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
310 O'Connor Street, Ottawa, ON K2P 1V8
Tel: 613.563.1131
<a href="http://www.hypersmash.com">HyperSmash.com</a>

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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.