WHAT SHOULD YOU DO WHEN YOUR TENANT IS LATE WITH THE RENT?
Are you renting out residential properties to tenants with the aim of earning a reasonable living, building some equity, and perhaps using the rental income to pay the ongoing expenses and paying all or some of the mortgage? If this is your intent then you are running a business. As a business person, the policies and procedures that you adopt, when it comes to enforcing the legal rights of your business will have a direct impact on whether you are successful or not. It is for that reason that you should make conscious choices about how you will deal with the problem of "non-payment of rent" by your tenants.
For well over the last 20 years I have been practicing Landlord and Tenant law. In that time I have come across many landlords who are owed in excess of a year's worth of rent and usually thousands and thousands of dollars. These poor landlords, for the most part, never recover these rent arrears and the losses end up being a complete write off. In some instances the non-payment of rent causes severe hardship, requires the landlord to pay the expenses of the rental unit from other income and sometimes it even forces the landlord to sell the property because they can't afford to keep the rental unit without the rental income. Often enough, new landlords are brought into the business of being a landlord by attending a real estate seminar or after listening to a friend or acquaintance touting the easy money that is made when you "let your tenant pay your mortgage". Unfortunately, the reality of being a landlord doesn't always mesh with the theoretical ease of letting a tenant pay the mortgage.
How do rent arrears happen? How do rent arrears get out of control? How do rent arrears destroy a landlord's business?
The first point that I'll make is that the landlords who get into rent arrears problems are typically well meaning and trusting people. The rent arrears accumulate firstly because of slow book keeping and then because excuses are accepted and faith is placed in the tenant who promises to pay. Secondly, after the arrears start to mount, the arrears get worse because landlords seem to enter into a form of denial where they can't believe and refuse to accept that the tenant isn't going to pay. At this stage the landlord ends up desperately wanting to believe the promises of the money that is soon going to come to take care of the rent arrears (hoping against hope). Finally, it is only when the amount of the arrears represents a serious danger to the financial viability of the landlord that the landlord finally recognizes that the rent arrears are unlikely to ever be paid, that legal proceedings are necessary, and that they have mistakenly trusted a tenant who is unwilling to pay or who never intended to pay.
The story above, about how rent arrears get out of control, is fairly common with new and inexperienced landlords. Giving people the benefit of the doubt and wanting to believe that if you work with a tenant, that rent will be paid, can indeed be a noble gesture. If the grace period given to a tenant is affordable to the landlord then perhaps there is no problem with delays and accepting promises. However, for any landlord it is important to retain control over the situation and make sure that delays and grace periods are granted as opposed to taken and that the amount of the rent arrears does not become unmanageable or seriously affect the viability of the business. To this end, it is critical to approach the issue of rent arrears from a policy perspective and to have hard rules in place of how rent arrears are to be dealt with.
RECOMMENDED STEPS and POLICY FOR DEALING WITH RENT ARREARS
In my opinion the proper way to deal with rent arrears is to immediately exercise the rights granted to the landlord under the Residential Tenancies Act. Exercising these legal rights puts the landlord in the very best possible legal position, avoids the loss of more rent than necessary, and still allows the landlord to be flexible and understanding when the circumstances of the tenant require.
FIRST STEP
If the rent is due on the first of the month then the landlord should have the rent money by midnight of the first of the month. It doesn't matter if it is a holiday, a weekend, a snowstorm, or anything else. If the rent is due on the 1st then it needs to be in the landlord's hands on the first. If, as a landlord, you don't require the tenant to pay on the first, or you tolerate rent being late, then you set up expectations on the part of the tenant that the rent due date is more of a guideline than a rule. This expectation can attract legal force if it goes on long enough and ultimately the rent due date can become a moving target depending on the tenant's expectations and on what the landlord has allowed.
Therefore, I recommend that the landlord immediately serve a FORM N4 (available on the Landlord and Tenant Board website) on the very first day after rent is due and unpaid. Hence, on the 2nd of the month (if rent is due on the first) take a look at the receipts and whoever is late with the rent should immediately be served with an N4 (Notice of Termination for Non-Payment of Rent). When filling out the N4 make sure to fill it out correctly, sign it, and make two exact duplicate copies (i.e. photocopies). Then serve the N4 on the tenant and fill out a Certificate of Service.
