Wednesday, 7 November 2012

Paying rent in cash----smart?

It always comes as a great surprise to me that many tenants pay their rent in cash.  They pay the rent in cash, often forget to get a receipt, lose the receipt, or don't even ask for one.  These are very trusting tenants.

I'm often confronted with the cash paying tenant at the Ontario Landlord and Tenant Board.  Most often when I am representing that tenant.  We are usually defending an application for termination of the tenancy for non-payment of rent.  As is my usual practice, we go through each month of claimed rent arrears, line by line.  It is in doing so that the tenant swears to me that the rent is paid---paid in cash.  That's when I ask the tenant if they have a receipt or any proof that the cash was delivered to the landlord.  The answer is often naive and the tenant tells me that the landlord knows the rent is paid.  Sometimes the tenants can show a withdrawal of the exact amount of cash from their bank account and we try to infer that the rent must have been paid from this withdrawal.  Most often though, there is no proof of payment.

The burden of proof in any application at the Ontario Landlord and Tenant Board is on a balance of probabilities.  In a non-payment of rent case, the burden is easily discharged by the landlord who only has to say " I didn't get the rent for X month(s)".  The burden then shifts to the tenant to prove that the rent has been paid.  How do you do that without a receipt?

The simple answer is that most of the time you can't  The Landlord and Tenant Board imposes the proof of payment on the tenant.  Without a receipt, cancelled cheque, direct deposit slip, there simply isn't any evidence of proof of payment.  Of course, a tenant's own testimony is evidence, and perhaps there is a circumstance in which the adjudicator would prefer the tenant's oral evidence that the rent was paid over the landlord's oral evidence that the rent was not paid.  However, those instances are very few and far between.

Tenants who pay cash, and who don't keep their receipts, risk having to pay the rent twice should the landlord deny receiving the rent in cash.  This is profoundly upsetting and quite expensive for tenants who are often paying the rent in cash because they can't afford a bank account or because the landlord insists on getting the rent in cash.

Tenants should be aware that a landlord can not insist on getting rent in cash.  Even if a tenant gets a receipt, it is better to pay the rent in a form that is traceable.  Direct deposit, cheque (get copy of cancelled cheque), money order, all of these are better than paying in cash.  A lost receipt for cash is as bad as never getting a receipt in the first place.


16 comments:

  1. Is there any law or LTB cases that indicate what forms of payment a landlord is required to accept? For instance, is a landlord required to accept direct deposit?
    Thank you!

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    Replies
    1. Hi: No there isn't. The Landlord is not allowed to require post-date dates cheques or specific forms of negotiable instruments. But I'm not aware of anything requiring the landlord to accept direct deposit.

      Michael K. E. Thiele

      Delete
  2. Hi Michael, thank you for your great blog, super INTERESTING to read, and very useful. I am a small-scale landlord (live in the same house as my tenants) in Brampton ON.
    From my Landlord's perspective I also do not want to take cash. While it might seems easier to take cash, but then I am required to give a receipt, then if they lost it, I am required to give the receipt again. On top of it while tenants have track of them giving me payments, I do not have any traceable evidence showing when and how much they paid (with their signature or other confirmation). I also don't feel quite safe taking cash from certain people, and I find it important to have a trail of tenants consistently paying late if this is the case.

    My actual question is - can I legally require my tenants to pay in traceable payments? E.g. money order, personal cheque, certified cheques, even e-mail transfer? Or do I have obligation to accept their cash payment if they insist?

    ReplyDelete
    Replies
    1. Hi:

      There is nothing it the RTA that I am aware of that forces a landlord to accept cash for the payment of rent. Certainly, I am aware of a great many landlords who refuse to accept cash for payment of rent--for many of the same reasons that you cite. The requirements with respect to the method of payment of rent are set out in section 108. This is the section that prohibits a landlord or tenancy agreement from requiring a tenant to provide post-dated cheques or other negotiable instruments. Further, this section prohibits a landlord from requiring a tenant to allow automatic payments from bank accounts, credit cards etc..

      That, however, appears to be the extent of the statutory rules on payment of rent. Refusing to accept cash seems like a reasonable thing to me. While you can't tell a tenant "how" to pay the RTA seems to allow you to state how you will not accept payments. It would be worthwhile to put this condition (no cash) in your tenancy agreements.

      Michael K. E. Thiele
      www.ottawalawyers.com

      Delete
    2. If you are a landlord and you communicate and coordinate via text with your tenant when/how much money she or he will give you in cash, are your text messages sufficient to hold up in court if need be? I'm a landlord, and my tenant is promising he will pay his arrears soon, but is insisting in cash only and not cheque. Is this something I should be worried about?

      Fantastic blog by the way! Learned a whole lot reading though your posts then I ever did searching though the internet!

