This is the time of year when many young persons are heading out on their own for the first time---off to college, off to university, or perhaps even just away from home. First apartments are being rented and leases being signed with roommates, co-tenants, guarantors. It is an exciting time!
What is often over-looked in the moving away from home process is the issue of insurance. While there may be some continued coverage for property and personal liability under a parent's home insurance policy there tend to be some gaps in coverage that leave the first time tenant inadequately covered in the event of a problem in the new apartment.
Renter's insurance is relatively cheap! You can find policies for as low as $150 plus taxes per year. It makes sense to be insured given what the insurance will cover.
A typical tenant's insurance policy will cover you for theft, water damage, fire damage, personal liability anywhere in the world. Typical policies will provide you with alternate accommodation (payment for it) for a period of time in the event that a fire, flood, or some other disaster makes your premises uninhabitable. For instance, if the upstairs neighbour forgets to turn off the tub, passes out in a chair, and three hours later you come home to find all of your ceilings collapsed and three inches of water in your apartment--you will be fairly pleased with yourself when you remember that you did indeed buy tenants/renters insurance and your insurance company is now paying for your hotel!
The benefits of renter's insurance can also be a pleasant surprise in instances where you just make a silly mistake, or your roommate makes a silly mistake, and causes a fair amount of damage that your landlord sues you for. Perhaps you're wondering what that could be? As an example, and I get these kinds of cases every year, winter arrives in Ottawa and the outside temperature drops. Before the cold snap hits, and without thinking about it, you open the window in the kitchen a crack (couple of inches) to let the cooking odours out. When you do it, the temperature outside is nice so you don't realize or remember that the window is open.
You then decide to go home for the weekend, and just as you're leaving you decide to turn the thermostat down a few degrees to save some money (and save the planet!). Unfortunately, what you don't know or realize is that the following evening the temperature is going to drop well below zero for the first serious freeze of the season. The freezing temperatures, along with the turned down thermostat and the open window in the kitchen cause a pipe just below the open window to freeze and burst. As a result, water pours into your unit and the unit below causing thousands of dollars in flood damage.
Burst water pipes (in a heater or waterline) are a very common occurrence in Ottawa. The damage caused by burst pipes often runs into the tens of thousands of dollars as water floods all the surfaces as it tries to get to the lowest point in the building. In this example, it would be entirely plausible for a landlord to try to 1) evict you and 2) sue you for the cost of repairs, lost rents, and associated expenses. Even if your landlord does not sue you, it is entirely possible that the landlord's insurance company would sue you for negligently leaving the window open and causing the pipe to burst.
The pleasant surprise in having renter's insurance is that you are likely covered for any claim made against you for accidentally leaving the window open. Your insurance company would pay for the repairs, the lost rents, the incidental expenses as well as a lawyer/lawfirm to defend you in any lawsuit. The relatively low premium of a couple of hundred dollars can protect you from many thousands of dollars in expenses.
I often hear tenants say that they didn't get insurance because they didn't think they would need it. Of course no tenant plans to be negligent (i.e. leave the window open), but there are so many silly things that any person can do that they don't realize will lead to a lawsuit. If you are still not convinced, consider that insurance will also pay to defend you from frivolous claims where you haven't actually done anything wrong.
Having a Landlord and Tenant law practice I see so very many problems that could have been resolved if the tenant only had insurance. I can assure you that most landlords will have a very different attitude towards you if you can say to them, in the face of a disaster, I'm very sorry for what happened but I am insured.
Before rushing out to buy a renter's insurance policy/ tenant's insurance policy, consider calling your parents' insurer or broker and checking to see what kind of coverage you already have. The broker or insurer may be able to sell you a separate policy that takes into account your family's relationship with the insurer or they may be able to sell you a rider, through your parents' policy that provides the protection you need.
I can't urge you enough to get insurance coverage as a tenant. It is a small expense for an incredible benefit should a situation arise where you suffer a loss or you cause a loss for someone else.
Michael K. E. Thiele
Landlord and Tenant Lawyer
Ottawa, Ontario
613-563-1131
www.ottawalawyers.com
Monday, 26 August 2013
28 comments:
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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Are landlords allowed to oblige tenants to have insurance, and if so, a specific amount?
ReplyDeleteHi Nancy: There is nothing in the RTA preventing a landlord from requiring a tenant to be insured. You should make the clause big and have it specifically acknowledged in the lease. Follow up annually for proof of insurance and take action (Form N5) if the tenant does not have insurance. There are cases where the Board has refused eviction against tenants where the landlord has not enforced the "insurance" clause that is in the lease.