The value of immediately serving the N4 is that it sends a message to the tenant(s) that from a business perspective that you require payment of the rent in full and on time. As tenants learn this about you they will adjust their behaviour to make sure that rent is paid on time. If you don't insist on timely payment then tenants will not go out of their way to ensure timely payment.
Timely payment is useful for a landlord because it adds efficiency to your business. If you receive all of the rent from all of your units on time then your banking, deposits, and bookkeeping can be done all at once and efficiently. Imagine having to do multiple trips to the bank and having to re-open and re-attend to the bookkeeping several times over the course of the month as rents are received. It is a big investment of time that could otherwise be saved if everything could be done once. The value of these efficiencies are high enough that I had a landlord with over 300 units actually offer tenants a rent discount for prompt payment.
The next great reason to immediately serve an N4 when rent is past due is that the service of the Notice starts the statutory clock rolling.
The law requires you to give the tenant a 14 day notice period before terminating the tenancy. This date is reflected in the N4 Form and it is called the termination date. The termination date is a minimum of 14 days after the N4 Notice is served. Therefore, if you serve the N4 immediately when you are able to the statutory delay will start counting down.
The law prohibits you from taking any action against a tenant for rent arrears until the N4 has been served and the 14 day notice period has expired. Therefore, by simply following the law and serving the N4 you are giving the tenant the legally required grace period of 14 days.
If you don't serve the tenant with an N4 immediately when rent is due you are effectively deciding to give the tenant a grace period of however long it takes you to serve the N4 PLUS the 14 days that the N4 requires you to give.
2nd STEP TO TAKE
After you serve the N4 on the tenant you can chat with the tenant and see when the rent will be paid. The tenant can make promises and you can seek to be helpful etc. etc.. If the rent is paid within the 14 day period the N4 becomes "void" and the tenancy is maintained. However, if the rent is not paid within the 14 day period you may, as landlord, apply to the Landlord and Tenant Board for an Order to evict on the 15th day after the N4 was served.
I do recommend that if the rent is not paid within the 14 day period and there is no satisfactory agreement with the tenant to pay the arrears that the landlord immediately apply to the Landlord and Tenant Board using a Form L1 (Landlord's Application to Evict for Non-Payment of Rent). This application can be filed online using the portal on the Landlord and Tenant Board website.
The reason to apply immediately is that it again takes time for the Landlord and Tenant Board to process the application and to schedule a hearing. From the date of filing it could take 2 to 6 weeks to get a hearing date (sometimes longer). During that time a landlord is prohibited from taking action against a tenant and it is entirely possible that further rent due dates will come and go before the case is actually scheduled for a hearing. Under the very best scenario and applying as quickly and as soon as possible the tenant will likely be in arrears in excess of 2 months rent by the time of the hearing (presuming that the tenant does not pay). My point here is that the structure of the legislation and the bureaucratic processes take at least this long before you get in front of an adjudicator. Imagine how many months of rent arrears can accumulate if you don't exercise your legal rights immediately when the law allows.
3rd STEP
This step is more of a procedural item. If as a result of serving the N4, or after serving and filing the L1 application, the tenant pays all of the rent arrears or rent arrears plus the LTB application fee, the tenancy will continue and the eviction proceedings are void. However, this does not mean that the process was for nothing. The process did likely result in getting the arrears paid--which is a good thing.
The additional value to having proceeded immediately with an N4 is that the N4 is evidence of the landlord's requirement that rent be paid on time. The copy of the N4, served on the tenant, should be saved in the tenant's file. There may be more than one N4 in the tenant's file. The tenant may be late every month. If so, the collection of the N4's becomes very useful for proving the tenant's breach of the obligation to pay rent in full and on time. The N4's then, become evidence of "persistent late payment of rent". If a tenant is persistently late with rent then the landlord can serve a Notice of Termination in Form N8 (Persistent Late Payment of Rent). This Notice of Termination is not technically voidable.
4th STEP
The fourth step is the Landlord and Tenant Board hearing. After filing the L1 application with the Landlord and Tenant Board the LTB will issue a Notice of Hearing. That Notice of Hearing will be served on the tenant (by the LTB) by mail. It is a matter of good practice for you to also serve the tenant with a copy of the application on the tenant (personally is best or by email) so that you know for sure that the tenant is aware of the hearing.
