Many unusual things happen when you are a landlord. Recently, I've had a number of cases involving the transfer of rental units, by tenants to strangers that the landlord is utterly unaware of. The original tenant disappears and all of a suddent there are people living in the rental unit that the landlord has never before seen. The landlord doesn't have the names of the individuals, no background check, nothing. These new people are showing up at the rental office handing over the rent in cash or by cheque and asking that the rent for apartment XX be credited. Some landlords advise that these strangers are saying they are paying for a friend, are staying with the friend and the friend is to busy, or some say nothing other than they are there to pay the rent, hand over cash and ask for a receipt in their name.
What does all of this mean and what is possibly going on here? A recent matter revealed, on investigation, that a tenant rented from the landlord with the intention of transferring the unit to individuals who would be running a business from the apartment. The entrepreneurs, on their own, would not qualify for the rental unit. However, once in possession, these people were indeed able to pay the rent and attended the rental office regularly to pay the rent. They did not complain about anything, made no demands whatsoever, and in a sense were model tenants. Unfortunately, the neighbours felt differently and did have complaints about the activities in the rental unit.
Another case had a similar transfer of the tenancy to an unknown third party but the third party was quiet and not running any kind of business. What turned out to be the case, though, was that this person had difficulty making the monthly rent and likely would not have been approved for the unit. This matter came to light only because of late rent payments and mounting arrears.
For whatever reason, these situations reveal circumstances where a rental unit has been transferred from a legitimate tenant to an unauthorized occupant. The tenant, without seeking authorization to sublet or assign the rental unit, has vacated the rental unit and put another person in possession of the apartment. That new person tries to become the tenant in the unit by simply living there and paying rent.
In circumstances where a landlord finds an unauthorized occupant in the rental unit (i.e. the original tenant is gone (vacated) and there is a new person in the unit) the applicable section of the Residential Tenancies Act is section 100. That section provides that a landlord may apply to the Board to terminate the original tenancy and evict the unauthorized occupant so long as the landlord applies to the Landlord and Tenant Board within 60 days of becoming aware of the presence of the unauthorized occupant.
If a landlord becomes aware of an unauthorized occupant, but does not apply to the Board within 60 days of becoming aware of the presence of the occupant, then the person is deemed to be a tenant and the original tenancy is deemed to have been assigned to the person with the consent of the landlord (section 104 RTA).
Therefore, if a landlord does discover an unauthorized occupant and wishes to evict that person; it is important to apply to the Landlord and Tenant Board in a timely manner. The application form used for this purpose is Form A2 (part 3). There is no need to serve a Notice of Termination (no "N" Form is required).
A further interesting alternative is that a landlord is authorized by the RTA to negotiate a new lease with the unauthorized occupant. The significance of this is that the landlord is permitted to deal with the unauthorized occupant as if the unit were vacant and a brand new lease is being negotiated. This means that the landlord may set a new rent and such a rent will be lawful even though the unauthorized occupant may have been paying the lower rent of the original tenant. The section of the RTA applicable in this circumstance is section 104 under the provisions relating to miscellaneous new tenancy agreements.
In summary then, if you find a stranger living in one of the rental units and the original tenant seems to be gone--and that stranger seems to be paying the rent and treating the premises like their own--begin to suspect that permits the rental unit has been transferred illegally. Consider applying to evict under section 100, or alternatively, formalize the relationship under a new tenancy agreement (so you set the rent, have a legal name, background check, credit check, etc.) under section 104; or take the risk in doing nothing and having a deemed assignment to people that you know very little about.
Michael K. E. Thiele
QTMG LLP
Ottawa lawyers
Friday, 30 May 2014
2 comments:
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What if the landlord changes the lock on the unauthorized occupant?
ReplyDeleteGreat question, especially these days when it takes many many months before the LTB will schedule a hearing. Can you self help and is it contrary to the RTA to change the locks on an unauthorized occupant?
DeleteSo, the prohibition on recovery of possession of rental unit is set out in section 39. It states:
Restriction on recovery of possession
39 A landlord shall not recover possession of a rental unit subject to a tenancy unless,
(a) the tenant has vacated or abandoned the unit; or
(b) an order of the Board evicting the tenant has authorized the possession. 2006, c. 17, s. 39.
This section prohibits a landlord from recovering possession (i.e. changing the lock as you indicated in your question) unless the tenant has vacated or abandoned the unit or you have an Order evicting the tenant and authorizing possession.
On the straight up wording of section 39 you might conclude that taking possession is permitted because the tenant has indeed vacated. Alternatively, you might want to think about this as an abandonment.
It seems to be an attractive argument/position--i.e. just change the locks. I am not aware of anything specifically in the RTA that says you can't do this. However, such an action (self help) is typically problematic under the RTA and very discouraged. In his text, Ontario Landlord and Tenant Practice, author Jack Fleming states at section 70 in the commentary: "Placing someone else in occupation is not abandonment, as the premises are still being occupied (even if not by the tenant). The landlord will have other remedies in that situation (such as an application under s. 100), BUT MAY NOT TAKE POSSESSION OF THE PREMSIES AS IF ABANDONED."
I don't know where Professor Fleming finds the statutory basis to say that self help possession may not be pursued (i.e. the landlord can't change the locks on an unauthorized occupant). But he does clearly state it and I confess that my instinct too is that the intention of the statute is to make such self help illegal. I imagine that any interpretation of the statute would come out with a prohibition--for example, if you did change the locks and the unauthorized occupant sued or took a position in Court against you---I could see the Court interpreting the RTA with the intent of making the self help illegal (i.e. changing the locks). Self help is simply discouraged in all things Residential tenancy.
That being said, the RTA does contemplate the possibility of the existence of unauthorized occupants and the process to evict them is provided for in the A2 Application and under section 100 RTA. "Unauthorized occupants" can potentially have rights under the RTA depending on the timing of their possession and the landlord's knowledge of it. Unauthorized occupants can become assignees of the prior tenant's lease by operation of law and the passage of time--in this sense the RTA is not putting unauthorized occupants into some kind of hyper-negative category of people that you can do what you like to. Evicting an unauthorized occupant by changing the locks can attract the same penalty if that person manages to convince an adjudicator that the tenancy was deemed to be an assignment to them or they otherwise have rights under the RTA (for example, as members of the tenant's household).