DeleteWith respect to the "amount" of insurance I think this is something you should speak with your own broker about. If the rental is inside your home (i.e. basement unit), you would want to ensure that your own insurer is aware of the use of the property as a rental (it changes the risk and hence must be reported to your insurer). When speaking to your broker you may wish to enquire if they would sell tenant policies and whether it is possible to be named on that policy (and whether it is advisable). Being named on the policy should prevent the policy from being cancelled without notice to you thereby giving you an opportunity to do something about it (pay premium, terminate, etc.).
From an amounts perspective take advice from your broker. That being said, I don't see why you couldn't require a certain amount of liability coverage in your lease as recommended by your broker.
Michael K. E. Thiele
Can a new owner of a building enforce tenants to take out insurance policies? Must there be a very specific clause in the original lease to be able to enforce it? I'm dealing with an original lease that includes a simple bullet list of what is to be paid by landlord, and what it to be paid by tenant. It includes things like, hydro, lawn care, cable, and simply "insurance" with a check mark next to the tenant box. Is this sufficient in referring to original lease in enforcing that tenants take out insurance policies? Thank you!
ReplyDeleteHi Jessica: I have to picture your lease in my head from your description of it. What you describe does not, in my view, impose an obligation to have insurance in place. At most, I think, it implies that if you are going to have insurance you have to pay for it. Or put another way, the landlord is not paying for insurance for you.
DeleteIf the landlord is insistent, he can file an application to the Landlord and Tenant Board to try to evict you for not having insurance. You could argue the point before the Board and take the position that you do not believe that you have to have insurance but that you will purchase it if the Board rules that your lease includes an obligation for the tenant to have and maintain insurance (presumably tenant insurance).
All of that being said, please do consider getting a tenant insurance policy. It is relatively cheap insurance and it provides a significant amount of protection (a typical policy) in case of flood, fire, theft, or negligence. If you are on assistance such as OW or ODSP you may even qualify to get additional funds to pay for the policy.
In the event of a fire, flood, theft that makes your unit uninhabitable many policies will pay for temporary shelter for you. If by accident you or your guest causes the flood or fire or frozen pipes or you cause injury to someone through negligence this policy may pay for a lawyer to defend you and pay for any damages that you are ordered to pay. I do highly recommend being insured if you can possibly get a policy to cover you.
Hope that helps
Michael K. E. Thiele
www.ottawalawyers.com
On September 6th, 2015 we accidently left a pot on the stove and left. The entire apartment was in flames and smoke billowed out of the building when we returned. We were not criminally charged and it was deemed an accident. We lost all of our belongings and there was about $70000 worth of damages to the building. The landlord is being so good to us and wants us to move back in when the unit is repaired as we are good tenants and is letting us stay in the upstairs vacant unit after it gets repaired and cleaned, until our unit is done. We did not have renters insurance as I did not feel it was necessary (boy am I regretting that decision). I am a student living off of osap and 1 shift a week at McDonald's and my bf just got hired full time at minimum wage at staples and works very part time as a bookkeeper for a restaurant. We have no assets and a lot of student debt and everything we owned was lost in the fire. We even owe $10000 on our car. Our worry is that the insurance company may come back and sue us. What can they do to us in our situation? Can they garnish wages even though we are barley scraping by? Nothing has been said yet but it's only been 2 weeks since the fire. Will declaring bankruptcy help our situation? What do we do if they decide to come after us and we have nothing to give?
ReplyDeleteHi Mel: Your landlord's insurer may indeed decide to sue you. Sometimes insurers do, sometimes they do not. They will have 2 years from the date of loss to commence legal action against you. Because you have nothing there isn't much that they can do. Having no assets and mostly debt gives them little room to seize anything. They could garnish wages but that would yield very little money. What they might do is simply get a judgment and wait. In time, and perhaps a few years from now you will try to buy a house, purchase something on credit, and you will discover a Judgment against you. Or you will find your credit rating is shot because of this Judgment. At that time you will likely want to contact them to make a deal to pay off the Judgment. Of course, if you never get around to any serious asset accumulation then this Judgment will remain unsatisfied. Certain technical issues will make it difficult (not impossible) for the Judgment to follow you to different jurisdictions. So, if you move far away you might escape a Judgment for a while or forever. A bankruptcy would very likely wipe out any judgment.