If between the date of filing the application and the hearing the tenant pays the arrears plus the costs then the tenancy is preserved. This time period, again, is a grace period and the landlord and tenant can negotiate a resolution while waiting for the hearing to occur. However, if no deal is reached then at least a hearing is coming and a legally enforceable eviction can occur.
At the Hearing of the application the landlord is required to have an L1/L9 update sheet available. This form, available on the LTB website, is an update to the Board of how much money is currently owing to the landlord as of the date of the hearing. By filling out this form you are telling the LTB what rents have become due since filing, what amounts might have been paid, and whether there are any rent increases. It is very important to have this form filled out prior to the hearing taking place.
5th STEP---position at the hearing.
In my view it is important to proceed to a hearing and to obtain an Order dealing with the rent arrears. Adjourning the case is to be avoided if possible as this only adds to the delay and hence greater rent arrears. If an adjournment must be granted or will be granted over the landlord's objections the landlord should try to get conditions imposed requiring ongoing rent to be paid to avert great prejudice to the landlord being caused by the delay.
At the hearing the landlord and tenant may be asked if they want to mediate. Certainly there is no problem with mediation and striking a deal with the help of a mediator can be a reasonable way to resolve a dispute. However, when you enter mediation keep in mind that the mediator's job is not to strike a fair bargain for the parties. The mediator is trying to get an agreement and it remains up to the parties to decide what is in their best interests.
6th STEP---contested hearing
At the Hearing you the landlord will give the LTB adjudicator the L1/L9 update sheet. The adjudicator will review that and perhaps have a question or two. It is very handy to also have a copy of the rent ledger showing the rent history with the tenant. A landlord is not required to do much else to prove rent is owing. Simply stating "I have not been paid" is enough to establish that aspect of the application. If the tenant wants to insist that the rent has been paid it will be up to the tenant to produce receipts or other proof of payment. The burden to prove payment falls to the tenant once the landlord asserts that the rent has not been paid.
The adjudicator may ask the landlord then what they are seeking from the hearing. The answer, in almost all situations, will be for an eviction Order, plus daily compensation, plus an Order for the arrears, plus the costs of the application. The adjudicator may ask "when" should the Order be enforceable to which the landlord will typically want to say "immediately". The adjudicator will then advise that a "Standard Order" will allow the tenant 11 days to pay the rent plus costs to void the eviction Order and continue the tenancy.
The LTB typically issues the "Standard Order" on rent arrears applications.
WHAT THE TENANT MIGHT ARGUE!
Once the rent arrears are established the adjudicator will turn to the tenant and ask the tenant to confirm that the amount of the rent arrears is correct. The tenant can either agree that the amount is correct or dispute the amount. If the tenant disputes the amount the tenant will need to prove payment or prove that the rent charged is somehow not lawful. Otherwise, the LTB is very likely to find that the rent has not been paid and therefore is owed.
The tenant is also entitled to ask the adjudicator to order a payment plan or otherwise give the tenant a break with respect to the timing of payment. The authority for this arises from section 83 of the Residential Tenancies Act. This section is known as the discretion section and it is legally required to be considered by the adjudicator in every single case. The factors that can support the exercise of discretion in favour of the tenant are too numerous to list. The following broad categories can justify discretion being exercise---job loss, reduction in work hours, a strike, illness, death in family, theft of rent money, family emergency, really bad luck, unforeseen events amounting to an urgent situation. Any of these things can result in the adjudicator cutting the tenant a break and perhaps delaying eviction or perhaps giving the tenant an extended payment plan to pay the arrears over time.
When it comes to payment plans the adjudicator will hear the tenant's proposal and then ask the landlord what it thinks about the proposal. Responding with "no" or "I want all the money now" is not helpful and the adjudicator is likely to stop taking the landlord seriously in relation to the proposed payment plan.
