I have recently encountered a couple of sticky situations regarding landlords and tenants & was waiting for the right time to do a blog post covering what I have learned. I apologize for the length! You can scroll through the topline takeaways down to some legal must-knows & resource links at the bottom if you're short of time!
To preface this article, most of my clients (and friends) who are landlords have no issues whatsoever with their tenants. I tend to do about 5-10 leases per year; combined with my team experience I can say in about 10 years only about 4-5 leases have had problems during that time. But when they go wrong, they can be incredibly stressful! Here’s my learning this year from a particularly interesting sale:
- Vet your tenants; I cannot stress that enough.
- Raise the rent as allowed each year so you don’t create a problem where a tenant is paying way below market rent
- Have a lease in writing (this is the law now, anyway)
- Understand the Residential Tenancy Act – fines and penalties are large for landlords
- The landlord tenant board is more pro-tenant than ever; prepare yourself emotionally
- The landlord tenant board is currently experiencing very long delays due to hiring freezes & understaffing
- In a real estate transaction dealing with a tenanted property, the rules of Real Estate and the Rules at the Landlord tenant board are not always consistent or compatible. The rules and regulations we are bound to by REBBA (Real Estate Brokers Act) are not upheld by the Landlord Tenant Board.
- If your tenant claims a disability the LTB takes that very seriously. To the point that you could be accused of violating human rights issues if you ask a tenant to do what others would consider normal (like clean, pay rent on time & show up to meetings on time)
- Hire a paralegal to represent you at a hearing
- LTB does no longer wants realtors to represent landlords (tenants get free representation)
- If you are thinking of selling & have a difficult tenant, try and negotiate with the tenant to leave so the unit shows to it’s best. Use a realtor who knows the rules or who can refer you to a good paralegal for some advice
The Story of the Tenant who wouldn’t leave
This year, I was hired to sell a home with a basement tenant. There had been friction for years; the landlords had taken pity on this gentleman and rented to him in what they thought was going to be a temporary situation. But as they had found out; once a tenant is in place it is almost impossible to get him to leave. Because there had been no lease in writing; there had been past arguments escalating to legal action concerning:
- Property: Because there was no lease, there was no defined storage area for the tenant, who was a hoarder. When the landlords removed property from the garage belonging to the tenant (who had stored it there without permission) there were accusations of theft/damage. Now the house is sold, providing vacant possession to the buyers of storage sheds is an issue because of the tenant’s property.
- Laundry: Again, not specified in the lease, there were accusations by each party including: non-operative dryer, leaving taps running, damage to pipes, etc.
- Harrassment: with no separate and private entrance to the rental suite, the tenants comings and goings were scrutinized. The tenant accused the landlord of entering the property without proper notice. Tenants can accuse a landlord of harassment; as a landlord you need a specific reason to enter the unit, you can't just do random checks, beware.
- Internet/Heat: again, with no lease in place to define what was covered in the rent, the tenant had lots of accusations of internet being cut off, etc.
During the time the house was for sale, the tenant was fairly co-operative with showings although the the apartment did not show well. Action through the Landlord Tenant Board was useless in trying to get him to clean up. Because the landlord had never increased the rent, the tenant was paying far below market rent; the artificially low rent made him resist any financial incentives to leave -- he knew he could not find other similar accommodation. He refused to mediate any settlement at the Landlord Tenant Board.
When an offer was finally negotiated; the buyers requested vacant possession. To accommodate that and also to ensure closing the agreement to purchase included three key items:
- A price discount to the Buyers if vacant possession could not be given
- A 90 day closing to accommodate the timeline required to give the tenant proper legal notice to vacate (60 days from date when the rent is paid) & a further 30 days to deal with any contingency.
- A promise by the buyers to deal with any legal action still outstanding after closing.
To close, at the LTB hearing the new buyers will have to deal with the tenant. An eviction will be granted in favour of the new owners, but the Chair at the meeting would not set a specific date due to the tenants claims of medical issues.
Finally some must-know rules if you are dealing with tenants:
- You can only ask a tenant to leave if:
- You or an immediate family member require the unit. In this case they must occupy it for 12 months or you may be subject to hefty fines. You must pay the tenant compensation of one months rent or offer them similar accommodation.
- You are doing major renovations
- You have sold the property (just having it up for sale doesn’t count)
- Hefty fines are now in place if you have asked a tenant to move and re-rent the property without moving in.
- You must provide your tenants with an Ontario Standard Lease within 21 days of leasing a property, a tenant can withhold a months rent as penalty
- Rent increases are capped by the government yearly unless the unit is newly built and has never been occupied
- 60 days notice starts at the beginning of a rent cycle. For example, for a tenant paying rent on the first of the month, if you give notice on the 15th of the month, the 60 day period begins the first day of the following month
Resources for Landords:
Landlord's Self-Help Centre:1500, 55 University Ave, Toronto, ON M5J 2H7 Phone: (416) 504-5190
Landlord and Tenant Board Website (That's were you will find all the forms & applications along with guideance on rules and rulings)
Ontario Residential Tenancies Act (this is the legal act, so it's long - 246 sections and written in legalese)