DeleteBefore considering something as drastic as bankruptcy for this debt wait to see what the insurer does. Many simply don't bother to chase tenants as they know how unlikely it is that they will recover anything. If this insurer does proceed to chase you, save some money for a lawyer, and see if that lawyer can negotiate a deal that you can live with. Insurers, and their lawyers, tend to want to make a deal on a lump sum basis. There are legal reasons that the amount of the repairs are not 100% your liability. Of that reduced amount, the insurer can generally be convinced to look at your assets and resources. A proposal taking into account your assets can sometimes settle a case (which is better than going bankrupt). It can indeed work out to pennies on the dollar of the actual out of pocket repair. The insurer knows, of course, that if they get a massive judgment that you simply can't pay and they push it that you will declare bankruptcy. The effect of that is that the insurer gets zero and is further out of pocket for having paid a lawyer to litigate against you. While that is a consideration don't feel too confident as some adjusters for insurers will indeed pursue the "principle" and pay the money to chase you if they view your conduct as particularly egregious.
Good luck to you both.
Michael K. E. Thiele
www.ottawalawyers.com
Our building has a new owner and he/she is now requesting proof of insurance. It was in the original contract that we had to have insurance, but it was never enforced. Can they evict me if I do not have insurance?
ReplyDeleteHi: requiring tenant's to have insurance is increasingly common and I've found that landlords are enforcing this lease provision more and more. In theory you can be evicted for not having insurance if your lease requires it. However, my experience has been that the Board is very reluctant to terminate for this reason and certainly has refused termination where the insurance clause has not be regularly enforced. Further, it is the kind of thing that the Board is likely to allow you to cure by purchasing insurance--i.e. not having it in the past will not lead to termination and eviction if you get it now.
DeleteThat being said, contracting for the tenant's to have insurance may be a condition of the landlord's own insurance and the landlord may then have a serious legal interest in ensuring that the tenant's are insured. The insurable risk of a landlord's building is lower if all of the occupants(tenants) have their own insurance to cover damage caused by negligence etc. and damages flowing from other persons in the building causing damage to other tenants. Tenants are unlikely to commence proceedings against a landlord (after a flood, fire, etc.) if those same tenants have their own insurance to make a claim against and whose own insurer's are putting them up in a hotel pending repairs. For these reasons I think a landlord's interest in enforcing the insurance clause is significant and I do believe that the Board when shown the importance would indeed terminate a tenancy of a tenant who refuses or who is unable to obtain insurance.
Michael K. E. Thiele
www.ottawalawyers.com
Hi,
ReplyDeleteI live in a 3 bedroom townhouse in a co-op housing society in GTA(Durham region). Last week I had a fire in the house. The fire was due to leaving a pan with oil on stove. The fire stayed contained in the kitchen and damage is done on the cabinets. Other damage is smoke damage which is all over the house. I have renters insurance and they will only cover my personal property and any upgrades done in the unit. I was told by my insurance that the landlords own insurance would cover the damage to their property which is the unit. The wall as, carpets, repairs in kitchen , paint etc.
I spoke to the management of the co op housing and I was told that the fire was my fault and I have to repair the unit. They are not responsible for any repairs.
Is this true? Would I have to do all the repairs in the unit? What are my options now. I was under the impression that the co-op housing MUST have some insurance to cover various problems in the units.
Also, management told me that it would take a vERY long time for the unit to be habitable. I can't live in a hotel as I can't afford it. My insurance will cover only upto a maximum amount. That's barely one month with 5 people who need a place to live.
On top of all this , I will have to pay my monthly rent and utilities of the rented unit while I am not even living there. What are my options? How can I make the management agree to their liability. And fix the unit ASAP!!! Thanks
Hi - Recently, a pipe burst/ leaked in the upper unit of a set of flats that I own. The water soaked the tenant's bed in the lower unit. The source of the leak is unknown but the tenant believes it was caused by the renovations we were doing upstairs. I disagree since we didn't touch the plumbing. In any case, it wasn't reasonably foreseeable that what we were doing (removing kitchen cabinets and wall panelling) would cause this leak. As soon as I was notified, I arranged for a plumber who diagnosed it as a faulty connection, repaired the drywall, cleaned all of the tenants bedding and did what I could to dry out the mattress. Nothing smells or shows any signs of mold. I have offered to buy him new pillows. The tenant does not have insurance and is insisting that we replace his 1 year old mattress at a cost of $1500. He also refuses to sleep on the bed because he believes it is growing mold deep inside.
ReplyDeleteMy question is this: Is the landlord responsible in this case? Does it matter what the cause of the leak was? Is this an issue of "quiet enjoyment"?
