Tuesday, 11 February 2014

An Abandoned Rental Unit----Landlords, what do you do?

Every once in a while I get a call from a landlord asking what they can or should do when they haven't see their tenant around for a while.  The rent is normally in arrears, the mailbox isn't being emptied, and the neighbours can't recall seeing the tenant around for a while.  There are many potential reasons for this--including that the tenant has died and is in the unit (unfound), the tenant is away on holiday, the tenant is hospitalized, or (and this is the focus of this article) the tenant has simply abandoned the rental unit.


Is this Apartment Abandoned?
If the suspicion is that the tenant is seriously ill or in need of assistance a landlord should feel free to consider the situation an emergency, access the unit and call for the appropriate emergency services.  However, if there is no reason to suspect an emergency, then the only thing to do is to give a 24 hours notice of entry to the tenant (mailbox or under the door) and enter the unit for an inspection at the appropriate time.

Often such an inspection will reveal a rental unit that looks like a tornado hit it.  The unit is messy, things are scattered everywhere. On closer examination, it becomes clear that there are few if any truly personal effects, things of value are not in the unit, and most of the things that are not obvioulsy garbage are large items that are not easy to move.  An inspection like this makes you question whether the tenant continues to occupy or reside in the rental unit.  If this is your situation what do you do?

One way to proceed would be to seek to terminate the tenancy for non-payment of rent. One could serve a Notice of Termination for Non-Payment of Rent, in Form N4 (section 59 RTA), wait the required 14 days and then seek to file an application under section 74 in Form L1.  That application would seek a termination of the tenancy as well as an Order for rent arrears.  At first blush, this seems like a safe way to proceed and to get the return of the rental unit in a lawful manner.

Unfortunately, proceeding on the basis of non-payment of rent, where it looks like the tenant is no longer in possession of the rental unit, creates a jurisdictional problem with respect to the awarding of rent arrears.  Section 87 of the Residential Tenancies Act provides: (1) A landlord may apply to the Board for an order for the payment of arrears of rent if, (a) the tenant has not paid rent lawfully required under the tenancy agreement; and (b) the tenant is in possession of the rental unit.   

It is interesting to note that section 74 (Non-Payment of Rent), which follows on the general authorization to file an application if a Notice of Termination has been served (section 69 RTA) is silent on the issue of the tenant being in possession of the rental unit as a condition of filing such an application.  The section (s. 74) states that: (1) A landlord may not apply to the Board under section 69 for an order terminating a tenancy and evicting the tenant based on a notice of termination under section 59 before the day following the termination date specified in the notice.

The balance of section 74 deals with mandatory discontinuance of an application if rent is paid and further provides than an Order of the Board, issued pursuant to such an application is void if the tenant pays the amount specified in the Order.  There are additional provisions that would void the Order if the amounts specified are paid.

Nothing in section 74 seems to expressly require the tenant to be in possession of the rental unit at the time of the application and therefore I do think it is possible to apply to the Board, based on an N4 when the tenant is not in possession.  However, in that application one could not get an Order for the rent arrears.  What it means, I think, is that a landlord could get an Order that could only be voided by the payment of rent arrears but which Order, at the same time, could not form the basis of a judgment for the same rent arrears.

Given the delays imposed by the 14 day period under an N4--why would you proceed in this way?  One reason might be, that the abandonment has not been discovered until after the expiry of the 14 day period in an already served N4 and therefore the choice to proceed with an application in Form L1 (based on N4) is available to the landlord.  

Presuming that the Board would allow the application to proceed, the Order that would issue should terminate the tenancy, set out what the tenant needs to do to void the Order, and provide an enforcement mechanism to the Sheriff if the Order is not voided.  The Order could not, provide the landlord with a Judgment for the rent arrears.  If this is the situation, query then the timing of the disposal of the abandoned property in the rental unit and whether the provisions of section 41 (Disposal of Abandoned Property if Unit Vacated), apply to this situation.   If one can argue, successfully, that section 41 does apply, it may be that a landlord could gain the right to clean up the unit and throw things out faster than in the alternative process contemplated under the RTA

THE WAY YOU ARE INTENDED TO PROCEED

Where a landlord discovers that a tenant is not in possession, as in the original scenario described at the beginning of this article, the thought that one should have is "abandonment".    One of the operative sections of the RTA in dealing with abandoned units is section 79.  It provides: If a landlord believes that a tenant has abandoned a rental unit, the landlord may apply to the Board for an order terminating the tenancy.

That application (under section 79) is brought in Form L2 and the boxes to check off are on the second page.  There is no Notice of Termination to serve and it is an application that can be filed directly with the Board.  There is no mechanism in the application to obtain rent arrears or other compensation.

