Monday, 24 November 2014

Getting sick from Mould in Apartments: What can be done?

Mould in an apartment can be an incredibly complex problem for a tenant to deal with.  A great number of tenants call me to say that they are suffering serious health problems from mould and that they can not get their landlord to fix the problem.  So what can be done? The presence of mold in a
rental unit is a relatively easy problem for a tenant to solve.  Getting compensated for injuries (health problems) that are caused by the presence and exposure to mould is much more difficult.  This article will focus on what a tenant can do to get mould problems fixed and deal only peripherally with the issues involved in proving a claim for injuries sustained due to the exposure to mould.  If I get enough questions about asserting mould claims for health problems I will tackle another article on that issue then.

When trying to fix a mould problem it is useful to understand the circumstances under which mould will typically grow.  In order for mould growth to thrive it needs moisture and high humidity, a medium to grow on (it likes porous materials), food,  heat and optimal temperatures (warm), and typically stagnant air.  Though mould will grow even in cool temperatures it is my experience that the majority of mould problems that trouble tenants arise in circumstances where warmth is a contributing factor to growth.   If you combine all of these factors it is quite likely that mould will not only begin to grow but flourish.  What kind of mould (from relatively harmless to toxic) will grow really depends on a great number of factors and specifically what kind of spores are in the environment.  However, in the presence of these factors you may reasonably expect that mould will grow as mould spores are all around us both inside and outdoors.  If the "right" conditions are created then mold will grow as the spores are around us.

The ability of a tenant to get rid of mould that is growing in a rental unit is tied to the ability to disrupt the moisture, growth medium, temperature and stagnant air that is encouraging the mold growth.  If these factors are disrupted it is entirely likely that mould growth will stop.  Unfortunately this does not mean that all of the mold that has grown will disappear from items that were covered in mould.  Mould likes to grow on pourous materials and these materials---including clothing, couches, beds, flooring, are sometimes impossible to clean of the mould that has already grown on them.  Often enough, these items simply have to be disposed of as it is impossible to clean them or too costly to do so.

Mould does not grow well in locations where there is a lot of air movement, where the relative humidity is low (under 50%), where the temperatures are cooler and nearer to regular room temperature and where the things that it would grow on are cleaned regularly. Changing one or all of these factors can have a dramatic impact on stopping mould growth.

WITHIN THE CONTROL OF THE TENANT

Some of the things that encourage mould growth are typically within the control of a tenant.  Where a thermostat is adjustable the temperature can be kept in a range that does not encourage mould to grow.  Where the environment within a rental unit is conducive to mould growth because of the tenant's lifestyle choices--such as lots of hot showers, not wiping down walls and floors, cooking a lot things that puts humidity in the air then the tenant needs to try to take steps to deal with those choices in such a way as to disrupt the mould friendly environment.  What can a tenant do?  Suggestions that I have seen in the past include: appropriately opening windows, turning down thermostats, wiping and drying walls and wiping places where mould grows with vinegar water, installing dehumidifiers, ceasing activities that encourage mould growth and using fans to circulate the air.  Where mould is growing in cupboards or closets or along the back walls of storage areas the primary culprit seems to be the lack of air circulation.  Getting items away from walls, opening the doors or even installing vents can help move air around thereby impeding mould growth.

OUTSIDE OF THE CONTROL OF THE TENANT

What can a tenant do if the things within the control of the tenant are "normal" and the mould still grows?  In these circumstances the responsibility for dealing with mould growth needs to be shifted to the landlord.  One would hope that a simple phone call or filling out a work order would result in the landlord attending the unit, figuring out the source of the problem, and addressing it.  Unfortunately, it is not always so simple.



Sometimes mould grows because the factors that encourage its growth (moisture, food, heat, stagnant air) are present because of a breakdown of a building system.  What does this mean?  Examples would include water infiltration through foundation walls due to a crack occurring, or water entering the structure through a failing/leaking roof, blocked eavestroughs, leaky pipes and plumbing.  Sometimes, the problem lies in a breakdown of the HVAC system and parts of the system are broken.  The point is that the occurrence of mould can be the result of a breakdown (rotting wood in basements, exposure to the ground) in the building structure or in the mechanical systems in the building.  Unfortunately, these breakdowns can be incredibly expensive to fix and therefore the landlord may resist doing the necessary repair.

If a foundation has cracked and it is allowing water to enter the building the landlord may be faced with excavating the foundation to effect a repair or perhaps undoing a finished basement to get at the walls.  Roofing can be expensive to replace or repair and sometimes the trick lies in finding the source of leaks.  As anyone who has watched Holmes on Homes knows, and you have likely seen those scenarios where the source of the problem is an improperly constructed home in the first place, sometime the only answer is an extensive re-engineering and rebuilding of the premises.

Repairing or fixing the things that cause mould growth can be so expensive that a landlord would prefer for the tenant to simply live with it.  The solution that a landlord may propose is that the tenant wipe the walls more frequently and open a window notwithstanding that the mould continues to grow and the tenants begin to feel like the mould is affecting their health.  How do you force a landlord to deal with mould when they really don't want to do it?

FORCING A LANDLORD TO DEAL WITH A MOULD PROBLEM

The first step that I always recommend to tenants is to speak with the landlord.  If that does not work, then a tenant should start writing letters to the landlord setting out the complaint, explain exactly what the problem is, and attach pictures if possible.  These complaints should be delivered in writing via email or fax or in such a way that delivery can be proven.

Once the complaints have been made, and presumably no response has been received, a tenant should call the Property Standards Department of their city, town, or township and ask them to come to the property to inspect the unit.   The Property Standards Officer will typically state that they do not have any specific mandate with respect to mould from a health perspective.  While that may or may not be true, the Property Standards Officer does have a mandate to ensure that a building complies with the Property Standards By-law of the city/town/township.  Note that for unorganized areas the RTA has a regulation that imposes a property standards type of standard for rental units (O.Reg 517/06).

Every Property Standards By-law that I have ever seen provides sufficient tools for a Property Standards Officer to query and require the rectification of problems that give rise to the growth of mould.  A Property Standards Officer can make orders with respect to water infiltration and moisture presence in a rental unit (where that moisture is not the result of tenant lifestyle).  A Property Standards Officer can deal with ventilation, cleaning of walls, repair of roofs, foundations, etc..  The point is that the things which encourage the growth of mould are things that fall within the purview of a properly constructed and maintained property and as such the tools to deal with these issues are available to the Property Standards Officer.

You may expect that a Property Standards Officer, when responding to an issue about mould will conduct an inspection of the premises looking for these kinds of things:  roof failure, penetration of roof, roof drainage system (pooling etc.), gutters (eavestroughs), downspouts being blocked, inspect vents, flashing, skylights, chimneys and anything else penetrating the roof.  The Officer will also look at cladding, flashing and trim on the walls of the building, exterior doors, windows, decks, stoops, steps, stairs, porches, railings, eaves, soffits and fascia to see if any of these things are failing or damaged and allowing water infiltration.  Of further interest will be the grading of the land around the property and any features that are directing or keeping water close to the building.