Hi, I was wondering if you could help me a little. We own a condo and we pay for the condo insurance but recently we rented out the unit. Now in case like this where we are already paying it do we have to change the status of unit to rental or does my tenant has to get insurance separately for herself meanwhile we pay for the condo.
ReplyDeleteHi Salma:
DeleteWhenever you change the use, make a major alteration, or some significant event happens in relation to your condo unit you should seriously consider advising your insurance broker of that fact. Most often, the safer than sorry answer will be to advise your insurer of what has happened. The reason is that a change of use, or other material changes or events can change the "risk" associated with the condo unit. The insurer is insuring your unit on the assumption of certain facts and a certain "reality". When you change the unit from owner occupied to tenant occupied the risk profile of the unit changes. The insurer may refuse to insure or may require higher premiums to insure the property. The failure to inform your insurer of any material changes may ultimately result in a refusal to honour a claim that is made. Before that happens, speak to your broker and even review your policy for your reporting requirements. The fine print of your policy does normally indicate what you have to tell your insurer about.
Good luck
Michael K. E. Thiele
www.ottawalawyers.com
My daughter is moving into a 2 bedroom apartment with a roommate. Her roommate does not want to take out content/liability insurance. My daughter does but when speaking to an insurance broker, I was told since both are on the lease both have to be on the insurance policy. Can my daughter take out liability/contents insurance for herself despite being on the renter's lease with her roommate on the same contract?
ReplyDeleteHi: Good for you and your daughter for thinking about renter's insurance. Given the cost of the insurance I think it is downright foolhardy for tenant's to not have insurance. The problem you describe arises from the broker highlighting that all of the people in the apartment are in effect named (or unnamed insureds) under the policy. Meaning, you can't sue each other for acts of negligence or make a claim for theft etc., by one of the roommates. I imagine that the broker you are speaking with is unable to place the policy unless this is acknowledged by all occupants of the apartment by being named insureds on the policy.
DeleteCan your daughter be insured without the roommate being insured. I certainly don't think it is illegal but the trick will be to get an insurer to sell her a policy while at the same time being forthright about the living situation. In my view, the insurance requirement is important enough (and it is cheap enough) that perhaps the roommate will allow her name to be added if your daughter pays the cost of the insurance? Also, as leverage against the roommate, check with the landlord and the lease to see if tenant's insurance is a mandatory requirement under the lease (it does not have to be). If it is, there is a risk of eviction for not being insured which might encourage the roommate to cooperatate.
Michael K. E. Thiele
www.ottawalawyers.com
A few days ago I signed a 1 yr lease to rent a condo in Toronto. I have never done any of this before. I was trying to get tenant insurance and noticed a clause stating "list landlord as additional insured". I contacted a few brokers and none of them are able to add this to my residential tenant insurance. One broker said this might not even be legal. I am confused and worried now. Any help or advise would be appreciated.
ReplyDeleteHi: There are some advertisements that Google kindly places on this blog for insurance companies and brokers--some specializing in tenant insurance. If the brokers you have spoken to are silly enough to suggest that it isn't "legal" you need to speak with others.
DeleteMy direct understanding of insurance law, insurability, and the terminology for adding insureds on a policy is not up to date. However, I do understand what your landlord is asking for. It is no different than what a bank as mortgage lender is asking for when you get a mortgage from them. The bank wants to be named as a loss payee, insured, joint insured, because they have an interest in the property while they have a mortgage in place that is secured by the property. In commercial rental real estate it is quite common if not universal, that a commercial landlord requires the tenant to have a certain insurance coverage also naming the landlord as a loss payee/insured. The reason is that the landlord has an interest in the building (being its owner). Partially, the insurance the tenant has is security to ensure there is money if the tenant does something negligent that causes damage to the building or if one of the tenant's customers, employees etc., suffers injury and tries to sue the landlord in addition to the tenant.
My understanding of the major reason why the landlord wants to be named in the policy is that being named results in the insurance company sending out confirmation of coverage to the landlord and the landlord would also receive notice of cancellation. The landlord could, if notice is received that the policy is being cancelled--pay the premium or take eviction proceedings. Simply relying on the tenant to do the right thing and keep valid insurance in place during the course of the tenancy might be a foolhardy thing to do.
So, that is what I think you're looking for. I've never had occasion to inquire about this on a residential rental--but it doesn't sound unusual to me for a landlord to want it. If you really can't find it, send a letter, email, text, to the landlord asking for more information about what they are seeking. Perhaps they have an insurance broker they can recommend. If that insurance is suitable for you and pleases the landlord then perhaps change and go with that.