The issue does not end there though, as the landlord may be tempted to just re-enter the unit and take it back and not bother with the application contemplated by section 79.  Afterall, if the tenant is gone, why spend $170 on an application fee to obtain an Order that simply confirms what the landlord already knows--i.e. the tenant abandoned the unit.  The question then may be---how illegal is it to simply re-enter and take possession of what appears to have been an abandoned rental unit?

That a landlord may simply re-take possession of an abandoned rental unit (without an order from the Board) is implied in section 42 of the RTA where the issue of the Disposal of Property in an Abandoned Unit is dealt with.  That section provides that a landlord may dispose of property in a rental unit that a tenant has abandoned if (a) the landlord obtains an order terminating the tenancy under section 79; OR (b) The landlord gives notice to the tenant of the rental unit and to the Board of the Landlord's intention to dispose of the property.

Clearly, to dispose of a tenant's property in an abandoned unit a landlord would need to re-enter the unit and take possession of it.  As section 42 sub A or B is disjunctive, there is a clear choice contemplated that a landlord might re-take possession without the Order contemplated under section 79.  So, to that end, it would appear that the RTA condones the re-taking possession of an abandoned unit without first obtaining an Order terminating the tenancy.  Therefore it is not "illegal" to assume control of an abandoned unit without an Order of the Board.  That it isn't illegal, however, should not be interpreted as meaning that doing so will not result in some penalties should the tenant return to the unit, try to take possession and be refused, and then apply to the Board alleging an illegal entry on the part of the landlord.  The reason for this is that while the RTA contemplates that a landlord may assume control of an apparently abandoned unit, the RTA does not validate the recovery of the rental unit in this way nor does assuming control terminate the tenancy and give lawful possession to the landlord.  Hence, if a landlord just re-enters the unit because it appears to be abandoned, they better be right about it.

THE ABANDONED PROPERTY

So what is the story with the stuff in the unit?  On an abandoned basis, and presuming that 42(A) or (B) are followed; section 42(2) & (3) provide timelines for dealing with the property.  The Landlord may sell, retain, use, or otherwise dispose of any items if 30 days have passed after obtaining the order referred to in 42(1)(a) or giving the notice contemplated by 42(1)(b).  If within the 30 days the tenant indicates a desire to remove the property the landlord must make it available to the tenant--though some charges may be levied to the tenant pursuant to section 42(6) for storage, moving, securing etc..  

If that were not enough, the RTA then provides that if within 6 months after granting of the Order or the Notice was given, the tenant claims any of the property that the landlord has sold, the landlord must pay the tenant the proceeds less any reasonable expenses for moving, storing, securing and selling the property and any arrears of rent.

How is dealing with abandoned property in a unit that has been "abandoned" different than dealing with abandoned property where a tenant moves out after being Ordered to move out?  And for this example I mean dealing with abandoned property that remains in a unit after a tenant is served with an N4 (Non-Payment of Rent) and an Order is made under section 69.

The applicable section appears to be section 41 which covers--Disposal of Abandoned Property if Unit Vacated.   This section provides:  A landlord may sell, retain for the landlrod's own use or otherwise dispose of property in a rental unit or the residnetial complex if the rental unit has been vacated in accordance with, (a) a notice of termiantion of the landlord or the tenant; (b) an agreement between the landlrod and the tenant to terminate the tenancy; (c) subsection 93(2); or (d) an order of the Board terminatng the tenancy or evicting the tenant..

In a situation where a voidable order issues under sections 59,69,74, and that Order is not voided within the time provided in the Order, can it be argued that the unit has been vacated pursuant to the Order (as the tenant has chosen not to void the Order?).  If this is a reasonable interpretation of the section, you can see that there is no 30 day obligation to make the property available and no obligation to pay the proceeds of the sale of that property to the tenant within the 6 month window allowed in section 42 dealings with abandoned property.  Without a doubt, depending on the circumstances, there appears to be a significant difference in how abandoned property can be dealt with under the Act depending on how the landlord proceeds to the Board.

The reality is that most of the time, the abandoned property will be pure garbage and not worth anything.  However, there are exceptions and I have certain handled cases where tenants have walked away from fully furnished units containing valuable electronics, furniture, antiques etc..  In such circumstances, a landlord may want to avoid the sale provisions and the obligation to pay money over to the tenant for the property sold.  Query whether in circumstances in which the proceeds have to be paid over to the tenant (within 6 months) that the landlord has a duty to maximize recovery and to sell the items for a reasonable price.   Is it possible that a landlord could be successfully sued for selling abandoned property for too little and therefore not having sufficient money to pay to the tenant for the sale of the items?