With respect to the basement and foundation that Officer will inspect all visible portions for damage (cracks) and signs of water infiltration and in crawl spaces the officer will look for adequate ventilation.  Ventilation is of general concern as well and the officer may look at the HVAC system including the air handler, circulating fan, air filters and any duct work in the premises.

Plumbing is also an obvious source of moisture so the officer will likely inspect any visible water lines, supply lines, waste lines and drains, the hot water source and the fixtures including the toilets, faucets, showers, and tubs.  There are other parts of the building (attic) that may be inspected and often it is simply the officers experience and the nature of the problem that will guide and direct the officer to the likely problems.  Where no problem is apparent, but mould exists, the officer may consider ordering a landlord to open walls to inspect for problems if the officer is satisfied that all other reasonable steps have been taken to control the mould.

It has been my experience that most Property Standards Officers, especially the experienced ones, tend to be practical about things.  They are solution oriented and before making orders requiring destructive testing or expensive renovations they will inquire whether the more traditional things have been tried---i.e., ventilation, opening windows, dehumidifiers, adjusting temperature.  Especially in rental units where there hasn't been a history of mould problems a Property Standards Officer is going to be cautious about making "expensive" orders unless of course the reason for mold growth is obvious and apparent (i.e. something broken and needing repair).

GETTING AN ORDER TO FIX

A tenant is entitled to file an application to the Ontario Landlord and Tenant Board requiring a landlord to fix or repair a rental unit.  Those repairs or maintenance are required to bring the rental unit up to the standard where the unit is fit for habitation.  The standard is reflected in section 20 of the RTA which provides as follows:


20. LANDLORDS RESPONSIBILITY TO REPAIR---(1) A landlord is responsible for providing and maintaining a residential complex, including the rental units in it, in a good state of repair and fit for habitation and for complying with health, safety, housing and maintenance standards.

(2)  SAME---Subsection (1) applies even if the tenant was aware of a state of non-repair or a contravention of a standard before entering in the tenancy agreement.


This section of the RTA imposes the legal duty on the landlord which is the basis for an application to the Landlord and Tenant Board under section 29 & 30 RTA.



There are certain assumptions that I assume will be adopted by any adjudicator hearing a case.  That assumption is that the presence of significant mould (readily visible) in a rental unit, on the walls, flooring, ceilings, etc. is contrary to the requirement that a rental unit be "fit for habitation".   It is generally accepted that a rental unit in Ontario is not fit for habitation if it has uncontrolled and significant mould growth within the unit.

Proving the presence of mould is also fairly easily done by taking photographs of the walls, floors, ceilings, or wherever the mould is located.  Some people will argue that black marks on the walls, floors, ceilings are not proof of the presence of mould as one can only know that it is mould if it is tested by a certified lab.  While that may be technically true, I have never known the argument to carry much weight when a tenant testifies that the mould has recently appeared, can be wiped off with a rag, and that it grows back again seemingly out of thin air.  The argument is that whether it is mould or not, anything that grows on a wall and re-appears after being cleaned, is something that is not "normal" and therefore is inconsistent with a rental unit that is "fit for habitation".

The value of having approached the Property Standards Department about mould is that the reports of a Property Standards Officer, along with any Orders, are extremely useful as evidence of the condition of a rental unit.  The "fit for habitation" standard certainly includes compliance with the requirements of the Property Standards By-Law and therefore, any Order directing that repairs be made in relation to mould will be evidence of the Landlord's breach of its duty to maintain a rental unit.

While getting a Property Standards Order is very useful it is still possible to proceed without such an Order or without even trying to get Property Standards involved.    However, without this very useful evidence from Property Standards the tenant will have a higher burden in proving that the rental unit is not fit for habitation and that certain work needs to be done to fix the unit.   This burden may be discharged by hiring experts, contractors, mould remediators, to prepare reports describing what is observed, what the problems are, and what needs to be done to fix the problem.  These reports will need to be backed up with oral testimony at a hearing.  Further, as the old saying goes, a picture is worth a thousand words and no hearing would be complete without high resolution photographs and perhaps video of the problems---including the mould and repair issues that are allowing the mould to grow (i.e. water infiltration, etc.).

An important point to note is that getting the Board to order the fixing of issues that are allowing mould to grow does not require the tenant to prove that the mould is causing health problems.  The mere presence of significant mould in the unit is unacceptable and in my experience the Board will Order it to be removed, cleaned, and the issue that is allowing the mould to grow to be repaired.

In my experience, the reason that tenants have difficulty winning mould cases is that not enough thought is given to discharging the burden of proof.  Many tenants are so disgusted by the presence of mould, and having a picture in hand, that they think showing the picture of mould is enough to win their case.  They think that by showing a picture of mould on a wall and saying that this has been there for months that this will be enough to win an Order requiring a Landlord to fix/remove the mould and for an abatement of rent.  The fact is, this is not sufficient to discharge the burden.

WHAT A TENANT SHOULD DEMONSTRATE

A tenant must demonstrate that they tried to deal with the mould.  They must demonstrate that they tried to adjust their lifestyle (reasonably) to address mould growth.  It is reasonable to expect that a tenant would try to wash walls, open windows, install a dehumidifier and operate a fan.  Be ready to prove that these things were tried.  Then, be ready to prove that the landlord was given notice of the problem, repeatedly, and that the landlord had specific knowledge of what the complaints were and the impact of the presence of this mould on your use and enjoyment of the property.  Then, be prepared to prove to the extent possible the reason for why the mould is in the rental unit.  While this should not be your obligation, it is indeed necessary as the Landlord will likely try blame you for the presence of the mould if no explanation for the presence is provided----so, show the broken pipe, hole in the wall, curling shingles, hole in roof.  If you have lost property as a result of the mould be prepared to show that property in pictures, provide the cost of acquisition (receipts) and estimates for repair or replacement.  Depending on what the item is, it may be important to get an appraisal from a recognized appraiser of the value of the item at the time of loss.

If you do these things--which is a lot more than just showing a picture of mould, you should have success at the Landlord and Tenant Board in getting an order fixing your mould problem.


Michael K. E. Thiele
www.ottawalawyers.com 






     




Thursday, 30 October 2014

Bedbugs: Can the Landlord Make a Tenant Pay the Cost of Treatment

It is not infrequent that I get calls from tenants and landlords alike asking about the costs that go with dealing with bedbugs.  Landlords, most often, are concerned about the costs of seemingly never-ending treatment by professional pest control contractors.  Landlords want to pass on the costs of treatment to the tenants or sometimes more specifically to tenants they have identified through whatever means as the source of the infestations.

