Tuesday, 23 October 2012

Non-Payment of Rent

The purpose of this blog is to help both landlord and tenants with the procedural issues surrounding the application of the Residential Tenancies Act (RTA).  The RTA is the law that governs the relationship between residential landlords and tenants (since 2006 to the present date of 2012).  The prior legislation was the Tenant Protection Act and before then the Landlord and Tenant Act.  Any residential lease making reference to the old laws will always be deemed to be the current and actual law which is the Residential Tenancies Act.

Where should a landlord or a tenant start if the issue being dealt with is non-payment of rent?  The first place to look is the law itself.  You may find it at RTA .  Both landlords and tenants should inform themselves of the specifics of the laws as no landlord may take any steps to recover possession of a rental unit without following the technical requirements of the law.  The law respecting non-payment of rent is significantly more complicated than you might think.  It is for this very same reason that a tenant should inform himself/herself of the law as they have many more rights that you might imagine.

What does not work?---you can't tell a tenant to get out and expect them to leave, you can not just send an email or a letter or a note and think that this is lawful.  A handshake has no legal force or effect.  A written "contract" or a written "deal" is unenforceable--void, of no force and effect if that deal (no matter how reasonable it seems) violates the provisions of the RTA.  In short, the law takes away your right--as mature and consenting adults to negotiate the terms of an agreement--no matter how reasonable that deal might seem.

The next most useful place to look is the website of the Ontario Landlord and Tenant Board This website provides the necessary forms that a landlord absolutely must use and it provides brochures and guides on what to do.

I regularly teach landlord and tenant law at a local College here in Ottawa.  It is always surprising to me that the process to deal with non-payment of rent is so poorly understood.  A summary of that process is as follows:

1. Fill out a form N4--which is a Notice of Termination for Non-Payment of Rent.  This is not a choice or a recommendation.  It is mandatory if you are seeking termination of a tenancy for non payment of rent and the payment of that rent.

2. The form N4 will give the tenant 14 days to pay the rent.  If they do, the notice is void and they get to stay in the unit.  While you are waiting for the 14 days (yes two weeks) to pass, you can do nothing except wait.  This delay is a very good reason to serve an N4 immediately after the rent is due--no breaks, no delays as any grace period delays the counting of the 14 days of notice required to be provided in the N4.

3. If the rent is not paid within the 14 day period, then on the 15th day you may fill in a form L1 (Landlord's Application number 1).  File it with the Board, with a copy of the N4 that you served on the tenant along with a Certificate of Service, proving that you served the N4 on the Tenant.

4.  Once you file the L1 with the Landlord and Tenant Board you will receive a Notice of Hearing and an issued copy of the application.  You will need to serve this on the tenant (in the New Year (2013), the Landlord and Tenant Board will start serving the document for you by mail).  You will likely be waiting a week or two for the hearing date to arrive.

5.  On the date of the Hearing, you will need to attend to prove that the tenant has not paid rent.  Normally this is done by simply stating that the tenant has not paid the rent.  Presuming that the tenant does not dispute that the rent is owed, and absent any special considerations, the Landlord and Tenant Board may issue a standard Order, giving the tenant 11 days to pay the rent, plus the $170 application fee.  If the tenant does pay with the additional time provided, the eviction Order will become void and unenforceable.

6. If the tenant does not pay the rent, as Ordered, then on the 12th day (set out in the Order), the landlord may take the Order to the Sheriff (at the local Courthouse) for it to be enforced.  It is the Sheriff (Court Enforcement Officer) who must enforce the eviction order (there is no self help, you can't get friends or even the police to enforce the order--it has to be the sheriff).  The Sheriff will normally give the tenant another 7 days of Notice before physically attending to change the locks.

7.  Once in a tenancy, a tenant may pay the full amount of the rent arrears, even after the Sheriff has posted a Notice to Vacate on a tenant's door.  If they do, the eviction Order is void.  The Sheriff fee of approximately $330 must also be paid by the tenant at the Motion to Void hearing.  In order to void an eviction notice after the Sheriff has posted a notice to vacate a tenant must file a Motion to Void with the Landlord and Tenant Board.