If the insurance clauses the landlord is seeking are simply impossible to get then I'd suggest getting the tenant insurance you have. Make a copy of the policy and send a copy to the landlord. Advise clearly that this is what you have been able to get and you will presume that this is satisfactory unless the landlord advises otherwise. If the landlord advises otherwise--then have the chat about where to get this insurance. The landlord either accepts what you have or takes termination and eviction steps. I don't see how the landlord could win if the clauses he is demanding in a policy are not commercially available. The Board would disregard a clause that imposes an impossible condition.
Hope that helps. If you ultimately get the type of policy that your landlord is happy with I'd appreciate a follow up from you with details. I'll publish it here as your question is a good one and of general interest.
Michael K. E. Thiele
www.ottawalawyers.com
Hi Michael,
ReplyDeleteMy landlord is asking for a copy of my insurance policy. I've had the same tenants insurance package since I've been in this unit and have been living in the unit since 2009. The landlord has never asked for proof this until now. Not once. (same landlord all this time; although the building became a condo in 2013, the original owner is my landlord and owns other units).
The actual clause, verbatim reads:
"The tenant shall, during the entire period of this tenancy and any renewal thereof, at his sole cost and expense, obtain and keep in full force and effect, fire and property damage and public liability insurance in an amount equal to which the landlord, acting reasonable, considers adequate. The tenant agrees to provide the landlord proof that all such insurance is in full force and effect and to notifty in event of cancellation and termination."
A couple of things trouble me. One is that I am one of several tenants left in a condo conversion that the landlord would love to evict or see move, so they can sell our units, so there is a clear motivation for them to say that the policy is not "an amount equal to which the landlord, acting reasonable, considers adequate".
There is that. Also, it stipulates the tenant requiring public liability insurance. I have a basic tenants package for 25k. Doesn't mention "public liability" coverage.
I would argue that there is nothing in the RTA that entitles the landlord to mandating insurance, let alone stipulating the nature, scope and content of the tenant's coverage. (so "extra-legal")
So, the question I have is:
if the landlord argues that I don't have high enough coverage or they don't like my policy, can they take this before the LTB board or seek eviction if I refuse to take out more coverage?
(the "an amount equal to which the landlord, acting reasonable, considers adequate" is something which seems to begin and end in subjectivity)
Hi Kevin:
DeleteGreat question. To put your mind at ease, I don't think you have anything to worry about. If this issue turns "legal" at any point be sure to retain a lawyer or paralegal as there are defences to explore that go beyond the scope of your question.
Let's assume that the request for insurance confirmation is not intended to be an eviction trap. What does your lease actually require? You've reproduced a clause--which I presume is the clause in your lease? That clause requires the landlord to provide additional information and guidance. The landlord has not done so because he hasn't told you about any specific coverages that you require. Can you be in breach of a mystery? No, I think not.
Is your policy adequate? Presumably an insurance professional has told you that it is. You've purchased a policy offered for sale in Ontario, for tenants, in a government regulated industry. It's not unreasonable to think that the policy you have is proper for the purpose.
The $25K coverage you have, is likely with respect to contents. If you're living frugally that might be enough--though I know some tenant can use that up just on the value of their "shoes". Consider speaking with your insurance broker to figure out if the coverage is sufficient for you in the event of a fire, big flood, etc.. Also, insurance products change over the years and there might be a more comprehensive policy out there, with better features, for the same or close to the same premium.
Do you have "public liability insurance". You very likely do. I don't think it is possible, in Ontario, to buy a renter's policy (or homeowner's policy) that doesn't have this coverage. If you don't see the phrase "public liability" it might simply be called something else. What this "public liability" coverage is, is coverage that responds and pays in case you are negligent. This coverage typically insures you against your own negligent behaviour for anything you might do anywhere in the world. For example, if you have a dog and it bites someone (even far away from the building), your tenant's policy would respond to you being sued and pay out to the bite victim if you lost. Similarly, if you by accident left open the window in your unit, the temperature plunges and freezes a pipe, that pipe burst and flooded dozens of units--your tenant's policy would respond to the claims of your neighbours (for destroyed personal property) and your landlord's claim for repairs to the property. Your own policy pays if it is determined that you were at fault.
DeleteYou can imagine that what the landlord is calling "public liability" coverage is actually a great thing to have in the event that you are responsible for damage arising from a negligent act.
