute resolution with the province’s Residential Tenancy Act, “arguing that the $100,000 holdback was a security deposit” that was owed back to them.

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Liu and Feng sought to have the Residential Tenancy Branch order Wang and Zhang to pay back the security deposit with interest and a penalty for the wrongful holding of it. In February, the RTB ruled that the $100,000 wasn’t a security deposit.

On March 1, the buyers of the home, Wang and Zhang, issued the sellers, Liu and Feng, a 10-day notice to end their tenancy due to unpaid rent, giving them the option to either pay the overdue rent or dispute the notice.

Liu and Feng didn’t pay the overdue rent and filed a dispute notice.

The RTB heard this second case in April and the arbitrator concluded that the previous RTB decision declaring that the $100,000 wasn’t a security deposit meant that Liu and Feng were behind in their rent payments. The arbitrator ruled in favour of Wang and Zhang getting possession of the home.

This order, however, was stayed when Liu and Feng petitioned the B.C. Supreme Court for a judicial review of the two RTB decisions.

In the end, Justice Loo found the arbitrator’s conclusion that the holdback wasn’t a security deposit “defective for at least two reasons.”

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Loo noted that the interpretation of the purpose of a security deposit used by the arbitrator was too restrictive in only considering it as related to or contingent upon the condition of the unit. He cited the Residential Tenancy Act, which says that security deposits can be held as security “for any liability or obligation of the tenant respecting the residential property.”

As well, Loo found that the clause in the sale contract did tie the holdback of $100,000 to the condition of the unit when it said the seller had to keep up the property.

“It is clear that the holdback was intended on the face of the documents, to secure obligations of the tenant with respect to the property. The respondents have not been able to identify any other viable reason for its imposition.”

The judge ruled that the first RTB decision should be shelved because its was “patently unreasonable” and the second one should also be shelved for depending on it.

He stayed the order of possession that would have allowed Wang and Zhang to evict Liu and Feng, and ordered the RTB to reconsider the matter in accordance with the court’s decision.

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jlee-young@postmedia.com

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