What is helpful for the adjudicator to hear from the landlord is how the proposed payment plan is prejudicial to the landlord. Speak to how the rent arrears are beyond the tenant's ability to pay back. Speak to how the rent is unaffordable in the tenant's circumstances and denying eviction is simply going to delay the inevitable ultimate eviction. Speak to how a payment plan creates another layer of process and delay if the payment plan is not followed by the tenant. The payment plan could end up being just another delay (tactic) and even more rent arrears will accrue when the payment plan isn't complied with. It is also useful if a long period of time has passed between application and the hearing to point out whether the tenant has made any payment plan proposals prior to the hearing date or whether this is only being sprung at the hearing. The "good faith" of the payment plan proposal can be judged from the tenant's behaviour leading up to the hearing.
If the landlord can demonstrate that the payment plan is unlikely to be followed, that the rent is unaffordable based on the tenant's income, that multiple chances have already been given, or that other circumstances make it highly unlikely that the tenancy can be successfully preserved then the adjudicator is unlikely to grant the payment plan. Instead, the adjudicator will be more likely to simply issue a standard order terminating the tenancy in 11 days unless the tenant pays off all of the rent arrears plus the costs.
7th STEP
A good defence is a strong offense. As a Landlord you need to be aware that the Residential Tenancies Act allows a tenant to defend an application for non-payment of rent by raising any kind of issue that the tenant could have filed an application for. The law (section 82 RTA) effectively allows a tenant to raise such claims by ambush and without warning. The law does not require the tenant to file an application or even fill one out. The law simply allows the tenant to raise any issue in defence to the non-payment of rent application and to further claim an abatement of rent and other orders.
As you can imagine, the point of raising claims under section 82 is to reduce the amount of rent arrears and to put the tenant in a position of being able to void the eviction for non-payment of rent. Most of the time when you see section 82 claims the tenant is not well prepared and isn't in a position to actually prove anything. Typically the tenant lobs the threat of a claim for maintenance, repairs, harassment, illegal entry, etc., with the hope that this some reduces the amount of the arrears. For the most part this doesn't work.
Sometimes, however, a tenant comes to a hearing prepared with large binders full of documents, photos, videos, etc. etc., and wants to proceed with the tenant application at the same time as the Landlord's application. This is a difficult problem because the law allows the tenant to do this, but of course it is an ambush of the landlord. In these circumstances it may be best to seek an adjournment to prepare to defend the tenant's section 82 claims. Of course, the delay caused by the adjournment may be exactly what the tenant was hoping for. The delay might allow the tenant time to move, or time to find the money to pay the arrears, or perhaps even find a roommate to be able to afford the ongoing rent.
Whether you should adjourn or not in the face of a sizeable section 82 claim is a judgment call. What I do recommend, if you think a section 82 claim is at all possible, that you bring with you the entirety of the tenant file and that you have completed an inspection of the rental unit within a reasonable period of time prior to the hearing to determine the condition of the premises. An occasional inquiry with the tenant about any repairs or issues---by email is also useful as the tenant's claim is greatly affected by any notice of the problem given to the landlord. If the tenant fails to give notice of any repair issues then the monetary award for this problem not being fixed is likely to be very little.
8th STEP--THE ORDER
It is very unlikely that the LTB will give you a decision on the day of the hearing. If you are going to get a Standard Order the adjudicator may inform you of that. Otherwise, if the adjudicator is going to exercise discretion or is thinking about doing so the adjudicator will typically reserve the decision. This means that the adjudicator will decide the case in writing and the decision/Order will be sent to you in the mail.
In the days following the hearing you can check on the LTB website as to the status of the application. Using just the file number and postal code you can see whether a decision has been rendered or not (though you can't read the decision on-line). You can then know to look for the decision to arrive in the mail or if you are nearby you can drop by the LTB to get a copy of the decision. Often enough, if your curiosity is too strong and you don't leave nearby to a Board office you can call the 1-800 number for the LTB and the customer service rep will tell you the gist of the decision.
9th STEP ENFORCEMENT
Enforcement of LTB Orders is done through your local Courthouse. The LTB and the Residential Tenancies Act has no enforcement mechanism. Hence, to enforce eviction you would use the Sheriff through the Courthouse or for collection of money you would use the enforcement provisions through the Small Claims Court (garnishment, Writ of Seizure and Sale, Debtor;s examination, etc.). To use the Small Claims Court procedures to collect money owing you will need to familiarize yourself with the Rules of the Small Claims Court.