CONCLUSION

Dealing with abandoned units, abandoned property, and the lawful assumption of possession of the rental unit is not an entirely straightforward process.  Different rules will apply depending on the circumstances and duties may be imposed that are not immediately apparent based on the known facts at the time.  One last thing to be aware of, and it runs counter to the explicit provisions of the RTA absolving the landlord or third parties from liability for disposing of abandoned property, is that the Superior Court (Small Claims Court) has on many occassions continued to hold the landlord liable for disposing of items after the timelines set out in the RTA.  Especially when it comes to sentimental items like photo-albums and keep-sakes that are clearly priceless and at the same time worthless.   The Court has held that Landlords should preserve those items and make sure to retain them for the tenant regardless of the timelines set out in the RTA and that the failure to do so (in a decent manner) will lead to damages being awarded to former tenants.

Michael K. E. Thiele
ottawalawyers.com








14 comments:

  1. Is it possible for landlords to charge a fee to a tenant for the costs assoicated with cleaning and removing items for a vacant or abandoned unit? Would the Board allow an Order for these types of costs if a landlord were to apply under section79 that could then be enforced through the Small Claims Court?

    ReplyDelete
    Replies
    1. A section 79 application allows only for a finding of abandonment. The Board, being a creature of statute, has no inherent jurisdiction to consider a claim that isn't expressly permitted in the section under which you are applying. So, no matter how reasonable it would be to allow a landlord to claim costs as you describe, it seems that you would have to proceed with a formal claim in the small claims court for cleaning, removing items etc.. This of course presumes that there is no value in the items being removed and you don't make anything from the sale of the property that could be used to off-set cleaning and disposal costs.

      A further question is whether there are other sections under the RTA that would allow for application to the Board for the kind of expenses that you mention. I think the closest is an application for damage and for breach of the tenant's obligation to maintain the premises to a standard of ordinary cleanliness. If you look at the L2 Form, that you would use for the s. 79 application, you will see other boxes to select for claims related to damage. It is under these sections that you would normally pursue claims for cleaning, disposing etc.. Unfortunately, the statutory basis for those claims is in section 89 of the RTA and that section explicitly provides that you can only advance such a claim if the tenant is in possession of the rental unit. Because of that, I can't find any section of the RTA that may be interpreted as authority to obtain an order from the Board for damage, clean up, disposal costs after the tenant has vacated. Of course, it is not to say that the Board would never consider such damages as there would be jurisdiction in the Board to consider those claims as long as the application was filed while the tenant was in possession--i.e. if the tenant moves out after the application has been commenced the application continues.

      Michael K. E. Thiele

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  2. I came across this case while reseaching for another, it may be on interest to anyone dealing with a potential abandoned unit.

    http://www.ltb.gov.on.ca/stdprodconsume/groups/csc/_ltb/_law/documents/resourcelist/256876.pdf

    ReplyDelete
  3. Hi Michael,

    If you have serve your tenant with N4 with termination date Mar 11.2014. She has left the rental unit before that date. Can a landlord take possession backof the rental unit before the termination date?

    ReplyDelete
    Replies
    1. If you know for certain that the tenant has vacated then you may take possession of the unit. Ideally she will have returned the key, told you that she has left, or in some other way has made it clear that she has returned possession of the rental unit to you. If the unit is completely cleaned out and your saw a moving truck that is a good indication of intent. The problem is that without an Order of the Board putting you in possession of the rental unit there is a risk that she can say that she did not move out and that you have retaken possession illegally. This would be the case even after March 11, 2014, if it is not crystal clear that she is gone. So, unfortunately, the answer is "it depends". Certainly nothing in the Act requires you to wait til March 11 or any other date if the tenant has returned possession or vacated the unit.
      Hope that helps

      Michael K. E. Thiele

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  4. Okay, so I am renting a room in a house. There is another tenant and we share a kitchen and bathroom. The owner of the house has a room, but does not use it. The landlord has his own bathroom, but technically the kitchen would be shared if he ever stayed here. It was never addressed whether he lived here or not as all the rooms were rented out. We knew we had to share with other tenants.

    There are actually two owners with a joint mortgage of the house. I have never seen the other owner.

    The house is now in the early stages of "foreclosure" or power of sale. The landlord I rented from has not responded in over 60 days. The TV cable has gone out, the Internet has been cut, and I am worried the hydro will be cut at the end of the month. (We get a red cut off notice every month which the landlord has paid in the past)

    The landlord is broke. His car is being repo'd and all his bills are overdue. He usually rents out all four rooms which usually covers the mortgage. He can't keep the rooms rented as people realize pretty quick that the landlord is broke and doesn't deliver what he promises.