Tenants of course, are extremely unhappy about the costs that they bear as a result of infestations.  It takes a lot of time and hassle to get ready for a bedbug treatment.  At a minimum, a tenant will have to take all washable clothing, jackets, fabrics, stuffed toys, and wash them and dry at high temperatures to kill any bugs.  Further, tenants will have to bag their items, move the furniture in their home and be ready to be inconvenienced for an extended period of time.  Some property might also have to be thrown out as pest treatment for some things just aren't possible.

One fact that everyone can agree upon is that dealing with bedbugs is an expensive and highly disruptive process.

So, can a landlord make a tenant pay for the costs of treatment?  The straightforward answer, in the vast majority of cases is "no".  For the most part, maintaining a rental property to a standard that is fit for habitation requires a landlord to spend the money to treat for pests.  Bedbugs, ants, cockroaches are all part of the same over all problem and are the responsibility of the landlord.  At the time of writing this article I am unaware of any Board decisions that impose the entire cost of pest control treatment on a tenant.

There are, however, some exceptions to the landlord being solely responsible for treatment costs.  The presence of bedbugs, specifically, is something that is very difficult to source.  How did the bedbugs get in the unit?  The presence of bedbugs is not usually attributable to the condition of the building.  Nor is their presence necessarily attributable to whether a tenant is clean and maintains their unit.  Bedbugs can infest a perfectly constructed and new building and further they can infest a perfectly clean and meticulously maintained apartment.  The fact is that bedbugs can hitch a ride into any kind of building--in furniture, clothing, luggage, and even in new furniture that comes into contact with old furniture in moving trucks.

The point about bedbug infestations is that it is incredibly difficult to determine where exactly the bugs came from.  There are, of course, exceptions.  Some known risky sources for bedbugs is used furniture, stereo equipment and even used books.  In buildings where tenants source furnishings for their units from "free" sources or used places there tends to be a higher incidence of bedbug infestation.  Where it becomes increasingly clear that a particular tenant is introducing bedbugs into a unit or building by bringing "risky" furnishings into the building it may indeed be possible to bring eviction proceedings against the tenant for doing so.  It is possible to assert that the costs associated with bringing infested furnishings into the apartment complex--contrary to an agreement not to do so--can be the basis for claiming the costs of bedbug treatment.  In my experience, claims founded on such allegations tend to work after numerous treatments and observations of the tenant introducing bedbug infested furnishings into their unit.

Another avenue of possible financial recovery for bedbug treatment against a tenant is when the tenant fails to adequately prepare for treatment.  The ability of bedbugs to survive treatment is quite high.  For treatment to have the best possible chance of success, a tenant is required to prepare their unit for treatment.  Pest control companies normally have a unit preparation sheet that sets out a whole list of things that need to be done to make a unit ready for treatment.  That sheet needs to be delivered to the tenant well in advance of the intended treatment and it needs to be stressed to the tenant that the instructions need to be complied with.  While many landlords don't do it, I strongly urge landlords that I represent to not only deliver the instructions sheet but to also contact tenants to ask if they need any help in complying with the instructions.  It is in the interest of both the landlord and the tenant that a unit be properly prepared for treatment.

If a tenant fails to prepare a unit properly for treatment the landlord will normally receive a report from the pest control company that the unit was not sprayed as it was not properly prepared or that the unit was treated but that the failure to prepare it properly likely will mean that treatment will not be effective.  The end result is that the cost of treatment will increase as the pest control company will  be invoicing the landlord for multiple treatments or wasted attendances due to incomplete preparation of the unit for treatment.  These costs can indeed be used in a Notice of Termination and charged back to a tenant if there is no good excuse for the failure to prepare the unit for treatment.  In this respect, having documented not only the delivery of the preparation sheet but also the inquiry to the tenant about them needing "help" to prepare is useful evidence.

In summary, in the vast majority of situations, the cost of treating for bedbugs is the sole responsibility of the landlord.  Bedbugs are a pest, like other pests, that simply are a reality of modern living that the landlord needs to anticipate as part of its maintenance obligation.  The same is true with respect to the impact of bedbugs on tenants living and their property.  For the most part, so long as a landlord follows the advice of a licenced pest control company and that advice is comprehensive and sound, a landlord will not be liable to a tenant for the inconvenience associated with a bedbug infestation.

Michael K. E. Thiele
www.ottawalawyers.com


Wednesday, 29 October 2014

Dirty Apartments---A tenant's responsibility to be clean

What is the scope of a tenant's responsibility for the cleanliness of their apartment?  Often enough, it becomes clear that one person's sense of what it means to be neat and tidy is completely at odds with another person's sense.  Conflict arises not just because tenants are messy but also because landlords can have an exaggerated sense of how "clean" a tenant has to keep their unit.  I've seen many lease agreements where landlords have inserted clauses referencing "professional" cleaning, or using language like "spic and span", "like new", or requiring the unit to be returned in the "exact" condition it was received.


Sometimes, tenants are driven to their wits end by demanding landlords who serve 24 hour notices for entry and then provide "violation" notices based on the entry raising objections to things like dishes in the sink, clothing on the bedroom floor, kitty litter boxes being used, random furniture placing, etc..  Tenants are left wondering whether the landlord has the right to dictate the level of cleanliness and frankly tell the tenant how to live.  When the landlord's demands are backed up by language in a tenancy agreement (lease) that says "spic and span" or "professionally cleaned" tenants often feel that they have no choice but to meet the landlord's demands.


From the reasonable landlord's perspective the old adage of "cleanliness is next to godliness" is an apt description of how they wish their properties kept.  With cleanliness usually comes being tidy.  Being tidy and maintaining cleanliness normally demonstrates that care is being taken of the property.  Landlords care about this for several reasons.  A clean and tidy apartment is much less likely to attract pests that will require expensive pest control treatment.  Further, in clean apartments an infestation will be noticed sooner and treatment will be started sooner and therefore will be less difficult to eradicate.  A tenant who is clean and tidy will also tend to be more careful meaning there will be less wear and tear.  Carpets will last longer, and the over-all condition of appliances, walls, floors, tiles, etc., will be better over time.  And lastly, a clean and tidy apartment requires less work--and less money-- to prepare for the next tenant on unit turn over.


Most landlords and most tenants have an innate sense of what is reasonable behavior on the part of the tenant and what is reasonable for a landlord to demand.  There is no perfect definition of what is required but there is a range of what is acceptable and in that sense the best way to describe it is "you know it when you see it".   While "you know it when you see it" is a great standard when the landlord and tenant agree--what are the rules when the landlord and the tenant have very different opinions of what is reasonable?