Michael K. E. Thiele
www.ottawalawyers.com
Are you renting out residential properties to tenants with the aim of earning a reasonable living, building some equity, and perhaps using the rental income to pay the ongoing expenses and paying all or some of the mortgage? If this is your intent then you are running a business. As a business person, the policies and procedures that you adopt, when it comes to enforcing the legal rights of your business will have a direct impact on whether you are successful or not. It is for that reason that you should make conscious choices about how you will deal with the problem of "non-payment of rent" by your tenants.
For well over the last 20 years I have been practicing Landlord and Tenant law. In that time I have come across many landlords who are owed in excess of a year's worth of rent and usually thousands and thousands of dollars. These poor landlords, for the most part, never recover these rent arrears and the losses end up being a complete write off. In some instances the non-payment of rent causes severe hardship, requires the landlord to pay the expenses of the rental unit from other income and sometimes it even forces the landlord to sell the property because they can't afford to keep the rental unit without the rental income. Often enough, new landlords are brought into the business of being a landlord by attending a real estate seminar or after listening to a friend or acquaintance touting the easy money that is made when you "let your tenant pay your mortgage". Unfortunately, the reality of being a landlord doesn't always mesh with the theoretical ease of letting a tenant pay the mortgage.
How do rent arrears happen? How do rent arrears get out of control? How do rent arrears destroy a landlord's business?
The first point that I'll make is that the landlords who get into rent arrears problems are typically well meaning and trusting people. The rent arrears accumulate firstly because of slow book keeping and then because excuses are accepted and faith is placed in the tenant who promises to pay. Secondly, after the arrears start to mount, the arrears get worse because landlords seem to enter into a form of denial where they can't believe and refuse to accept that the tenant isn't going to pay. At this stage the landlord ends up desperately wanting to believe the promises of the money that is soon going to come to take care of the rent arrears (hoping against hope). Finally, it is only when the amount of the arrears represents a serious danger to the financial viability of the landlord that the landlord finally recognizes that the rent arrears are unlikely to ever be paid, that legal proceedings are necessary, and that they have mistakenly trusted a tenant who is unwilling to pay or who never intended to pay.
The story above, about how rent arrears get out of control, is fairly common with new and inexperienced landlords. Giving people the benefit of the doubt and wanting to believe that if you work with a tenant, that rent will be paid, can indeed be a noble gesture. If the grace period given to a tenant is affordable to the landlord then perhaps there is no problem with delays and accepting promises. However, for any landlord it is important to retain control over the situation and make sure that delays and grace periods are granted as opposed to taken and that the amount of the rent arrears does not become unmanageable or seriously affect the viability of the business. To this end, it is critical to approach the issue of rent arrears from a policy perspective and to have hard rules in place of how rent arrears are to be dealt with.
RECOMMENDED STEPS and POLICY FOR DEALING WITH RENT ARREARS
In my opinion the proper way to deal with rent arrears is to immediately exercise the rights granted to the landlord under the Residential Tenancies Act. Exercising these legal rights puts the landlord in the very best possible legal position, avoids the loss of more rent than necessary, and still allows the landlord to be flexible and understanding when the circumstances of the tenant require.
FIRST STEP
If the rent is due on the first of the month then the landlord should have the rent money by midnight of the first of the month. It doesn't matter if it is a holiday, a weekend, a snowstorm, or anything else. If the rent is due on the 1st then it needs to be in the landlord's hands on the first. If, as a landlord, you don't require the tenant to pay on the first, or you tolerate rent being late, then you set up expectations on the part of the tenant that the rent due date is more of a guideline than a rule. This expectation can attract legal force if it goes on long enough and ultimately the rent due date can become a moving target depending on the tenant's expectations and on what the landlord has allowed.
Therefore, I recommend that the landlord immediately serve a FORM N4 (available on the Landlord and Tenant Board website) on the very first day after rent is due and unpaid. Hence, on the 2nd of the month (if rent is due on the first) take a look at the receipts and whoever is late with the rent should immediately be served with an N4 (Notice of Termination for Non-Payment of Rent). When filling out the N4 make sure to fill it out correctly, sign it, and make two exact duplicate copies (i.e. photocopies). Then serve the N4 on the tenant and fill out a Certificate of Service.