    So, it is down to two of us. I have lived here for a year and the other guy for 4 months. We want to stay until the bank throws us out. We have been paying rent to the landlord every month, but it is obvious he is no longer going to pay anything to keep the house going.

    The landlord has his belongings in the basement. I assume this is a measure to say he lives here and we have no rights through the RTA. There are no written leases. He never said he lived here and never has. Once in awhile he would come over and party with a roommate who was a long time friend. In fact, that roommate basically ran the house like it was his. He moved out and the house has had a number of single month tenants since.

    The basement is set up like an apartment. It is the landlords space, but we all use it to watch TV. There is a bedroom and a bathroom that belong to the landlord, but he has never used it. It smells bad and is full of mould, but it is there.

    Here are my concerns.

    1) We want to stay until the "power of sale" is complete and we are ordered out. Are we entitled to 60 days notice?

    2) We are worried about the hydro being cut. All utilities plus tv and internet were included in our rent. Can we use the rent money to pay these bills in order to keep the house functioning?

    3) Can the landlord come in one day and just say get out? The verbal agreement with him when we moved in was for at least 30 days notice.

    4) There is a Management Company assigned to the house. I spoke with the agent, he was very nice and said we are fine as the "power of sale" takes a long time. Will they pay the bills going forward?

    5) Can we go after the landlords for moving and other expenses? The one landlord is broke, but the silent partner landlord has a good full time job.

    6) There is no way for me to prove that the landlord doesn't live here. All his mail comes here as does the mail for the silent landlord. Is it worth trying the Landlord Tenant Board or is this a Small Claims Court issue?

    The obvious answer is to move out. I have no way to get a reference now for the year I have been here and paid my rent on time. The price is right and the house is in a good location for me. I have a 13 year old daughter who stays overnight. I have a big dog and little cat. It's not easy finding a place that works in my situation.

    I read the mortgage act and the RTA which seem to indicate we can stay or we will get 60 days notice. I hope that is true.

    ReplyDelete
  5. I am renting a room in a house with other roommates. The landlord does not live here, but he does have a room setup in the basement and gets his mail here. All the tenants share a kitchen and a couple bathrooms. The landlord technically shares the kitchen, but he actually doesn't live here. He stops in now and again to watch sports with the tenants or swim in the pool (that we tenants pay to maintain separately) We think his room and space is away to get around the RTA rules. We have no written lease. All was verbal from an ad he posted on Kijiji. We have lived here for several months to a year and did not know he wasn't paying the mortgage. A few disconnects on utilities have happened, but he always explained them away. He is a real estate agent so we kind of thought he was successful and knew what he was doing.

    The house has just started foreclosure. The guy from the banks management company came by to do an occupancy check. We told him we rent here and that we haven't seen the landlord in months. We pay him by transfer. I asked the management company guy if we would be thrown out and he said we would not.

    My questions;

    1) are we entitled to the 60 days notice as set out in the mortgage act and RTA?

    2) who is responsible for the utilities? Included in our rent is Internet, TV, gas, hydro, water. So far the TV and Internet have been disconnected for non payment. The hydro will likely be disconnected at the end of the month as it has been twice in the last three months. The landlord pays the bill after it is cut off. I doubt he will do so anymore as he is in hiding. His vehicle is also being repo'd, but they can't find him.

    I know this is a tough to answer. We are looking for new places to live, but we all lost a reference from this guy, have pets, etc. it will take time. We are hoping that the foreclosure takes 2 more months and then we get 60 days notice from the bank. Is that realistic?

    Thanks,

    Mike

    ReplyDelete
    Replies
    1. Hi Mike: For the most part, the mortgagee will step into the shoes of the landlord and become responsible as a mortgagee in possession--once that happens. Receiving a notice that the rents are being attorned is a good sign that the mortgagee is in possession (attornment requires you to pay the ongoing rent to the mortgagee). The key is to stay in touch with the bank's management company. If they are in possession then they need to provide landlord services to you. Until there is a bit more clarity on who is responsible, who is the landlord, you'd be well served to hold on to your rent. In a way, getting someone to serve you with a Notice of Termination and application to the Landlord and Tenant Board would be a good thing as it would lend clarity to who to deal with. Your original landlord may redeem the property/mortgage and again become the owner. How quickly a foreclosure or power of sale proceeds depends significantly on what the owner does. I would certainly expect you to have a lot more time than 60 days.