      Delete
  3. great story, however, I was under the impression that no one can refuse coin of the realm. I realise it may not be safe, but I do not have a chq book, and I do not feel that I should have to pay 5$ for a money order. thank you for this blog however, very helpful

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  4. I've been making the mistake of paying cash without receiving my receipts, and I only ask for receipts when I need them. I recently asked for receipts for the whole year and she hasn't given them yet.

    My question is, if I want to change my payments from cash to cheque, which she'll dislike, how can I do so efficiently and within my rights?

    ReplyDelete
    Replies
    1. Hi Ahmed: Get your receipts for the cash and don't give any further cash unless you get a receipt for that cash immediately. Once you have all of your receipts then simply give the landlord a cheque the next time. The landlord may be upset but they are not entitled to be paid in cash. You have every right to pay the rent by cheque. It is safer and is traceable as it's own receipt if necessary.

      Good luck

      Michael K. E. Thiele

      Delete
  5. Dear Michael,

    I have learned a lot through your blog site and have something similar to the question provided to you back on November 15, 2015 regarding rental payment.

    We've been at this location for over 11yrs. Since the last 5 years we've paid cash, no lease, as of Dec 2015 we asked for a receipt and feel it was purposely ignored even though the landlord that lives directly across the street did not follow up. We have had a good relationship but feel we are more and more being ignored or treated disrespectfully in a way that they are getting away with too much and we are just too nice. I have no idea if they are claiming it or not. Either way that's their business but truly feel we have a right to get a receipt every month or at least for the entire year by end of year for proof.
    When we inform them of a matter that could eventually lead to a serious one, they consider it as an issue from us when instead its a "request" that should be looked into as we are being in my view responsible tenants. After 2 years of informing them that the way the furnace was running did not seem right and was running inconsistently with heat due to the possibility that it was reaching its longevity of over 15yrs.
    Thanks to the new tenants upstairs that notice the same thing and went over quick time in 48hrs the issue was looked into. While our new furnace was being installed I informed them in person of our bathroom sink having an egg smell and can it be looked into. This has happened just recently once in Jan. 2016 and now several times during Feb. while using the sink late at night or early mornings. Sometimes during the day it won't happen.
    The landlord verbally confirmed "one thing at a time and that he'll get a friend (plumber to look at it) It's been over 48hrs since our furnace was looked at and the egg smell was mentioned and still have not received any confirmation that the sink will be looked at.
    Can you please provide guidance at your best knowledge to the following:
    i) getting the receipts
    ii) having the sink looked at and would this be considered a health related issue if a another step needs to be approached if our request continues to be avoided or ignored? Do they have the right to be paid rent for March if the matter is not looked at sooner than later and continue to ignore us after a verbal reminder?
    iii) Would it be appropriate to have an excel file created for the above with the length of time when these requests are being looked at as proof?

    Thank you and really appreciate your time and effort in advising what the next step should be. Your blog is fantastic and I'm looking forward to hearing from you.

    All the best!

    ReplyDelete
    Replies
    1. Hi: The obligation to give receipts is set out in section 109 of the RTA. If you search my blog in the search box you will find an article written specifically on the obligation to provide a receipt and the tenant's rights if one is not provided.

      The issue with the sink should be something that the landlord looks into quickly and without question. Especially for long term tenants like yourself. An egg smell is concerning as it suggests to me sewer gas smells which you shouldn't be getting. However, as something new after 11 years that doesn't make sense to me either as I would have expected the smell to be present long ago if the sink was not properly installed. You are right to ask the landlord to look at it. If he takes too long or refuses there is always the avenue of calling your city/town/township in to have the property inspected. If that isn't realistic you could also file an application with the landlord and tenant board--even though it seems extreme for a sink that apparently is still working but just has an egg smell to it.

      Your last point is a good one. Whether it is an excel file or a simple folder. You should keep track of all of your requests, copies of emails, text messages, letters, or make a note of the date and time of phone calls and what was said with the landlord. This is useful and necessary evidence if you should ever need to proceed to the Landlord and Tenant Board. Keeping this evidence also protects you from allegations that you did not inform the landlord of necessary maintenance that could have avoided significant damage.