The value of immediately serving the N4 is that it sends a message to the tenant(s) that from a business perspective that you require payment of the rent in full and on time. As tenants learn this about you they will adjust their behaviour to make sure that rent is paid on time. If you don't insist on timely payment then tenants will not go out of their way to ensure timely payment.
Timely payment is useful for a landlord because it adds efficiency to your business. If you receive all of the rent from all of your units on time then your banking, deposits, and bookkeeping can be done all at once and efficiently. Imagine having to do multiple trips to the bank and having to re-open and re-attend to the bookkeeping several times over the course of the month as rents are received. It is a big investment of time that could otherwise be saved if everything could be done once. The value of these efficiencies are high enough that I had a landlord with over 300 units actually offer tenants a rent discount for prompt payment.
The next great reason to immediately serve an N4 when rent is past due is that the service of the Notice starts the statutory clock rolling.
The law requires you to give the tenant a 14 day notice period before terminating the tenancy. This date is reflected in the N4 Form and it is called the termination date. The termination date is a minimum of 14 days after the N4 Notice is served. Therefore, if you serve the N4 immediately when you are able to the statutory delay will start counting down.
The law prohibits you from taking any action against a tenant for rent arrears until the N4 has been served and the 14 day notice period has expired. Therefore, by simply following the law and serving the N4 you are giving the tenant the legally required grace period of 14 days.
If you don't serve the tenant with an N4 immediately when rent is due you are effectively deciding to give the tenant a grace period of however long it takes you to serve the N4 PLUS the 14 days that the N4 requires you to give.
2nd STEP TO TAKE
After you serve the N4 on the tenant you can chat with the tenant and see when the rent will be paid. The tenant can make promises and you can seek to be helpful etc. etc.. If the rent is paid within the 14 day period the N4 becomes "void" and the tenancy is maintained. However, if the rent is not paid within the 14 day period you may, as landlord, apply to the Landlord and Tenant Board for an Order to evict on the 15th day after the N4 was served.
I do recommend that if the rent is not paid within the 14 day period and there is no satisfactory agreement with the tenant to pay the arrears that the landlord immediately apply to the Landlord and Tenant Board using a Form L1 (Landlord's Application to Evict for Non-Payment of Rent). This application can be filed online using the portal on the Landlord and Tenant Board website.
The reason to apply immediately is that it again takes time for the Landlord and Tenant Board to process the application and to schedule a hearing. From the date of filing it could take 2 to 6 weeks to get a hearing date (sometimes longer). During that time a landlord is prohibited from taking action against a tenant and it is entirely possible that further rent due dates will come and go before the case is actually scheduled for a hearing. Under the very best scenario and applying as quickly and as soon as possible the tenant will likely be in arrears in excess of 2 months rent by the time of the hearing (presuming that the tenant does not pay). My point here is that the structure of the legislation and the bureaucratic processes take at least this long before you get in front of an adjudicator. Imagine how many months of rent arrears can accumulate if you don't exercise your legal rights immediately when the law allows.
3rd STEP
This step is more of a procedural item. If as a result of serving the N4, or after serving and filing the L1 application, the tenant pays all of the rent arrears or rent arrears plus the LTB application fee, the tenancy will continue and the eviction proceedings are void. However, this does not mean that the process was for nothing. The process did likely result in getting the arrears paid--which is a good thing.
The additional value to having proceeded immediately with an N4 is that the N4 is evidence of the landlord's requirement that rent be paid on time. The copy of the N4, served on the tenant, should be saved in the tenant's file. There may be more than one N4 in the tenant's file. The tenant may be late every month. If so, the collection of the N4's becomes very useful for proving the tenant's breach of the obligation to pay rent in full and on time. The N4's then, become evidence of "persistent late payment of rent". If a tenant is persistently late with rent then the landlord can serve a Notice of Termination in Form N8 (Persistent Late Payment of Rent). This Notice of Termination is not technically voidable.
4th STEP
The fourth step is the Landlord and Tenant Board hearing. After filing the L1 application with the Landlord and Tenant Board the LTB will issue a Notice of Hearing. That Notice of Hearing will be served on the tenant (by the LTB) by mail. It is a matter of good practice for you to also serve the tenant with a copy of the application on the tenant (personally is best or by email) so that you know for sure that the tenant is aware of the hearing.