      Good luck

      Michael K. E. Thiele
      www.ottawalawyers.com

      Delete
  6. Hi Michael,
    What a great blog. My landlady claims we "abandoned" our unit - until I pointed out that we paid for the month of December. She says now that we "vacated" it but I can't seem to find a legal definition of what that means. She used her own key & went into the place and tossed out some "junk" so she could show the place. I'm not sure what "vacated" means, but reading through this makes me think it means returning the keys and leaving. We still had mail and internet there so I was going to go back before the end of the month... so I was surprised our stuff was gone and the locks were changed. It wasn't important stuff, but it was our stuff!
    thanks sir! I hope 2016 will be a good one for you
    regards,
    Susie

    ReplyDelete
    Replies
    1. Hi Susie: The landlord's argument/position is nonsense. She was not entitled to enter and take possession of your unit and she certainly was not entitled to throw your things out regardless of what they were. Until you return possession of the unit to the landlord the place is yours during any period for which you paid rent. The trick will be to prove what happened. If you can engage your landlord in emails about that happened it will be easier to prove what happened at a hearing (i.e. admissions writing). This is a rather simple case about proceeding to the Board to getting the value of what was thrown out ordered to be paid to you. Further, you should get a rebate of the daily rent for the days that you paid for but for which the landlord took possession. This is an illegal entry on the part of the landlord so you could also ask for a fine.

      Good luck

      Michael K. E. Thiele
      www.ottawalawyers.com

      Delete
  7. Hello Michael,

    I have a situation that leaves me with some question. I will thank you in advance for your input.

    My tenant has not paid rent for two months, I have not been able to server any paper work to them as they are not in the apartment. They have posted an advertisement to rent the apartment and have taken money from the new tenants and now I have new tenants in the unit. The original tenants have communicated via text messages to the new tenants that they will be the sole occupants of the unit. The original tenants have removed all of their belonging.

    Do I need to file a L2 Form for the original tenants?

    I have worked with the new tenants and I am preparing to let them take over the remaining term of the original tenants lease. I have collected the text messages between them and the original tenants where they agree to take over the unit.

    Are there other options or risks that I should be aware of?

    ReplyDelete
    Replies
    1. Hi: In Ontario a tenant may not transfer occupancy of a rental unit to other people without the consent of the landlord. What you are describing here is an unauthorized transfer. The answer on how to deal with that is multi-fold. You should begin by reading the sections of the Residential Tenancies Act starting at section 100. You have the ability to apply to the Landlord and Tenant Board to terminate and evict the original tenants and the occupants from the rental unit and to get an order for compensation. You have the option of making a new tenancy agreement with the current occupants. There are choices to be made. You also have a 60 day timeline/deadline to make the application failing which there can be a deemed assignment of the lease to the occupants. That 60 days runs from when you became aware of the assignment. Again, it is worthwhile to read the RTA sections starting at section 100---take a look at these sections by searching the free legal database at www.canlii.org in the Ontario tab search Residential Tenancies Act and then scroll to the applicable sections.

      Reasons to proceed for eviction and getting orders is to get all of the rent that is owing. Nothing stops you from making a deal with these current occupants if they are satisfactory to you. You also have the ability to make new lease terms and a new rent but not if you allow it to proceed by assignment.

      Take a look at the RTA and if you have further questions consider a consultation with a lawyer just to get it right.

      Good luck

      Michael K. E. Thiele
      www.ottawalawyers.com

      Delete
  8. Hi. Thanks in advance for reading my situation. I live in a condominium building. My landlord emailed me 3 times in one week but I did not see the emails till after a week. Landlord also attempted to call me once. In her last email, she said she will disable the garage opener and the fob. So now I have restricted access to the building it but still live in the rental unit. I have been renting for 8 years and for the past month I am on a month to month rent. Rent is always paid on time.

    I emailed my landlord stating that it is illegal to restrict my access. I think it may be possible that the landlord filed for termination of tenancy based on abandonment. What shall I do if she does not respond to my emails? What if the landlord gets termination of tenancy based on abandonment?

    Thanks in advance.

    ReplyDelete
    Replies
    1. Hi: If your rent is paid up it is impossible for the rental unit to be considered abandoned (legally). Under the Residential Tenancies Act it is impossible for a rental unit to be considered abandoned if the rent is paid. If you do not get a reply from the landlord and your access continues to be restricted consider going to a lawyer or paralegal or to a legal aid clinic and getting some help. It would make sense to file and application with the Landlord and Tenant Board and to also contact the Ministry of Housing Investigations branch so that they can contact your landlord. You can get the contact details on the Landlord and Tenant Board website or by calling the 1-888 number on the Landlord and Tenant Board website.

      Good luck

      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.