As you can see, the process to terminate and evict a tenant for non-payment of rent is a lengthy process.  The RTA reflects a policy choice (Security of Tenure) to give tenants many opportunities to maintain their rental unit and home in cases involving non-payment of rent.  In fact, not discussed above, is the fact that a tenant, at a hearing before the Landlord and Tenant Board, may ask an adjudicator to exercise his/her discretion and order a payment plan or some other method that is affordable to the tenant instead of issuing an eviction Order.  The power to grant relief from eviction is under section 83 of the RTA.  Where an adjudicator exercises such discretion (and it is mandatory that they consider using the exercise of this discretion), the Board would Order that the tenancy is maintained (and the tenant not evicted), so long as the tenant meets the conditions of the Order (for example $50 per week until the arrears are paid off).


In the event that the tenant does not meet the terms of a conditional order granting them relief (i.e. the chance to maintain the tenancy), the landlord will be permitted to apply again to the Landlord and Tenant Board under section 78 of the RTA in form L4.  Of course, a tenant may bring a motion to set aside an Order obtained under section 78--which all means that the parties will be back before the adjudicator several weeks later---- again.

Left out of this short blog is the possibility of a tenant raising various defences to the Landlord's application.  Those various defences include the legal right to argue any grounds for abatement of rent (maintenance, repair, illegal entry, tenant's rights etc.) or any other argument that would impact on the right of the landlord to collect rent (i.e. the lawful rent, the validity of the Notices, etc.).  If any of these arguments are successful the landlord might find that the rent arrears are substantially reduced or even that the application is dismissed on what is often derisively called a "technicality".

If you are a landlord, or a tenant, I hope you have taken from this blog the fact that the requirements of the RTA are highly technical, that not following the technical requirements of the RTA is in fact illegal, that tenants have many rights that are not necessarily intuitive, and that getting professional legal help--whether you are the tenant or the landlord is a very good idea.

Michael Thiele
Quinn Thiele Mineault Grodzki LLP
Lawyers
310 O'Connor Street, Ottawa, ON K2P 1V8
Tel: 613.563.1131
mthiele@pqtlaw.com
<a href="http://www.hypersmash.com">HyperSmash.com</a>

5 comments:

  1. Hello Michael.

    I finally got an order to have my tenants evicted for breaching the order. The order stated that they had to pay rent on time and in full. The tenant paid rent 6 days after the rent was due and did not make a full payment.

    I received the order November the 19th, and since it is almost Christmas I decided to let them stay Dec 15th-jan15th, without getting the sheriff involved.

    I sent them an advance notice to enter with my real estate agent, and received a message stating that i could do the inspection after Christmas.

    Do they have the right to deny entry at this point?


    I also called the landlord and Tenant board and found out that they filed a motion on Dec the 10th. which is past the 10 day requirement. I am confused why a hearing date was given, without an extension request.

    The hearing date is now booked for Dec 16th.

    You have been very helpful in the past, and I would really appreciate your assistance.

    Thank you, kindly!

    ReplyDelete
    Replies
    1. Hello:

      With respect to the tenant's denying entry to allow you to show the unit, inspect the unit etc.. The right to enter is covered in section 26 & 27. The cumulative effect of these sections is that the tenant does not have the right to deny entry. I always say that this is subject to reasonableness/decency--i.e. if the tenant is on the couch with the flu being sick etc., then I think that even though the landlord has the right to enter their would be no consequence to the tenant for refusing.

      In your situation, a simple denial without a proper reason is not acceptable. Note that you could explore the idea of entry without notice pursuant to section 26(3)(a)--if the purpose is to show the unit to a prospective tenant. Follow the requirements in section 26.

      The second part of your comment makes me have to guess what has happened here. I presume that you had an Order under an N8 (Persistent Late Payment of Rent). The Board ordered as a result of that N8/L2 application that the tenants could stay but would have to pay in full and on time for the next year (a fairly standard order). In breach, you were allowed to file a motion under section 78--which means an L4 application relying on affidavit evidence. That would have resulted in you getting an ex parte order it the mail---i.e. an Order based on your affidavit without the tenant having any opportunity to make submissions.