If between the date of filing the application and the hearing the tenant pays the arrears plus the costs then the tenancy is preserved. This time period, again, is a grace period and the landlord and tenant can negotiate a resolution while waiting for the hearing to occur. However, if no deal is reached then at least a hearing is coming and a legally enforceable eviction can occur.
At the Hearing of the application the landlord is required to have an L1/L9 update sheet available. This form, available on the LTB website, is an update to the Board of how much money is currently owing to the landlord as of the date of the hearing. By filling out this form you are telling the LTB what rents have become due since filing, what amounts might have been paid, and whether there are any rent increases. It is very important to have this form filled out prior to the hearing taking place.
5th STEP---position at the hearing.
In my view it is important to proceed to a hearing and to obtain an Order dealing with the rent arrears. Adjourning the case is to be avoided if possible as this only adds to the delay and hence greater rent arrears. If an adjournment must be granted or will be granted over the landlord's objections the landlord should try to get conditions imposed requiring ongoing rent to be paid to avert great prejudice to the landlord being caused by the delay.
At the hearing the landlord and tenant may be asked if they want to mediate. Certainly there is no problem with mediation and striking a deal with the help of a mediator can be a reasonable way to resolve a dispute. However, when you enter mediation keep in mind that the mediator's job is not to strike a fair bargain for the parties. The mediator is trying to get an agreement and it remains up to the parties to decide what is in their best interests.
6th STEP---contested hearing
At the Hearing you the landlord will give the LTB adjudicator the L1/L9 update sheet. The adjudicator will review that and perhaps have a question or two. It is very handy to also have a copy of the rent ledger showing the rent history with the tenant. A landlord is not required to do much else to prove rent is owing. Simply stating "I have not been paid" is enough to establish that aspect of the application. If the tenant wants to insist that the rent has been paid it will be up to the tenant to produce receipts or other proof of payment. The burden to prove payment falls to the tenant once the landlord asserts that the rent has not been paid.
The adjudicator may ask the landlord then what they are seeking from the hearing. The answer, in almost all situations, will be for an eviction Order, plus daily compensation, plus an Order for the arrears, plus the costs of the application. The adjudicator may ask "when" should the Order be enforceable to which the landlord will typically want to say "immediately". The adjudicator will then advise that a "Standard Order" will allow the tenant 11 days to pay the rent plus costs to void the eviction Order and continue the tenancy.
The LTB typically issues the "Standard Order" on rent arrears applications.
WHAT THE TENANT MIGHT ARGUE!
Once the rent arrears are established the adjudicator will turn to the tenant and ask the tenant to confirm that the amount of the rent arrears is correct. The tenant can either agree that the amount is correct or dispute the amount. If the tenant disputes the amount the tenant will need to prove payment or prove that the rent charged is somehow not lawful. Otherwise, the LTB is very likely to find that the rent has not been paid and therefore is owed.
The tenant is also entitled to ask the adjudicator to order a payment plan or otherwise give the tenant a break with respect to the timing of payment. The authority for this arises from section 83 of the Residential Tenancies Act. This section is known as the discretion section and it is legally required to be considered by the adjudicator in every single case. The factors that can support the exercise of discretion in favour of the tenant are too numerous to list. The following broad categories can justify discretion being exercise---job loss, reduction in work hours, a strike, illness, death in family, theft of rent money, family emergency, really bad luck, unforeseen events amounting to an urgent situation. Any of these things can result in the adjudicator cutting the tenant a break and perhaps delaying eviction or perhaps giving the tenant an extended payment plan to pay the arrears over time.
When it comes to payment plans the adjudicator will hear the tenant's proposal and then ask the landlord what it thinks about the proposal. Responding with "no" or "I want all the money now" is not helpful and the adjudicator is likely to stop taking the landlord seriously in relation to the proposed payment plan.
