Friday, 20 March 2020

NEW LAW: Bill 184 and the changes that are Coming!


You may have heard that there are amendments coming to the Residential Tenancies Act and that these amendments are making significant changes to important parts of the RTA.  The bill that does this is Bill 184 and it passed first reading on March 12, 2020.  The proposed legislation can be reviewed (not reproduced below) though the final form remains unknown.  

What I personally like is the explanation of the intended changes and a bit of discussion of the reasons for the change even if just implied from the language.  Below is schedule 4 from Bill 184.  It provides an outline of the changes that are coming (presuming the Bill becomes law). 

Many will recognize that the jurisdiction of the LTB is about to be expanded to allow for post tenancy and post "vacating" applications to be brought to the LTB by landlords against former tenants.  This is, in my view, an unfortunate change for many reasons.  Firstly, the nature of post tenancy claims by landlords tend to involve complicated questions of damage, repair of damage, betterment, replacement value and lease breach losses.  The work required to prove these claims is not insignificant.  Further, these kinds of claims are typically for significant sums of money (often approaching the jurisdictional cap) and as such the impact of the case, I think, deserves more than the rather relaxed evidence rules of the LTB and the relaxed procedural rules of the LTB.  In my view, the Small Claims Court rules and the reliance on formal rules of evidence (comparatively) provide greater protection to tenants against inflated claims.  On the landlord side of the equation, with the work required to prove the claim, at least at the Small Claims Court you could recover legal costs for the effort involved.  Nothing here seems to contemplate legal costs being awarded to the winner at the LTB.

Anyway, lots of changes are coming, and it is interesting (I think) to see legislative changes that appear to be focused on overturning Appellate authority.  I wonder if the pre-Turnbull's Grove clarity is finally returning?




SCHEDULE 4 

RESIDENTIAL TENANCIES ACT, 2006 

The Schedule amends the Residential Tenancies Act, 2006. The amendments include the following:

New exemption from Act 

Under new section 5.2 of the Act, a rental unit that is a site on which a land lease home is located is exempt from the Act if the unit is owned by an employer and is provided to an employee in connection with their employment.

Compensation for tenant 

Under new section 49.1, a landlord who gives a notice of termination of the tenancy to a tenant on behalf of a purchaser under section 49 is required to compensate the tenant in an amount equal to one month’s rent or to offer the tenant another rental unit acceptable to the tenant.

Currently, under section 52 and subsections 54 (1) and (2), a landlord is required to compensate a tenant if the landlord gives a notice of termination of the tenancy for the purposes of demolition or conversion to non-residential use or for the purpose of repairs or renovations, provided that the residential complex in which the rental unit is located contains at least five residential units. Subsections 52 (2) and 54 (3) and (4) are added to also impose an obligation to compensate the tenant if the residential complex contains fewer than five residential units.

Currently, under section 57, the Board may make various orders if, on application by a former tenant, the Board determines that a landlord has given a notice of termination in bad faith.  The section is amended to permit the Board to make an order requiring the landlord to pay a specified sum to the former tenant as general compensation in an amount not exceeding the equivalent of 12 months of the last rent charged to the former tenant.

Applications for order terminating tenancy under s. 69

New section 71.1 sets out requirements a landlord must comply with when filing an application under section 69 for an order terminating a tenancy and evicting a tenant that is based on a notice of termination given under certain sections. Under new subsection 71.1 (1), the affidavit required in respect of an application based on a notice under  section 48 (Notice, landlord personally, etc., requires unit) or section 49 (Notice, purchaser personally requires unit) must be filed at the same time as the application. Under new subsection 71.1 (3), the landlord must indicate in the application whether or not the landlord has, within two years prior to filing the application, given any other notice of termination under section 48, 49 or 50 (Notice, demolition, conversion or repairs) and must, with respect to each notice, set out the specified information in the application.

Under new subsections 72 (3) and 73 (2), the Landlord and Tenant Board, in determining the good faith of the landlord or the purchaser in an application under section 69 that is based on a notice of termination given under section 48, 49 or 50, may consider any evidence the Board considers relevant that relates to the landlord’s or purchaser’s previous use of notices of termination under those sections.