The first point I'll make is with respect to lease clauses like "spic and span", "like new", "exact condition", "professionally cleaned" and "no wear and tear".  All of these phrases, and ones similar to them, seek to impose a standard of maintenance on a tenant.  By using these phrases in a lease, a landlord is seeking to create a contractual obligation for a tenant to maintain the premises according to the standard imposed by these phrases.  The argument that landlord's often make is that if the tenant does not wish to adhere to this standard then they shouldn't sign the lease.  After-all, no one is forcing the tenant to rent this unit.  Hence, if the landlord lives in a house where the plastic remains on the lampshades the landlord's argument is that the tenant should also live this way if the lease terms require that level of cleanliness.


There is something attractive about the argument as I do think people have a sense that in Ontario people still have a freedom to contract.  As consenting adults we should be able to enter into whatever kind of contract we wish so long as the terms are not illegal (i.e. contract for murder) or contrary to public policy (i.e. contract that discriminates on prohibited grounds).  Why shouldn't landlords be able to hold prospective tenants to a very high standard of cleanliness?


I think the answer to this question is answered in the Residential Tenancies Act (RTA).  The RTA in many respects has taken away the right for consenting adults to make their own private contracts.  The RTA and the predecessor legislation ( Tenant Protection Act and Landlord and Tenant Act), were passed by the Ontario Legislature with the implied understanding that in residential leasing, there is a significant power imbalance between landlords and tenants.  The underlying premise is that landlords have all the power and can impose unreasonable and oppressive terms on tenants if there is no regulation of the leasing arrangement between landlords and tenants.  The RTA today, seeks to take away the unbridled power of landlords in their dealings with tenants so that the ability to negotiate terms in a lease are constrained and kept within certain "reasonable" boundaries.  Effectively, in the residential leasing context, landlords and tenants are intended to have almost equal power with respect to the tenancy.  Of course, many people have wildly varying opinions on whether the RTA accomplishes this, but my point simply is that the RTA does take away the right to contract freely.


How does the RTA do this?  The answer lies in section 4 of the RTA.  It provides:  PROVISIONS CONFLICTING WITH ACT VOID---Subject to section 194, a provision in a tenancy agreement that is inconsistent with the Act or the regulations is void.


It is section 4 of the RTA that I believe is the basis for making the clauses of "spic and span", "perfect condition", "like new" and "professionally cleaned", void and of no force and effect.  What I am saying is that I believe these clauses are illegal and unenforceable under the RTA.


Of course, section 4 RTA, on its own does not make these clauses illegal.  Section 4, is simply the basis for voiding a clause/lease term if it contradicts the RTA.  So, how does the RTA provide a standard of cleanliness/tidiness that would set a standard that the lease clauses (spic and span etc.) would violate.  The answer I believe is in section 33 of the RTA.


Section 33 RTA provides as follows:  TENANT'S RESPONSIBILITY FOR CLEANLINESS---The tenant is responsible for ordinary cleanliness of the rental unit, except to the extent that the tenancy agreement requires the landlord to clean it.


The key to section 33 of the RTA are the words "ordinary cleanliness".  The responsibility of a tenant with respect to cleanliness of the rental unit is something that the RTA specifically regulates.  The standard is legislated and a matter of law.  This means that the landlord and tenant are not free to contract to a different higher standard as doing so, and using any kind of clause in a lease to impose a higher standard, would be deemed void pursuant to section 4 RTA as set out above.




Section 33 of the RTA also provides the answer to landlords who have serious concerns about the condition of an apartment that they have rented to a tenant.  What if the lease that is signed is silent on the issue of cleanliness.  Does this mean that the tenant can live how they wish?  What if there is no lease at all?  The answer is section 33 of the RTA and regardless of what the lease provides or even if there is no lease at all, a tenant is required to maintain a rental unit to a standard of ordinary cleanliness.  If the tenant fails to maintain the unit to this standard then a landlord may serve a Notice of Termination on the Tenant (usually a Form N5), and if the situation is not corrected proceed to evict the tenant.


A question you may have is what does "ordinary cleanliness" as used in section 33 of the RTA mean?  Unfortunately, there is no definition of this phrase in the RTA itself.  The words simply mean what they mean---which means that they need to be interpreted by the adjudicator.   Hence, "ordinary cleanliness" will be measured against an "objective" standard of what is commonly understood to be "ordinary cleanliness".  The standard is not fixed or measurable on a precise scale.  There is likely some flexibility in the standard depending on the context of the tenancy.  What is required as a part of ordinary cleanliness may be different depending on the nature of the rental unit, the location of the rental unit and the status of the rental unit.  The context/circumstances of the tenancy will be relevant in informing what constitutes "ordinary cleanliness".


Michael K. E. Thiele
www.ottawalawyers.com  

Thursday, 14 August 2014

Last Month's Rent Deposit: When do you use it?

Tenants in Ontario are quite familiar with usual requirement of landlords to provide a first month's rent and a Last Month's Rent deposit before moving into an apartment.  In fact, it is unusual for a landlord to provide a tenant with possession until such time as these two amounts are paid.


As discussed in other articles in this blog, a Last Month's Rent deposit is the amount of the monthly rent that is held by the landlord for the last month of the tenancy.  The legal authority to collect this deposit may be found in section 106 of the Residential Tenancies Act.  The amount of the deposit is limited to the lesser or the amount of rent for one rent period and the amount of rent for one month.  The deposit could be less than one month of rent if there is a rent discount [see section 106(2) RTA for the limit on the amount of the deposit].


So what normally happens is that a tenant signs a one year lease that sets out the first month of the lease and which sets out the last day of the last month of the lease.  For example, a lease may provide that the lease starts on June 1, 2014, and that it ends on May 31, 2015.  This is for a term of 12 months.  The question is, when does the last month rent deposit get used?  Many tenants and landlords believe that the deposit is to be used for the month of May 2015 because that is the last day of the term of the written lease.  This is not necessarily correct.


While a person may have a written lease for 12 months, the fact is that in Ontario the tenancy does not end at the expiry of the term.  Automatically, using the example above, the lease continues on a month to month basis on June 1, 2015, unless the lease has been terminated by Notice of Termination that has been properly served.  If the tenancy has not been terminated by giving 60 days notice, the Last Month's Rent deposit is kept by the landlord until the tenancy is actually terminated.  This means that a tenant, who has not terminated the tenancy, is in fact required to pay the rent for June, 2015 and onwards.


To carry through on the example, let say the tenancy continued on a month to month basis until August 2015, and on August 15, 2015, the tenant decides to terminate her tenancy.  The tenant will provide the landlord with a 60 day Notice (Form N9), which will have October 31, 2015 as the termination date (the termination date must be the last day of a term).  In this example, the Last Month's Rent deposit will be applied to the month of October 2015.


Michael K. E. Thiele
Landlord and Tenant Lawyer
Ottawa, Ontario

Tuesday, 29 July 2014

Can the landlord demand post-dated cheques or money orders?



