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