What is helpful for the adjudicator to hear from the landlord is how the proposed payment plan is prejudicial to the landlord. Speak to how the rent arrears are beyond the tenant's ability to pay back. Speak to how the rent is unaffordable in the tenant's circumstances and denying eviction is simply going to delay the inevitable ultimate eviction. Speak to how a payment plan creates another layer of process and delay if the payment plan is not followed by the tenant. The payment plan could end up being just another delay (tactic) and even more rent arrears will accrue when the payment plan isn't complied with. It is also useful if a long period of time has passed between application and the hearing to point out whether the tenant has made any payment plan proposals prior to the hearing date or whether this is only being sprung at the hearing. The "good faith" of the payment plan proposal can be judged from the tenant's behaviour leading up to the hearing.
If the landlord can demonstrate that the payment plan is unlikely to be followed, that the rent is unaffordable based on the tenant's income, that multiple chances have already been given, or that other circumstances make it highly unlikely that the tenancy can be successfully preserved then the adjudicator is unlikely to grant the payment plan. Instead, the adjudicator will be more likely to simply issue a standard order terminating the tenancy in 11 days unless the tenant pays off all of the rent arrears plus the costs.
7th STEP
A good defence is a strong offense. As a Landlord you need to be aware that the Residential Tenancies Act allows a tenant to defend an application for non-payment of rent by raising any kind of issue that the tenant could have filed an application for. The law (section 82 RTA) effectively allows a tenant to raise such claims by ambush and without warning. The law does not require the tenant to file an application or even fill one out. The law simply allows the tenant to raise any issue in defence to the non-payment of rent application and to further claim an abatement of rent and other orders.
As you can imagine, the point of raising claims under section 82 is to reduce the amount of rent arrears and to put the tenant in a position of being able to void the eviction for non-payment of rent. Most of the time when you see section 82 claims the tenant is not well prepared and isn't in a position to actually prove anything. Typically the tenant lobs the threat of a claim for maintenance, repairs, harassment, illegal entry, etc., with the hope that this some reduces the amount of the arrears. For the most part this doesn't work.
Sometimes, however, a tenant comes to a hearing prepared with large binders full of documents, photos, videos, etc. etc., and wants to proceed with the tenant application at the same time as the Landlord's application. This is a difficult problem because the law allows the tenant to do this, but of course it is an ambush of the landlord. In these circumstances it may be best to seek an adjournment to prepare to defend the tenant's section 82 claims. Of course, the delay caused by the adjournment may be exactly what the tenant was hoping for. The delay might allow the tenant time to move, or time to find the money to pay the arrears, or perhaps even find a roommate to be able to afford the ongoing rent.
Whether you should adjourn or not in the face of a sizeable section 82 claim is a judgment call. What I do recommend, if you think a section 82 claim is at all possible, that you bring with you the entirety of the tenant file and that you have completed an inspection of the rental unit within a reasonable period of time prior to the hearing to determine the condition of the premises. An occasional inquiry with the tenant about any repairs or issues---by email is also useful as the tenant's claim is greatly affected by any notice of the problem given to the landlord. If the tenant fails to give notice of any repair issues then the monetary award for this problem not being fixed is likely to be very little.
8th STEP--THE ORDER
It is very unlikely that the LTB will give you a decision on the day of the hearing. If you are going to get a Standard Order the adjudicator may inform you of that. Otherwise, if the adjudicator is going to exercise discretion or is thinking about doing so the adjudicator will typically reserve the decision. This means that the adjudicator will decide the case in writing and the decision/Order will be sent to you in the mail.
In the days following the hearing you can check on the LTB website as to the status of the application. Using just the file number and postal code you can see whether a decision has been rendered or not (though you can't read the decision on-line). You can then know to look for the decision to arrive in the mail or if you are nearby you can drop by the LTB to get a copy of the decision. Often enough, if your curiosity is too strong and you don't leave nearby to a Board office you can call the 1-800 number for the LTB and the customer service rep will tell you the gist of the decision.
9th STEP ENFORCEMENT
Enforcement of LTB Orders is done through your local Courthouse. The LTB and the Residential Tenancies Act has no enforcement mechanism. Hence, to enforce eviction you would use the Sheriff through the Courthouse or for collection of money you would use the enforcement provisions through the Small Claims Court (garnishment, Writ of Seizure and Sale, Debtor;s examination, etc.). To use the Small Claims Court procedures to collect money owing you will need to familiarize yourself with the Rules of the Small Claims Court.
Michael K. E. Thiele
www.ottawalawyers.com
Thank you for posting this great resource and sharing your insight.
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