REQUIRING POST-DATED CHEQUES IS ILLEGAL


In Ontario a landlord is not allowed to demand post-dated cheques, money orders or any type of direct debit from your bank account.  The Residential Tenancies Act is the law that governs residential landlord and tenant relationships and it has specific rules about rent and how it is charged to tenants.


With respect to post-dated cheques and other types of automatic payments this is what the law says:


s. 108.  POST-DATED CHEQUES ETC.-- Neither a landlord nor a tenancy agreement shall require a tenant or prospective tenant to,


(a) provide post-dated cheques or other negotiable instruments for payment of rent; or


(b) permit automatic debiting of the tenant's or prospective tenant's account at a financial institution, automatic charging of a credit card or any other form of automatic payment for the rent.


WHAT IS A POST-DATED CHEQUE?


A post-dated cheque, or what is meant by this in the contexted of landlord and tenant law is that a landlord will often ask a tenant to provide 12 cheques, all at once for the monthly rent.  The cheques are post-dated, meaning each cheque is dated for the day rent is due in each of the following 12 months.  The point of post-dating a cheque is that the cheque isn't "good" or capable of being cashed until the date on the cheque.  Therefore the post-dating prevents the landlord from depositing all of the cheques at once.


ARE YOU ALLOWED TO PROVIDE POST-DATED CHEQUES?


Note that the language of the Residential Tenancies Act simply provides that a landlord may not "require" a tenant to provide post-dated cheques.  Certainly, providing post-dated cheques can be a great convenience and be easier for both the landlord and the tenant.  This is especially true in tenancies where the relationship with landlord and tenant is good.  If you have provided post-dated cheques, and this is convenient to you, there is nothing wrong with having done this.   If you are a landlord and you have asked for post-dated cheques there is nothing wrong with this either.  The prohibition is against "requiring" the post-dated cheques as a condition of the tenancy.


Michael K. E. Thiele
www.ottawalawyers.com






Monday, 7 July 2014

DAMAGED APARTMENT: Suing your tenants for damages!



Making Ontario Small Claims Court work for you


Often enough I get calls from Landlords who are very upset about the condition of the rental unit that they get back from a tenant who has moved out.  Landlords describe apartments where there is writing on the walls, holes punched through drywall, appliances that have been so severely neglected that they are

Surprise!  It's hard to imagine how ...
effectively beyond repair, missing or damaged screens, damaged doors and locks, flooring, ceilings, etc. etc. etc..  Sometimes it is difficult to conceive how a rental unit can become so utterly damaged in so short a period of time.   In addition to damage or sometimes instead of it, the rental unit contains an inordinate amount of garbage that has to be collected and carted off to a dump or the unit is so utterly filthy that the work needed to clean the unit is excessive.

Repairs to property, replacing damaged things, cleaning and carting off garbage from a rental unit, after the tenant has vacated, can quickly add up to several thousands of dollars.  Can a landlord recover these repair costs?

In short, the only answer to this question is "maybe".   Whether or not these costs may be recovered requires consideration of the effort required to get the costs back and the "issues" typically associated with proving the loss.

Typically, by the time landlords are calling me about damage caused by a tenant who has already vacated, they have already tried to get the tenant to pay the damages voluntarily.  Not having success in this regard, and having determined that there is no insurance coverage for the loss (note: sometimes there is, so call your broker), the only remaining option is to commence legal proceedings and sue the tenant and any guarantor to the lease.

The legal proceeding to be contemplated is typically a claim in the Ontario Small Claims Court.  The small claims court has a financial jurisdiction of $25,000.00.  For claims that are over $25,000 but "close" it is possible to waive the excess above $25,000 to fit into the jurisdiction of the Small Claims Court.  The alternative, is to sue the tenant in the Superior Court of Justice under the Rules of Civil Procedure under either the simplified or regular Rules.

WHAT IS THE SMALL CLAIMS COURT LIKE?

The small claims court is much more formal than the Landlord and Tenant Board and there is a greater authority to deal with a broader range of claims.  Almost the entire scope of the common law, including equity, and all types of damages and remedies are available in the small claims court.  The Ontario Small Claims Court has contempt powers and in this sense is a Court of Record that can make orders and judgments that may lead to incarceration of people appearing before it.   Proceeding in the Small Claims Court is a serious matter that can give rise to serious judgments involving substantial sums of money by the measure of most people.

Whereas the Landlord and Tenant Board is fill in the blanks "Form" focused), the Small Claims Court allows for more original drafting and requires people to more actively understand and communicate the nature of their claims.  While there are still "forms" to fill out, the overall process of the Court is governed by the Small Claims Court Rules which every party before the Court should really be familiar with.  While it is possible to go through the process without detailed knowledge of the procedures I think it is a fair comment to say that a litigant who is experienced and who knows the Rules and how the Court works is more likely to have success with the claim.

While the Small Claims Court is more formal than the Landlord and Tenant Board the procedures are still intended to allow for people to represent themselves.  It is perfectly allowable for a person to explain the nature of their claim in regular English (or French) and leave the "law" out of it and instead rely on the Small Claims Court Judge to apply the law to the facts as presented to them.  When proceeding in this way a plaintiff (person making the claim) is relying on the Judge to know the particular law that applies to the claim and for the Judge to quickly conceive the nuance and different perspectives that a consideration of all of the facts call for.  This can be a very tall order for Judges who have multiple cases on their dockets, have to learn complex facts that are not being presented in a the "best" way, while still ensuring that the trial process is procedurally fair.  So, while it is entirely acceptable to rely on the Judge to do the "legal" work in a case, it is advantageous to retain a lawyer to represent you.


A lawyer, in representing you in Court, has a few different functions.  The function that is not often spoken about is that a lawyer is an "officer of the Court".  This function imposes duties on the lawyer that the Court often relies upon in deciding a case.  When a party is represented by a lawyer the Judge can focus more on the evidence being presented and worry less about whether the party is leading all of the evidence that they want to lead.  A represented party will have the benefit of their lawyer's skill in presenting the essential elements and facts of the case.  Aside from the facts, a represented party can take comfort in knowing that their lawyer will have considered the law before the trial and that the evidence presented in Court is the evidence that the Judge needs to apply the law to.  Further, where the law is fairly nuances a lawyer can make sure that the Judge understands the law to be applied to the particular facts of the case.  Another significant benefit of having a lawyer is that the lawyer will do all the talking, structure the case, decide what witnesses to call,  dross examine witnesses, challenge the position of the other side and speak for the party during the course of the hearing---in a way that is helpful to the party's case. 


The advantages of having a lawyer should be apparent from the foregoing paragraph.  As you may imagine, if the "other side" has a lawyer who is providing this kind of service to the party opposite it would be incumbent on the other side to get a lawyer to balance out the advantage of being represented.  That being said, no one is required to be represented by counsel in a Small Claims Court case and you may certainly defend yourself even if the other side has a lawyer.