      An Order obtained in this way may be automatically stayed by a motion to set aside the order if the motion is brought within 10 days of the order issue date. If, as in your case, the 10 days expires without the motion being brought, the tenant may request an extension of time to file the motion--usually citing as a reason that they didn't get the Order or some other such thing. Clearly, whatever they wrote was persuasive enough for the Board to accept the Motion to Set Aside and schedule a hearing date. Given the scheduled hearing your eviction Order is likely stayed pending the hearing.

      Hope that explains the process a bit more.

      Michael K. E. Thiele
      www.ottawalawyers.com

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  2. Hi Michael,

    I am kind of a new landlord and my tenant hasn't paid rent for 6 months. I have given N4 notice then filed L1. We had a hearing today and judge had asked him to vacate. He has agreed to vacate by tmrw. He owes $5614 and is on social assistance. I was using my line credit to manage the expenses during the period. He will disappear after tmrw for sure. Since he is on welfare, how can I collect the money? How to find his new address? I cannot afford any further expenses. Kindly, advise me. Thx.

    ReplyDelete
    Replies
    1. Hi: I suspect that you already know that the answer to your question is not what you want it to be. If your tenant's sole source of income is Ontario Works (welfare) or perhaps ODSP (Ontario Disability Support Plan), then your tenant's income is exempt from garnishment or seizure for the payment of your debt. You could convert your Landlord and Tenant Board Order to a Judgment of the Small Claims Court (small fee) and try a debtor's examination in Court which is an opportunity to ask him about his assets and what he has available to pay you (it is quite possible that the answers will be that he has nothing and can't afford to pay you). Out of that process you can sometimes get Orders and payment plans that could be backed up with possible contempt findings. Sometimes the Small Claims Court judges get very creative to find a solution! Another option is to hire a collection agency and see if they have any luck--they often charge a percentage of what is collected. Sadly, you may be counting on the debtor inheriting money or winning the lottery as a condition of getting paid yourself.

      Finding the debtor's address, employment details if any, is a matter of luck. There is no specific way of finding this information for the purpose of enforcing an Order. If you can't find the information yourself you could hire a process server (who can do various database searches) or alternatively a Private Investigator who can do a bit more. This is usually called "skip tracing" and you can expect it to cost several hundreds of dollars. It is very helpful if you collected the debtors date of birth, drivers licence number, etc., at the time of renting the unit to him. This information would give the Private Investigator a head start in locating the debtor for you.

      Good luck and I hope for your sake that your tenant does voluntarily vacate today. If he doesn't leave on his own you will need to file your eviction Order with the Sheriff so that the Sheriff will come and remove the tenant. This will cost another approx $330 dollars and depending where you are in the province take a number weeks.

      Good luck

      Michael K. E. Thiele
      www.ottawalawyers.com

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    2. Dear Michael,
      It is a pleasure to have ppl like you, who help others with valuable information. I really appreciated and proud of you. At the same time, the society has ppl like my tenant, who steals others money and leave them with debts. I just came from Dr. Office and my BP is high. I have decided to follow your advise and got the forms to fill out. The tenant was willing to hand out the key by today. Also, I have found out that he doesn't have any assets or even vehicles. I was told that he works for cash, while on welfare. Officially, he doesn't work.......(he is a handy man). Do you still think it is better to go through the small claim court or better with collection agency? What you will do (if you were me)? He is still living somewhere close to my condo......other ppl have seen him. He has done that to other landlords too (I found out, while he was talking). He has told the board member that he can't pay, b/c other roommates were moved. The board member has repeated that "it is your problem sir".
      Kindly advise your opinion.....that is the only relief I have now. Thanks.

      Delete

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About Michael Thiele

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Ottawa lawyer and partner at Quinn Thiele Mineault Grodzki LLP.  Graduate of Queen's University in Kingston, Ontario.  Called to the bar in Ontario in 1997.  Undergraduate degree at Colby College, Waterville Maine, U.S.A.