Tenant issues in s. 69 application for non-payment of rent

Currently, under subsection 82 (1), at a hearing of an application under section 69 that is based on a notice of termination under section 59 (non-payment of rent), the tenant may raise any issue that could be the subject of an application made by the tenant under the Act. Under section 82, as re-enacted, a tenant may do so if the tenant complies with specified requirements (including giving of advance written notice of intent to raise the issue) or provides an explanation satisfactory to the Board explaining why the requirements could not be met.

Applications by landlord for compensation 

Currently, under sections 87 and 89, an application for arrears of rent, for compensation for the use and occupation of a rental unit by an overholding tenant or for compensation for damage to the rental unit may be made only if the tenant is in possession of the unit. Sections 87 and 89 are amended to provide that such applications may be made while the tenant is in possession of the unit or no later than one year after the tenant or former tenant ceased to be in possession of the unit.

Under new section 88.1, a landlord may make an application for compensation for interference with the reasonable enjoyment of the residential complex or with another lawful right, privilege or interest of the landlord and, under new section 88.2, a landlord may make an application for compensation for failure to pay utility costs that a tenant or former tenant was required to pay. Such applications may be made while the tenant is in possession of the unit or no later than one year after the tenant or former tenant ceased to be in possession of the unit.

Section 189.0.1 is added to provide that if, at the time a landlord makes any of the applications described above, the tenant or former tenant is no longer in possession, the landlord must give the tenant or former tenant a copy of the application and a copy of any notice of hearing issued by the Board and must, in specified circumstances, file with the Board a certificate of service on the tenant or former tenant.

Rent increase deemed not void

New section 135.1 deals with increases in rent that would otherwise be void as a result of a landlord’s failure to give at least 90 days’ written notice of the landlord’s intention to increase the rent. Under subsections 135.1 (1) and (2), the increase in rent is deemed not to be void if the tenant has paid the increased rent in respect of each rental period for at least 12 consecutive months, provided the tenant has not, within one year after the date the increase is first charged, made an application in which the validity of the rent increase is in issue.

Mobile home parks and land lease communities

 Under new section 165.1, if a landlord of a mobile home park or land lease community charges a tenant under the terms of a written agreement for any prescribed services and facilities, and if the prescribed circumstances apply, the prescribed services and facilities shall not be considered services and facilities that fall within the definition of “rent” that applies for the purposes of the Act. Current section 167 sets out a special rule for above guideline rent increases in mobile home parks and land lease communities relating to capital expenditures for infrastructure work required by a government. Section 167 is amended to provide that the special rule applies regardless of whether the infrastructure work is required by a government. Section 167 is also amended to provide that any determination by the Board of how the increase may be taken must be done in accordance with the prescribed rules.

Mediation or other dispute resolution process

Currently, under subsection 194 (1), the Board may attempt to mediate a settlement of any matter that is the subject of an application or agreed upon by the parties if the parties consent to the mediation. Subsection 194 (1), as re-enacted, provides that the Board may attempt to settle any such matter through mediation or another dispute resolution process if the parties consent to participating in the mediation or other dispute resolution process.

Agreement to settle matter

Subsection 206 (3) is re-enacted and subsection 206 (3.1) is added to allow the Board to include in an order under subsection 206 (1) a provision allowing a landlord to make an application under section 78 if the tenant fails to comply with one or more of the terms specified in the order.

Production order

Under new section 231.1, a provincial judge or a justice of the peace may, if the specified requirements are met, issue a production order to a person, other than a person under investigation for an offence, requiring the person to produce documents, copies of documents or data or prepare a document based on documents or data already in existence and produce it.

Penalties

The maximum fines of $25,000 (in the case of a person other than a corporation) and $100,000 (in the case of a corporation) set out in subsections 238 (1) and (2) are increased to $50,000 and $250,000, respectively.

Transitional provisions and regulation-making powers

Several amendments are made to the regulation-making powers set out in sections 241 and 241.1. In addition to various transitional provisions added to the Act, section 241.3 is added to give the Lieutenant Governor in Council the power to make 

Tuesday, 17 March 2020

UNABLE TO PAY RENT DUE TO COVID 19 /CORONA VIRUS



What happens if, due to Corona virus, I can't pay my rent?