SETTLEMENT CONFERENCES & TRIALS


An advantage of the Small Claims Court over regular litigation in the Superior Court of Justice is that the process is simplified and that case proceeds more quickly than regular procedure cases.  After the exchange of a Claim and Defence the next step in the process (normally) is that a case is scheduled for a settlement conference.   The Court will order the parties to disclose their evidence and a witness list along with will say statements (there is a Form) in advance of the Settlement Conference.  At the Settlement Conference the Judge will consider both sides, get both sides to explain their positions, and try to mediate a resolution of the claim by pointing out legal issues, problems with the case, and things that might not be obvious to the parties.  Settlement Conferences often result in judicially supervised settlements that get the parties out of Court without the needs for a trial.


If a Settlement Conference does not result in a settlement, the Judge at the Settlement Conference may make additional procedural orders and then order that the case may be set down for trial.  Sometimes, if there are major procedural issues or evidentiary problems the parties may make a motion to the Court for remedies/relief that are required before the case can go to trial.


TRIALS


Trials in the Small Claims Court are definitely "real".  They are adversarial and the parties are most certainly expected to try to "win" their case.  It is not a session of getting together to have a discussion, nor is it a time when the Judge will hold your hand through the process doing the work for you.  If you are the plaintiff (person bringing the claim), you will be expected to be ready to present your case by making an opening statement, calling and examining witnesses, entering evidence, cross examining witnesses, arguing law, while at the same time staying within the Rules and complying with the Rules of Evidence.  It is a mistake to think that the Judge will elicit the evidence by asking questions, making inquiries, calling witnesses, or wait for you to get the evidence that you "left at home".  A trial is not a tea party--even in the small claims court.  If you fail to discharge your burden (as a plaintiff you have the burden of proof on a balance of probabilities), you might find that after you finish presenting your case that the Judge invites the Defendant to ask for a dismissal of your case without requiring the defendant to lead any evidence at all.  A defendant has no obligation to help you get all the facts before the Court nor to assist you in any way.  A defendant has the right to make you prove your case before the defendant starts to present his/her defence to your case.


PROPERTY DAMAGE CLAIMS in small claims court


When I am representing landlords in claims for damages to rental units there is a checklist of things that I would ideally love to have ready and available to tender into evidence.  This is the list:


  1. A copy of the tenant's rental application;
  2. A copy of the tenant's identification (for proper legal spelling of their names);
  3. A copy of the lease;
  4. A copy of the rent ledger from the commencement of the tenancy to the end of the tenancy;
  5. A copy of any Notices of Termination served during the course of the tenancy;
  6. A copy of any Orders from the Landlord and Tenant Board that were made during the course of the tenancy;
  7. A copy of any Property Standards Orders or any other orders by any governmental agency affecting the rental unit during the course of the tenancy;
  8. Pictures of the condition of the rental unit at the time of the tenant moving into the rental unit;
  9. A Move In Inspection report (with photos is tremendous), that goes through each room of the rental unit that identifies all of the elements of each room (floor, walls, ceiling, doors, baseboards, switches, lights, appliances, etc. etc.).  The report should have room for check marks indicating the condition of the individual elements--leave room for written comments---and be initialed by the tenant on at least each page--but even better beside each room.  The Move In Inspection report should also mention the condition of the common areas of the building on move in and get the tenant to agree with the description (photos are great).
  10. A copy of any Notice of Termination, Eviction Order, Sheriff's Notice to Vacate
  11. A copy of a move out inspection along with photographs of the damage to the unit.  Signed off by the tenant if possible.  If the tenant is not signing off on the move out inspection then a written statement from a neutral third party who was present at the time that the landlord recovered the unit describing the condition of the unit;
  12. Three estimates for repair work to the rental unit or to the appliances and systems in the unit;
  13. A copy of cheques and invoices for the work done in the unit;
  14. A copy of invoices for replacement appliances etc..
  15. A copy of a demand letter to the tenant asking the tenant to pay the damages prior to commencing litigation.
If a Landlord client is able to provide me with the above checklist of documents then the claim is as close to being a sure thing as is possible in law.  Having all of these documents also makes the trial much shorter and results in a very efficient use of time.  Legal fees are lower simply because we don't have to prove the evidence through indirect means (i.e. call witnesses to testify as to their recollection of the condition of the rental unit when it was rented--as opposed to having the Move In Inspection and photographs).  Also, having these documents handy will encourage the Settlement Conference Judge to urge the defendant to pay your claim (and avoid a trial) as the Judge will tell the defendant that the plaintiff is likely to win and also get Legal Fees added to the amount of the claim.


If you have the evidence that is represented by the checklist you will find that the need to be represented by a lawyer or paralegal is less important as the flow of these documents tells the story of the tenancy in a chronological way and further demonstrate that the damages claimed result from the actions--negligent or willful conduct of the tenant.  However, before deciding to do this yourself, consider the fact that having these documents handy will likely allow a lawyer to quote a block fee for representation that may indeed be substantially contributed to by an award of costs at the end of trial.


IF YOU DON'T HAVE THE CHECKLIST DOCUMENTS


The checklist for me represents the ideal case.  Almost no cases are ideal and many of the documents in the checklist are often missing or non-existent.  Where the documents do not exist you need to think about how you will get the evidence that is represented by the document on the checklist.  Usually this means calling a witness and having the evidence of the "fact" presented orally.  With respect to non-contentious issues such evidence is usually not a problem (for example--testifying that there was an oral lease).  However, sometimes the oral evidence is highly contentious--for example stating that the rental unit was in perfect condition at the start of the tenancy.  When the evidence is disputed, contentious, and pertinent to the ultimate issues in the trial the Judge may have to judge the credibility of witnesses and choose who to believe.  Hence, on some points, it may be necessary to call much more evidence in support of your position if the tenant is denying the fact you are asserting as true.


JUDGMENT


The conclusion of the trial will result in Judgment.  If you are successful the Court will order that the defendant owes you money, with interest and costs.  If you have lost your case it is entirely possible that the Court will order you to pay costs to the defendant.


Sometimes Judgments are paid voluntarily and the case is settled.  Sometimes Judgments are appealed and the litigation saga will continue. When the Judgment is neither paid nor appealed then the next step will be to enforce the Judgment through the enforcement provisions in the Rules of the Small Claims Court.  These enforcement provisions will include things like garnishment, writ of seizure and sale and debtor's examination.


Whether you have any success in enforcing the Judgment often turns on whether the defendant has any assets.  If the tenant has no job, no assets, and no decent prospects, then sometimes, regardless of the "justice" of it all, your judgment will remain unsatisfied and you will get nothing.  Sometimes, the result of pursuing the claim to its conclusion is that the defendant will make an assignment in bankruptcy and as a result your claim is wiped out.  Whether or not a defendant will have an ability to pay is something that you need to take into consideration before starting out with a lawsuit.