You can explore with your broker how much liability coverage you should have. This is the
'reasonable" issue reflected in the clause you reproduced. Brokers will be able to tell you what the typical coverage is. You'll likely be surprised to discover that you have coverage likely for several hundred's of thousands already and perhaps even $1 million. You can increase those coverages by paying a little more. What amount is reasonable is contextual.
Ultimately, and perhaps before providing proof of insurance to your landlord, you could ask him in writing what coverages he requires. Or, you could ask your insurance broker to provide a letter confirming that you have in force, a current tenant's insurance policy that runs from x date to x date and that you have had that policy for x years. The broker might even comment that it is a standard tenant insurance package etc.. If the landlord comes back with wanting the details of the policy--ask him why, and perhaps then ask him what specific information he is looking for. If he advises that he wants to know the coverages (i.e. limits) you could then indicate that your lease does not stipulate limits and you'd like to know what he thinks those should be.
DeleteWhat is considered "reasonable" will be an objective test. Your insurance broker (or any insurance broker) can confirm what is objectively reasonable. Every policy sold in Ontario will be "reasonable" as any policy that is objectively not reasonable would carry liability for the broker who sold it to you (i.e. you can sue a broker for selling you woefully inadequate insurance). Objectively reasonable is determinable and is not simply the landlord's whim.
Ultimately, I'm guessing that the landlord wants proof of insurance--not to pick on you--but instead to meet an obligation he has to the condo corporation or to his commercial insurer or to the condo insurer. If the occupants in a building all have insurance then, in the event of an incident, the risk of litigation is reduced if people are getting served by their own policy (for example: if a neighbour causes a fire and you lose some property and need to be out of the unit for a while--your own policy may have available compensation to cover your expenses and damages--which you get without having to sue your neighbour who caused the fire---or sue your landlord because the neighbour didn't have insurance).
I hope that begins to be helpful. There is a ton of information here and we could talk about it for much longer. The fact that you actually have insurance puts you in a better position than a great many tenants who don't bother even though their lease requires it. Typically, the Landlord and Tenant Board will not terminate for a breach of an insurance clause if you get insurance before a hearing and explain the mistake. So, you're in an even better position--and in my view likely in full compliance with your lease.
Michael K. E. Thiele
www.ottawalawyers.com
Thanks Michael,
DeleteYes, that clause is actually in the lease as it reads.
Another thing I would also question are the fact that the original lease was between myself and a company that owned the original unit. Five years after having moved in, the company named in the lease created another company and demanded that from thereon in I pay rent to the new company - one which is not named in the original lease. So, is a lease still even valid even if it names different parties than currently exist as landlord/tenant?
Then, there is the fact that the landlord (either of the companies that they have used to register ownership of my unit as) have never in my 11 years of tenancy enforced this clause of the lease. They never asked for proof of insurance till now.
Apparently landlords have recently been using the clause that a tenant not having insurance "substantially interferes" with a landlord’s "reasonable enjoyment" of the property, or with a landlord’s "lawful right, privilege or interest."
If the fact is established that a landlord has never enforced this clause for 11 years and out of the blue then makes demands to enforce it (argue coverage doesn't exist for a tenant or in my case isn't enough coverage), how can they argue that the tenant "substantially interferes" with a landlord’s "reasonable enjoyment" of the property, or with a landlord’s "lawful right, privilege or interest."? (how can not having, or having enough insurance substantially interfere with the landlord’s interest or privilege when they've not exercised that privilege for over a decade--and the risk is the same now as it has been all this time--11 years?)
To add to that I would even argue that the landlords liability is less now than at any point in my 11 year tenancy as they have just made a major upgrade to the building's fire alarm system.
Hi Kevin: The points you raise open the door to a very broad discussion. With respect to your lease the key is to know that you actually have a lease. The various transfers, changes in ownership, have not left you as a squatter. Generally, leases (and the terms of them) transfer from landlord to new landlord to newer landlord. The paperwork may be imperfect--that doesn't matter much. New terms can not be imposed. The same terms apply. If you had the obligation in the beginning you have the obligation now.
DeleteThen you have a giant HOWEVER---if a term of a contract is never enforced does the failure to enforce it cause that clause to be waived? Aside from contract analysis you have the RTA which directs an adjudicator to disregard the outward form of everything and get to the real substance (s. 203 RTA). Hence clauses that are not enforced may be disregarded as not actually forming part of the tenancy agreement.
So, I say that to recognize that you have a point about the implication of the failure to enforce.