There are numerous comments posted to this blog all asking the same or similar question.  What should a tenant do if they can't afford the rent, or fear not being able to afford the rent because of COVID 19?  The "because" arises from a concern that wages/paycheques have stopped or the ability to earn has stopped because people are not going to work.

At this stage most of the questions are anticipating problems and are reflective of "worry" and "anxiety" in being able to pay next month's rent that will be due April 1, 2020.   For most tenants it will be a very unusual circumstance to be unable to afford the rent and other debts as they become due.  The hard reality for many people will be that they don't have the income or savings to meet all of their expenses; including rent.  What does this mean for rental housing?  Is there a prioritization of expenses and how do you decide what to pay and what to hold back on?  I won't give advice on prioritization but simply set out the implications of non-payment of rent (below) and perhaps that will assist you in deciding what expenses will have priority.

The first thing to realize is that the inability to pay rent, being behind in rent, or needing time to pay rent, does not result in any kind of immediate eviction.  Landlords are PROHIBITED from taking unilateral action to evict a tenant for non-payment of rent.  It is simply illegal to force a tenant to leave because rent is late.  In fact, if a landlord threatens to take self help actions to forcibly remove a tenant the landlord is subject to prosecution.

Fully aside from COVID 19, the regular rules (pre-COVID 19), still apply.   These rules favour the maintaining of tenancies and these rules give lots of chances to maintain a tenancy even when rent is not immediately paid.  A tenant is protected, if they find themselves in a tough spot and are unable to pay the rent.  A  landlord must still follow the rules set out in the Residential Tenancies Act, regardless of the reason for non-payment.  The rules (summarized) and the minimum timeline are as follows [which presumes that landlord taking legal action as soon as the law allows]:

  1. Once the rent is late (day after rent is due) the landlord can choose to start the legal process.

  2. The landlord will prepare a form N4 which is a Notice of Termination for Non-Payment of Rent.

  3. The N4 Form, for tenancies where rent is paid for a month at a time (as opposed to weekly and daily), is required to give the tenant 14 days to pay.  The 14 days is indicated in the N4 Form (middle box in the centre of first page) as a termination date.  The landlord is not allowed to take any action until the termination date has passed.  This is effectively an automatic 2 week grace period.

  4. If the tenant pays the rent arrears before the termination date then the N4 is void (and the landlord can take no further action at all).  It is illegal for the landlord to charge a penalty, interest, or any other kind of charge for being late with the rent.

  5. If the Termination date comes and goes and the tenant has not paid the rent (and hence has not voided the N4), then the landlord is permitted to file an application to the Ontario Landlord and Tenant Board.  The landlord uses a Form L1 to do so.  Once the application is filed the Landlord and Tenant Board will schedule a hearing and mail the tenant a Notice of Hearing.  The typical wait time between filing the L1 and a hearing date is several weeks.

  6. Any time before the hearing date, if the tenant pays the rent plus the application fee (maximum $190), the eviction proceeding is voided and cancelled.  The tenancy then continues.

  7. If the hearing proceeds, the tenant is given an opportunity to dispute the amount of the rent arrears.  Presuming the arrears are accurate the tenant is given an opportunity to present a payment plan or to seek other relief from eviction based on whatever relevant circumstances there are.  This is called section 83 relief (it is a fairness/justice power).   Grounds for relief include illness, loss of job, accident, tragedy, bad luck and basic fairness and empathy.  Relief is likely to be granted if the tenant can demonstrate a plan that has the tenant paying ongoing rent plus making payment towards arrears within a reasonable period of time.

  8. If the tenant is unable to convince the adjudicator to give more time (or a payment plan), then automatically the LTB will order the tenancy terminated within 11 days of the date of the Order--subject to a pay and stay.  Even on a refusal of discretion the LTB is still required by law to allow the tenant a further 11 days to pay the amounts owing and thereby void any eviction proceeding.

  9. The Order will allow the tenant to void the process and stay (i..e continue the tenancy) if the rent plus the application fee (max $190) is paid before the Order is enforceable (i.e. 11 days from the date of the Order--this is called a "standard order").