CONCLUSION


Proper vetting of prospective tenants, regular inspections, and active enforcement of your rights under the RTA should keep the number of significant damage claims against former tenants to a minimum.  However, it will be impossible to have a perfect record and hence you should take steps to document each tenancy in such a way that proceeding with a damage claim is made easier.  The checklist outlined in this article is something that you should turn your mind to at the beginning of every tenancy.  It is not a lot of work to gather the evidence in a timely way and certainly it pays off many times over if you have a tenant who does cause problems in the rental unit.


Michael K. E. Thiele
Ottawalawyers.com






Monday, 23 June 2014

Co-op housing: Evicting Co-op Members at the Landlord and Tenant Board

The Residential Tenancies Act was recently amended (June 1, 2014) to include provisions that allow Co-operative Corporations to proceed to the Ontario Landlord and Tenant Board to enforce the termination of membership rights and eviction of Co-op members.  For many people involved in Residential Co-ops this is a significant change to the legal process that has been in place for as long as I can remember.

Before the legislative changes, the legal system for dealing with membership rights and eviction from a residential co-op could be summarized as follows (using "conduct" as the basis for termination as an example).  If the "office" became aware of a complaint against a co-op member the "office" could try to resolve the issue informally, perhaps send a letter, or take other steps that solve the problem.  If the steps taken by the "office" are ineffective, the complaint and the surrounding problems are elevated to the Co-op Board for discussion at a meeting.  At that meeting the Board could direct some other less formal ways of dealing with the problem.  If that too is ineffective, the Board could decide to ask the member complained about to attend a meeting with the Board to discuss the problem.  There are formal notice requirements etc..  At that meeting the Board could, after hearing from the member, make a variety of decisions and one of those decisions might be to terminate membership rights in the co-op and occupancy rights and evict the member from their housing unit. 

The termination and eviction decision of the Board is subsequently communicated to the member and the member is further advised of a right to appeal the termination decision to the membership of the Co-op.  If the member elects to appeal to the membership, the member has rights to distribute materials to the membership and a meeting of the Co-op is called to review the decision by the Board to terminate and evict the member.  There are technical procedural requirements for such meetings that are designed to grant procedural fairness to all concerned. 

The manner of proceeding at the meeting is often a matter for the Chairperson of the meeting to decide along with the direction provided by the By-laws of the Co-op and the general requirement to conduct a "fair" meeting.  It is not unusual for Chairpersons to adopt the procedures as set out in Robert's Rules of Order which provides a commonly accepted method of conducting a fair and respectful meeting while maintaining Order and ensuring that the meeting does not devolve into chaos.  The meeting will normally have representations from the Board as to why the decision to terminate and evict was made.  The member whose membership was terminated has the right to make their own statement.  The floor is then opened to questions, discussion, clarification.  These meetings may become incredibly tense as there are often very strongly held views amongst different factions from within the community.

At the conclusion of the members meeting (presuming that there was quorum), the members will vote (usually by secret ballot).  The exact nature of the question on which they vote is sometimes a pre-determined question--such as vote to uphold the Board decision or vote to overturn the Board decision, or sometimes the exact nature of the question to be voted upon is determined by motion from the floor.  How the meeting evolves, how the question to be voted on is determined, who speaks, and frankly how good or how badly the meeting goes depends on the Chairperson of the meeting and the manner in which the members of the Co-op participate.

If the membership vote to uphold the termination and eviction, the member must move out of the unit.  If the former member refuses to vacate the unit, the Co-op must then apply to the Superior Court of Justice for a writ of possession which will result in the Sheriff attending the members unit and forcibly removing the person if necessary.  After enforcement, the member has no legal right to be on the property and can then be arrested and charged for break and enter or trespassing if they are found in the unit without permission.

The application to the Superior Court of Justice is tremendously expensive as the entire application process is by way of affidavit, application record, and factum.


THE CHANGE IN THE LAW

The foregoing procedure remains more or less in place and Co-ops continue to have the option to proceed to the Superior Court if section V.1 (i.e. 5.1) of the Residential Tenancies Act (RTA)does not require the Co-op to proceed through the Landlord and Tenant Board as opposed to the Superior Court of Justice.  At this point, on my reading of section V.1 of the RTA, there is no procedure under the Co-operative Corporations Act that must proceed through the Landlord and Tenant Board on a mandatory basis.  Meaning, a Co-op has the option to proceed to the Landlord and Tenant Board if it wishes but the Co-op may still proceed with the "old" system if that is preferable.

So what does this "new" system look like.  Given that the law was just proclaimed on June 1, 2014, it is all still fairly new.  Hence, my comments are based on a first look.  From what I see, I think there will be a need for a great many amendments to the statute to make the contemplated new process make sense and there will likely be a need for adjudicators to make procedural rulings that help make section V.1 make sense and be useful.


SO HOW DOES IT WORK?


The new provisions applicable to Co-op's, in essence apply the same rules and procedures to Co-op's that apply to regular tenants in Landlord and Tenant relationships.  Unfortunately, they only apply after the Board does all of the things it had to do under the old rules.  Meaning, the Board must still meet, terminate by resolution, provide appeal rights, and follow the strictures that it has always followed.  The direction that this is the case is set out in section 171.8 of the Co-operative Corporations Act.

What the new law allows--but requires Co-op's to do--is to decide whether they still want to allow members the right to appeal to the membership if the Board terminates the Membership and Occupancy Rights.   The new law contemplates that Co-op's will pass a by-law that removes the right to appeal to the membership in the face of a termination decision.

In my view, the only way that proceeding to the Landlord and Tenant Board will ever make sense is by passing a by-law removing the appeal to the membership as a right (the reason will become clear).  Though, if a by-law is passed to remove the appeal right a Co-op should consider passing a by-law directing the Board to presumptively proceed by application to the Landlord and Tenant Board as opposed to the Superior Court of Justice unless there is good reason to proceed instead to the Superior Court of Justice.

Once the Board of Directors terminates a members occupancy and membership rights by resolution the Co-op may then decide to serve the member with a Notice of Termination under the Residential Tenancies Act.  These Notices of Termination are "Special" Notices specifically designed for Co-ops.  The Form Numbering, for those people familiar with regular Landlord and Tenant Board forms will be very familiar as the numbering remains the same.  So, whereas a Notice of Termination for Non-Payment of Rent in a landlord and tenant case uses form N4 and Notice of Termination for Non-Payment of Occupancy Fees and charges for a Co-op uses Form N4C.  Note that these forms look completely different from each other and you CAN NOT use one in substitution for the other.  The other forms are numbered similarly for everything from substantial interference (Form N5 is Form N5C0 to illegal act, impaired safety, misrepresentation etc. etc..