That being said, the landlord using the insurance clause to evict is probably more urban myth than actual a real threat. If you know what you are doing in defending an application I don't see this as being a real problem. Certainly, if you get to section 83 relief (which you do in every case) the existence of a subsisting policy and the landlord having suffered no actual damage would, I think, automatically result in a refusal of the termination request.
The other points you want to argue---yes, there is a basis for that. In my opinion, though, on the facts you have put forward it isn't necessary to get to those arguments. I don't see how your facts can successfully support a termination or eviction.
Michael K.E. Thiele
Hi Michael,
ReplyDeleteI'm a small Ontario landlord and really enjoy reading your blog. I signed a Residential Tenancy Agreement with a new tenant about a year ago and checked off the box on Section 11 of the Standardized Lease Form for Ontario which specifies that the tenant must have liability insurance at all times. The reason I requested this is because my insurance policy requires that any tenant must have an active liability policy at all times.
The leaseholder purchased a tenant's insurance policy prior to moving in, but I just got a notice from his insurance company that he cancelled the policy. I have spoken to the tenant and he is refusing to purchase another policy, stating that he is not required to have one.
I am now in violation of the requirements of my insurance policy on this building and concerned that my policy might be cancelled or I might incur additional liability if something were to happen and my uninsured tenant is deemed to be at fault. I checked the available Landlord Forms on the LTB website but don't see any that might apply for this specific situation.
My question is do I have the right to enforce that my tenant maintains an active liability insurance policy? If yes, is it an evictable offence if they refuse to obtain one? Which form would I use and how would I word the violation on the form if this is an evictable offence?. Is simply stating "breach of contract by not maintaining liability insurance" suffice or do I need to be more specific on the form and specify how it impacts me?
Your feedback would be appreciated
Hi: In my opinion this issue is a simple and straightforward application for termination and eviction and frankly it should be. The value of your tenant being insured can't be overstated. If your tenant, through negligence, causes a fire, flood, or injury to others on the property their insurance would likely respond to make you whole. If the tenant suffers a loss due to fire, flood, theft or other event the fact of the tenant having insurance likely protects you from a tenant's claim because the tenant will be compensated by his own insurance policy. For you, the fact that the tenant has insurance protects the integrity of the property (because there will be money to fix or replace), and prevents claims against you for other actions by the tenant (for example--if the tenant has a dog and it bites someone on the property then you would likely be sued if the tenant did NOT have insurance). If the tenant has insurance then it is also likely true that the cost of your own insurance policy for the property is cheaper. In fact, it might be impossible to get an insurance policy if the tenant does not have insurance. You being insured may also be a condition of your mortgage (if you have one). If the tenant fails to be insured then your own insurance may cancel the policy which then may result in them advising your bank that the insurance is cancelled which then may put you in default of your mortgage conditions which may result in your entire mortgage being immediately due.
DeleteTo me, the foregoing issues (all or some) certainly make the tenant's breach of the insurance requirement a serious issue warranting the service of a Notice of Termination. The Form I would use is an N5 Notice of Termination. Presuming it is all filled out correctly, I would focus the "details" on the interference with your "lawful right interest or privilege" [look at the Form you will see the reference]. The key in the details portion is to explain clearly how the tenant is required to have insurance and how the breach of the insurance requirement interferes with your lawful right interest or privilege.
You will be able to find caselaw on www.canlii.org supporting the position that a tenancy can be terminated for a tenant not having insurance. Unfortunately, there are some cases there as well that don't seem to recognize the seriousness of the breach of the insurance requirement. When I've reviewed the cases that don't recognize the seriousness of the breach the issue seems to have been the failure to explain and prove the interference with the "lawful right". It is quite important that you explain this properly.
All that being said, you may want to consider handing this issue over to an experienced landlord and tenant lawyer or paralegal. Having your own insurance cancelled, mortgage called, is a rather serious headache. The N5 process of termination is the most complicated of the Notices under the RTA. It is very easy to inadvertently screw it up and that mistake can permanently bar you from trying again or it sends you back to do it all over again. While the Landlord and Tenant Board bills itself as "user" friendly you shouldn't make the assumption that this isn't an adversarial process with strict rules. The tenant will have access to duty counsel (free) and you will be expected to have fully complied with the RTA. Certainly, for cases where the outcome isn't critical it may be fine to represent yourself but with the possible repercussions in what you describe you might want to give yourself the best chance on the first go around.