  10. If the tenant does not pay the amount Ordered by the date specified in the Order then the Landlord can take the Order to the Sheriff and ask the Sheriff to enforce eviction.

  11. No one in Ontario, other than the Sheriff (Court Enforcement Officer), is entitled to enforce evictions.  This includes the police (i.e. the police do not enforce eviction orders).

  12. The Sheriff will (typically) give a tenant notice of an intended eviction date.  In Eastern Ontario a tenant gets 7 days notice of an intended eviction by the Sheriff.  This means that the Sheriff attends at the rental unit, posts a Notice to Vacate form and comes back 7 days later to enforce the eviction.  The exact date and time that the sheriff is coming back is specified in the Notice to Vacate.

  13. Note that in other parts of Ontario the Sheriff will sometimes serve a Notice to Vacate by mail as opposed to posting it on the door.

  14. Once during a tenancy, a tenant is permitted to pay the rent owing plus the costs prior to the Sheriff showing up.  If this is done then the eviction Order can be voided.  Note that the Landlord and Tenant Board has a special process for this (it is called a Motion to Void) and the steps of that process should be followed by reviewing the LTB website.

The above are the standard steps that are followed in Ontario.  These steps applied before COVID 19 and they apply now after the Corona Virus.

Is there anything else that is different?

The processes set out above in paragraphs 1 to 14 still must be followed.  The current reality is that certain steps in the paragraphs listed are simply impossible to invoke at this time.  This impossibility benefits tenants who find themselves unable to pay the rent (currently) because it will be impossible to evict tenants for non-payment of rent.  Eviction will only again become possible when the processes go back to normal and hearings are possible.

What has become impossible is that landlords can not easily apply to the Landlord and Tenant Board.  COVID 19 service reductions have made it impossible to file applications at the LTB (no counter service).  Currently, online applications continue to be accepted but there are NO hearings being scheduled.

Here is the announcement on the LTB website confirming that hearing processes and counter services are suspended (current as of March 18, 2020):


Important Notice

COVID-19 Policy – Postponing Hearings
Effective today, Tribunals Ontario is implementing a new policy to postpone in-person hearings and reschedule to a later date. Where feasible, alternative hearing options such as written and telephone hearings will be considered to minimize disruption to hearings across the organization. In addition, all front-line counter services will be closed as of March 16 until further notice.
For more information, please see the news release.


Without hearings being scheduled it is impossible for there to be an eviction Order.  The pay and stay provisions and timing of the deadlines will not occur until there is actually a hearing.  At the moment, hearings at the Ontario Landlord and Tenant Board are cancelled until further notice.  A tenant will only face a risk once the COVID 19 / Coronavirus restrictions are lifted and the LTB begins scheduling hearings again.

Tenants who are already part way through the process are also safe from eviction at this time.  If there already is an eviction Order and the Order is enforceable it is clear now that the Sheriff is not enforcing evictions.  The Sheriff has stopped evictions and the government of Ontario has instructed the Sheriff not to enforce eviction Orders for the time being.  Until the Sheriff goes back to work and the COVID 19 restrictions are lifted there is no risk of eviction by the Sheriff.  If, during this time, a tenant can cobble together the rent arrears and it would be the first time during the tenancy, the tenant could pay the rent and void the eviction altogether (even after the COVID 19 restrictions are lifted).

When things go back to normal

I expect that once the LTB starts hearings again and non-payment of rent applications are again heard, that the hardship caused by COVID 19 will be a real factor under section 83 of the RTA.  This is the discretion section that will certainly take into account the extraordinary circumstances caused by this emergency.   While the outright cancellation of rent arrears is doubtful, I do imagine that extended payment plans and delayed enforcement will be a common feature of future Orders so long as the tenant can demonstrate a reasonable plan to get back on track.

Is there any help for tenants or landlords?

Indeed there is discussion and broad statements from government that support and assistance is coming.  The Federal Government and Provincial Government have made announcements of support programs.  Unfortunately, the details are unclear and with so much changing, so quickly, it will simply be a matter of monitoring the government websites for details of how to get support.  As far as I have seen there is nothing immediately available.

Good luck and good health to everyone during this emergency situation.  

Michael K. E. Thiele
www.ottawalawyers.com


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