Tuesday, 29 July 2014

Can the landlord demand post-dated cheques or money orders?



REQUIRING POST-DATED CHEQUES IS ILLEGAL


In Ontario a landlord is not allowed to demand post-dated cheques, money orders or any type of direct debit from your bank account.  The Residential Tenancies Act is the law that governs residential landlord and tenant relationships and it has specific rules about rent and how it is charged to tenants.


With respect to post-dated cheques and other types of automatic payments this is what the law says:


s. 108.  POST-DATED CHEQUES ETC.-- 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


(b) permit automatic debiting of the tenant's or prospective tenant's account at a financial institution, automatic charging of a credit card or any other form of automatic payment for the rent.


WHAT IS A POST-DATED CHEQUE?


A post-dated cheque, or what is meant by this in the contexted of landlord and tenant law is that a landlord will often ask a tenant to provide 12 cheques, all at once for the monthly rent.  The cheques are post-dated, meaning each cheque is dated for the day rent is due in each of the following 12 months.  The point of post-dating a cheque is that the cheque isn't "good" or capable of being cashed until the date on the cheque.  Therefore the post-dating prevents the landlord from depositing all of the cheques at once.


ARE YOU ALLOWED TO PROVIDE POST-DATED CHEQUES?


Note that the language of the Residential Tenancies Act simply provides that a landlord may not "require" a tenant to provide post-dated cheques.  Certainly, providing post-dated cheques can be a great convenience and be easier for both the landlord and the tenant.  This is especially true in tenancies where the relationship with landlord and tenant is good.  If you have provided post-dated cheques, and this is convenient to you, there is nothing wrong with having done this.   If you are a landlord and you have asked for post-dated cheques there is nothing wrong with this either.  The prohibition is against "requiring" the post-dated cheques as a condition of the tenancy.


Michael K. E. Thiele
www.ottawalawyers.com






10 comments:

  1. Hi Michael,
    Recently I've been in a disagreement with my landlord. About 1 year ago, we moved into a townhouse in Toronto and we signed a formal lease agreement. This summer, when it was time to renew our lease, we verbally agreed to an extension of another year. However, our situation changed and now we are looking to move of our place. We gave our 2 month notice to our landlord, but now she is saying that we cannot terminate the lease because we are breaking the a legal lease. She said that because we gave her a year's worth of post-dated cheques, as well as alleged email and text message agreements ( she says that is written proof), we are in a binding agreement. When we renewed, I don't recall ever signing any formal agreement, nor do I have any emails or texts that confirm our agreement. There are some texts mentioning planning to renew the lease, but I never replied to them. I was under the impression that after the first year, once we renew the lease, the tenancy goes on a month to month basis, thus allowing us to give her a 2 month notice. She has also told me that if I did not agree with her that I should take it up with the Residential Tenancy Board.I can also prove that for a year now, we have had issues regarding our A/C that she was aware about but never repaired. She currently lives about a 6 hour drive from where we currently live, making repairs very difficult. What is your take on this situation?

    ReplyDelete
    Replies
    1. Hi: In the situation you describe the underlying facts will be relevant to a determination of what your obligations are. The applicable section of the RTA provides as follows:

      Deemed renewal where no notice
      38. (1) If a tenancy agreement for a fixed term ends and has not been renewed or terminated, the landlord and tenant shall be deemed to have renewed it as a monthly tenancy agreement containing the same terms and conditions that are in the expired tenancy agreement and subject to any increases in rent charged in accordance with this Act. 2006, c. 17, s. 38 (1).
      Same
      (2) If the period of a daily, weekly or monthly tenancy ends and the tenancy has not been renewed or terminated, the landlord and tenant shall be deemed to have renewed it for another day, week or month, as the case may be, with the same terms and conditions that are in the expired tenancy agreement and subject to any increases in rent charged in accordance with this Act. 2006, c. 17, s. 38 (2).
      Same
      (3) If the period of a periodic tenancy ends, the tenancy has not been renewed or terminated and subsection (2) does not apply, the landlord and tenant shall be deemed to have renewed it as a monthly tenancy, with the same terms and conditions that are in the expired tenancy agreement and subject to any increases in rent charged in accordance with this Act. 2006, c. 17, s. 38 (3).