Good luck
Michael Thiele
www.ottawalawyers.com
Good morning.. I have a fairly simple question regarding providing proof of tenants insurance. I have recently signed a lease to rent a house and I agreed to carry my own tenants insurance with a minimum liability of $1M. I arranged for this with my insurer and they provided me with a binder letter. After forwarding this to the landlord, they insisted that it wasn't enough and asked to get a copy of the policy. I don't have possession yet, and he's threatening to not give me the keys if I don't give him the full policy document. Can he do that after I provided a clear binder letter?
ReplyDeleteThanks WW
Hi Wally:
DeleteThe answer I think lies in the wording of the lease. If you search the Residential Tenancies Act for references to "insurance" you will not even find the word "insurance" in it. The RTA does not precisely define the rules surrounding tenant insurance. The regulations to the RTA are of no help either. Tenant insurance is not explicitly dealt with.
Just because the RTA does not deal with tenant insurance does not mean that requiring a tenant to have insurance is contrary to the RTA. In fact, so long as a requirement is not contrary to the RTA that requirement would normally be valid. The key then, is to look at how the obligation is created. In your case I presume you signed the Ontario Standard Form lease agreement. Tenant insurance is dealt with at paragraph 11. Presumably the landlord ticked off the box requiring you to have insurance. If you look at that clause--closely--you will see that the only thing that you are required to provide to the landlord is "proof of coverage". That proof of coverage is typically a "binder" as you describe. Presumably, the binder will have language proving that you have "liability insurance" which is the other phrase in paragraph 11 of the Standard Form lease.
Unless the Standard Form lease has been amended to require more than what paragraph 11 mandates then I'd say your landlord is not entitled to a copy of the full policy. Demands for "more" could be set out in additional terms that paragraph 15 of the lease contemplates. Whether the additional terms are lawful or not would depend on the wording.
Based on the foregoing, and if my assumptions are correct, then I don't see how your landlord can demand a copy of the entire policy. Hence, he can't withhold the keys--though that doesn't mean that he won't. You might end up with a good claim and perhaps a complaint to Housing Enforcement branch. Withholding your keys, in my view, is contrary to the RTA regardless of how you look at it. Failure to have insurance, or failing to provide the level of detail the landlord wants, is a basis to serve an N5 to terminate the lease. It is not grounds to with-hold the keys. With-holding the keys in my view would be an illegal lock out and the landlord could face charges, a fine, or both.
I haven't discussed for the benefit of people reading this why it would be a big deal to disclose the full policy. Shouldn't you just hand it over--why does it matter? I'll mention that aside from privacy, giving only what you've agreed to give, another key reason to withhold a full policy is that the full policy can reveal personal information and assets being insured that you may not want anyone to know about (including the landlord). In short, the specifics of your policy is no one's business but your own.
Hope that helps
Michael K. E. Thiele
www.ottawalawyers.com
Hello, Michael.
ReplyDeleteI have just discovered your blog and have already found it very useful - so thank you for this.
With regard to liability insurance, what are your thoughts on this scenario: a landlord states it's required in the lease and gets proof of insurance prior to the start of the tenancy. During the tenancy something goes wrong (e.g. fire, burst pipe etc.), and only at this point, the landlord learns that the liability insurance was cancelled at some point after the tenancy started, but prior to the incident. What recourse does the landlord have? What is the tenant liable for in this scenario? How can landlords ensure that the liability insurance is maintained in a reasonable fashion?
Thank you for your time. It's greatly appreciated.
This is a great question and I wish I had an answer that would solve the problem. You identify something that does happen often enough. A tenant can fulfill the insurance requirement by buying a policy, getting the confirmation of insurance, and then let the policy lapse or cancel it. Is there a way for a landlord to prevent the policy from lapsing or cancelling without being notified of that in advance? I have checked this question with a few different insurance brokers. The answer has been consistent and is "no". Unlike commercial lines of insurance there is nothing in the personal lines of insurance that would allow a landlord to be named as a co-insured and thereby get "notice" of any impending lapse or cancelation. The brokers have told me that they suggest checking frequently with the tenant. That of course is a labour intensive and ultimately doesn't solve the problem. I wonder if a landlord could include a condition that the tenant has to pay an annual premium or something like that to make it more likely that the policy would be in place when needed. No scenario that I can think of, though, is foolproof to the possibility of lapsing or cancellation.
DeleteYou asked about liability. Sure, if the tenant's insurance policy would have responded to the loss (incident) then the tenant will be personally liable for that incident if the insurance would have indemnified you or others for the loss (so you can sue the tenant). The problem of course is that the tenant's ability to pay is likely much less than the insurers obligation to pay and hence you may end up with a paper judgment that is effectively useless.