      Good luck to you

      Michael K. E. Thiele
      www.ottawalawyers.com

      Delete
  6. Good morning, thank you for sharing your knowledge here. Our issue is that we rented an apartment from a mother and daughter couple... Unbeknownst to us, the daughter doesn't not reside upstairs but the mentally ill mother does, on her own. Slowly but surely we learned of our landlord's disruptive behaviours. We've asked her daughter to intervene but to no avail. My question is, can we ask for our full security (first and last) back as we were swindled into taking this place with no knowledge of our mentally ill landlady? Best regards to you

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    Replies
    1. Hi: IN order to offer an answer I need to infer that you are seeking to terminate your tenancy and move out? If the living arrangement is intolerable then you can seek to terminate your tenancy and move. If the landlord does not agree, then you would have to apply to the Board to request an order terminating the tenancy (presumably you are on a written fixed term lease?). If you are applying to terminate your lease you could ask the Board to refund rent paid, or provide an abatement, and/or provide you with compensation for moving costs etc.. Whether this is successful or not will depend entirely on the circumstances. Of course, the fact that your landlord is mentally ill does not justify termination in and of itself. You will need to demonstrate how the landlord's behaviours are making it impossible to continue to live in the premises. As terminating a tenancy is often considered a remedy of last resort you will want to make sure to have made every reasonable overture and attempt to solve the problems that you are facing. If the Board feels that this has not been done you may indeed be denied termination of the tenancy. If I were you, I would not highlight in the case against the landlord that any of the behaviours arise from mental illness or any other disability. You should focus only on the disturbing conduct and if it is serious enough then that may be the basis to terminate the tenancy. If the landlord, via her daughter, wishes to argue that the complained of activity arises from a disability etc., then that is her argument to make.

      Good luck to you.

      Michael K. E. Thiele
      www.ottawalawyers.com

      Delete
  7. Hi Michael, my tenant sends rent via etransfer and has started shorting rent to cover the cost of the etransfer fee. I can't find any law regarding this, but I feel like they should be paying the transfer fee.

    ReplyDelete
    Replies
    1. Hi: You are correct. The tenant owes you the entire rent and reducing the rent for the fee means that the rent is not paid up. I presume of course that you haven't required the mode of payment to be etransfer? If the tenant does not wish to incur etranfer fees they should use a different method of payment.

      Michael K. E. Thiele
      www.ottawalawyers.com

      Delete
  8. Hi Michael. My landlord sent out a notice that effective Dec 1 they will not be taking cash payments. Now considering cash is legal Canadian tender, can they do this?

    Secondly, I do not trust direct withdrawal from any source, nor will I incur any extra fees from etransfer or cheques.

    What are my options?

    Thanks

    Jeff

    ReplyDelete
    Replies
    1. Hi Jeff: An interesting question. There is a general legal proposition, with respect to the payment of rent, that "neither party can unilaterally change the accepted method of payment". Your landlord simply announcing that they will no longer take cash is a unilateral decision changing the accepted method of paying rent. You could argue, and I think successfully, that the landlord can't do this.

      A second way of looking at this is in relation to the Post Dated Cheques section of the Residential Tenancies Act (RTA) specifically section 108 (b). This section is most commonly referred to when talking about landlord's wanting post dated cheques or automatic charging of rent to a bank account, credit card, etc.. This section clearly makes that illegal.

      However, for your situation, section 108(a) is more interesting. It provides: Neither a landlord nor a tenancy agreement shall require a tenant or prospective tenant to, (a) provide post-dated cheques or other negotiable instruments for payment of rent; or ".

      You end up asking yourself what are "negotiable instruments". I can't find a definition in the RTA so you would look elsewhere for what is commonly understood to be a "negotiable instrument". For sure this includes "cheques" and I imagine it would include a money order, postal money order, or anything else that is the equivalent of money or which can be traded in for money.

      While I don't see that you have the right to pay rent in cash I don't see how the landlord can demand that you pay rent in anything but cash based on the wording of section 108(a).

      The foregoing is at least an argument. I haven't looked up the caselaw on section 108 and I don't know if the Board or a Court has dealt with this question of a tenant insisting on paying in cash and whether there is a legal right to do so OR alternatively whether the landlord has the legal right to demand payment in any for other than cash.

      Good luck with this. Interesting issue.

      Michael K. E. Thiele
      www.ottawalawyers.com

      Delete

IMPORTANT NOTICE

Any answers provided are intended to reflect the Law of Ontario, Canada. The answers are not legal advice and no one should rely on the answers provided as legal advice. The answers are intended to be general information about Ontario Law and are the personal view of the author based on the limited facts provided to the author. The answers may not be legally accurate and may indeed be contrary to the law of Ontario. Answers and conclusions drawn may have been different if facts had been shared that have not been disclosed in the comment/question. This blog is intended to assist people in learning about Ontario Landlord and Tenant Law. However, if you have actual legal problems this blog should under no circumstances replace proper legal advice obtained by retaining a lawyer or licensed paralegal to advise you. Nothing in this blog, comments submitted or answers provided, gives rise to a solicitor and client relationship. Comments are published as submitted and commenters should be aware that if they identify themselves in a comment that their identity will become public upon the comment being published. Comments that have been published may be deleted upon request to the author.

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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.