      The key to a fixed term tenancy is setting out the fixed term with precision, much in the same was as the original fixed term tenancy agreement. My feeling is that in order to enter into a renewed fixed term tenancy agreement there needs to be a signed renewed fixed term tenancy agreement and more than just an email exchange as you describe. I don't see the post-dated cheques as determinative of anything given that they are only a matter of convenience and you may demand them back at any time. I'm inclined to accept your explanation that in your mind "renewal" meant month to month as opposed to terminating and moving out at the end of the fixed term lease. Emails and texts are fine things, but what do they say, and more importantly, what do they mean. There needs to be a meeting of the minds with respect to what you were intending to do when dealing with her. If you look at the emails and texts in the context of a tenant who is at the end of their fixed term do they make sense as communications from someone who believes that they have to let the landlord know that they are not moving out but continuing to stay? Clearly you know now that you didn't need to do anything to renew automatically on a month to month but to be fair, a great many tenants do not know that. Many believe that coming to the end of a lease means you have to move unless you "renew". I think your interpretation is fair.

      Delete
    2. I don't see any issue with 12 post-dated cheques and nothing inconsistent with the view that this is a month to month tenancy. Being month to month is a contractual state that people live in for years and years. At the time you "renewed" you had no plans to move--so why wouldn't you provide 12 post dated cheques?

      In my view, prove the service of an N9 (Tenant's Notice to Terminate). If the landlord will not confirm to you that she agrees that the tenancy is terminated you may 1) simply move out in accordance with your notice to terminate, or 2) file an application to the Board (Form T2) seeking an Order terminating the tenancy in accordance with the N9. The only reason to go to the Board is to avoid the possibility that the landlord might "sue" for lost rent, report you to a collection agency and basically cause you trouble in the years to come after you move out. There are enough examples of tenants who have moved out, thinking all was resolved, only to discover that their landlord obtained an order against them after they moved out or filed a claim with a collection agency. It is possible of course to fight and fix these things after the fact--but it can be difficult especially if you've thrown out the copy of the N9 (Notice of Termination) that you provided to the landlord when you vacated.

      If the landlord puts you to the trouble of going to the Board to terminate the tenancy you may as well file a T6 for the maintenance issue and ask for an abatement of rent while you're there anyway.

      Best of luck.

      Michael K. E. Thiele

      Delete
  2. It is also not required for landlords to pickup a cheque or go to a rental unit to get rental payment. It is the tenants responsibility to ensure rent is paid on time.

    ReplyDelete
  3. Is the section that says, "provide post-dated cheques or other negotiable instruments" meant to be read as, post-dated cheques or other (post-dated) negotiable instruments? What does "negotiable instruments" mean? Are landlords allowed to require money orders or certified cheques?

    ReplyDelete
    Replies
    1. Hi: The term "negotiable instruments" is not defined in the RTA or in the regulations to the RTA. When you look very closely at the caselaw about what a negotiable instrument actually is the whole question becomes rather confusing. However, for the purposes of the RTA I think it is fair to say that what is meant by the term "negotiable instruments" is money orders, bank drafts, certified cheques. What is intended here is that the tenant is allowed to choose how they wish to pay their rent.

      Michael K. E. Thiele
      www.ottawalawyers.com

      Delete
  4. Landlord demanded money orders for first and last month's rent prior to July 2015 as well as post dated cheques for the year. Clearly, we would not get the townhouse if we did not comply. This is B.S. to the nth degree! I only provided the money because I had no choice. Tenants have no rights. Money talks, if I did not give it to them I was told I could not have the unit. It's June 11th and I had to give the money order for July 1st rent and 11 post dates. What can do to report them after I get my unit and not get kicked out?

    ReplyDelete
    Replies
    1. Hi: Once your tenancy has commenced and you are in possession you can more easily complain about any illegal actions of your landlord. While you could complain before the tenancy started the likely result, as you indicate, is that you would not get the apartment. Complaining afterwards is not a basis to terminate your tenancy and you can file an application with the Landlord and Tenant Board without fearing a legal termination notice for doing so.

      Good luck

      Michael K. E. Thiele
      www.ottawalawyers.com

      Delete
  5. I am currently applying to rent a 2 bedroom apartment, and the future landlord is demanding I provide them with a form allowing automated payments to come out of my account on the first of every month. Is that legal?

    ReplyDelete
    Replies
    1. Hi: The landlord is not legally allowed to require you to permit automatic debiting of your account. This is very clearly set out in section 108 of the Residential Tenancies Act.

      While the law is clear, you may want to consider how you approach this issue with your prospective landlord. You are not a tenant yet. If you play hardball on this issue you might find that the landlord refuses your rental application. Certainly, if you can prove that this is why your rental application was refused you have a claim to make against the landlord. However, you will still be without an apartment and having a "claim" will be cold comfort when you are apartment hunting.

      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.