WHY IT'S OKAY TO REVOKE THE MEMBERSHIP APPEAL

If the Co-op proceeds to serve any of these Forms you will see that the same voiding provisions apply that arise in landlord and tenant cases.  So, as an example, if a member is behind in housing charges and the Board of Directors decides to terminate they could serve a Form N4C.   That Form, provides in its terms, that the member who receives this Form N4C can void the termination by paying the housing charges.  In effect, the Form N4C will operate to over-ride the decision of the Board of Directors if the member does or does not do certain things.  The same is true for conduct related Notices of Termination---hence if the Board of Directors chooses to terminate for behavior and then serves a Form N5C--that form, if it is complied with will result in the decision of the Board of Directors being over-ridden and the Landlord and Tenant Board will not evict the member (or put another way, it will lack the jurisdiction to evict the member).

At the moment, what is not entirely clear to me is whether the voiding of a Notice of Termination served under the Residential Tenancies Act automatically reinstates the membership rights of a member.  Is there anything explicitly stopping a Co-op from applying to the Superior Court of Justice for a Writ of Possession if the member manages to void a Notice of Termination by complying with the provisions of the Notice.  I don't see such a prohibition explicitly but certainly I think it would be foolhardy for a Co-op to engage the Residential Tenancies Act process and then abandon it when it doesn't work out as they expected.  I imagine a Superior Court judge would deliver a rather damaging Judgment against the Co-op in such circumstances.

What about non-voidable Notices of Termination for things like: Illegal Act (drug dealing and other criminal activity), impaired safety, subsidy misrepresentations, subsequent breaches of a lawful right interest or privilege of the Co-op, or subsequent behavior problems.  Such Notices of Termination are not voidable--does this meant that eviction is a foregone conclusion?

Not at all in fact.  The Co-op still needs to prove to the adjudicator at the Landlord and Tenant Board that the alleged transgressions did happen and that the Board of Directors by resolution did terminate the membership and occupancy rights of the member.  The adjudicator at the Landlord and Tenant Board is then given explicit power to exercise discretion and refuse to grant the application.  That discretion is found at section 94.12 of section V.1 of the RTA.   It is similar in nature to the discretion afforded to adjudicators under section 83 of the RTA in landlord and tenant applications.   Given that the wording of the two sections are the same, I would expect that section 94.12 will be interpreted in the same way as section 83 which means that the Adjudicators will feel free to make such orders as they consider fair.  In effect, the traditional view that Co-operatives regulate their own affairs through their Boards and members meetings is over-ridden by this new legislative structure that leaves the final say in the hands of adjudicators at the Landlord and Tenant Board.

What is appealing about discretionary relief in the hands of adjudicators as opposed to members' meetings is that the adjudicator is charged to make a decision in a judicious manner.  Having attended a great number of members appeals--on both sides--I think it is fair to say that the decision making in Co-ops is not necessarily confined to pertinent facts. 


CONCLUSION

I do believe that proceeding to the Landlord and Tenant Board is the "way to go" for Co-operatives. The learning curve is of course in applying new rules in the context of what has always been done.  However, I do see a certain efficiency in using the LTB forms and I think Co-operatives will be able to save significant costs in legal fees by going through the administrative process of the Landlord and Tenant Board.

As this legislation is new and I myself have not yet been through an application I would be pleased to receive comments from anyone reading this blog about their experiences.


Michael K. E. Thiele
Ottawalawyers.com


Monday, 9 June 2014

Options when you can't pay your rent to your landlord.

Being short on the rent can happen.  This article speaks to options that Ontario tenants have when they are unable to pay their rent in full or on time.

When I have tenant clients who are facing an application for termination for non-payment of rent there are a series of questions that have to be asked before becoming too concerned about dealing with the eviction.  It is worthwhile for anyone who is having trouble paying the rent to answer these questions:

1) Why is the rent late?  Is it because there is not enough income, unexpected bills, poor spending control, the rent is too high, roommate moved out, illness, loss of job, hours at work cut, on strike?

2) Can the reason that the rent is late be fixed so that the tenant is able to pay the future rents in full and on time?  If not, is there a period of time over which the problem can be fixed?  What is the timeline?

3) Is there enough income coming in that the rent can be paid in full on an ongoing basis and a small amount can be paid towards the arrears?

4) Is there a family member, friend, or someone who can and who is willing to help out?

5) How long is/was the tenancy and are there any special circumstances.

RENT ARREARS: NOT THE END OF THE WORLD

Being in arrears of rent is not a tragic situation.  Getting evicted is not the obvious outcome and the likelihood is that you can indeed preserve your tenancy---i.e. you won't be evicted--depending on how you answered the questions above.

The Residential Tenancies Act is the law that governs landlord and tenant relationships in Ontario.  As a provincial statute it is a law that takes precedence over any contract or lease document that a tenant may have signed.  In fact, it doesn't matter what a tenant agrees to, in writing or not, if that agreement violates the provisions of the RTA then the agreement is void.  The law does not allow a residential landlord and tenant to make just any deal that they wish.  This includes agreements or terms that appear to be reasonable and fair to both parties.  If the deal breaches the RTA--it is void---regardless of the perceived fairness of the arrangment.

The structure of the RTA matters--and its precedence over lease terms matters--as the RTA itself gives tenants many many chances to pay rent arrears, to make deals, and to seek relief from eviction from the landlord and tenant board.  In fact, the structure of the RTA is such that the tenant gets the chances--whether the landlord likes it or not---and the hearing process is such that the law requires the adjudicator (judge at the Landlord and Tenant Board) to consider alternatives to eviction (called section 83 relief).  As a tenant in a rent arrears situation you can access these chances and alternatives to eviction simply by participating in the process that the Landlord needs to follow.  At some point in going through the process you will find yourself standing in front of an adjudicator--and depending on the answers to the questions I've set out above--you can likely save your tenancy. 

At this point, I should make it clear to tenants that a landlord is NOT allowed to simply change the locks.  A landlord is not allowed to enter your unit and evict you.  A landlord is not permitted to demand that you move by a certain time and date and enforce that demand himself or through friends or acquaintances.   A landlord does not have the right to remove a tenant who is covered by the Residential Tenancies Act from the rental unit.  In Ontario, the only person who can physically evict a tenant from a rental unit is a Court Enforcement Officer--known as the Sheriff---and the Sheriff will only do that based on a valid Order from the Ontario Landlord and Tenant Board or the Superior Court of Justice.  Landlord's have no self help right to kick out a tenant who has not paid the rent (regardless of what any lease or agreement to the contrary might say).

WHAT IS THE LEGAL PROCESS and how should a tenant respond to the steps?

When a tenant is in arrears of rent they should expect that a landlord might call to ask for the rent.  In my experience it is best to be honest and straightforward with the landlord and advise truthfully about the reason for late payment.  Often enough, a landlord will accept the explanation and make a deal to take care of the rent arrears.  If this can be done an awful lot of anxiety and stress can be avoided.  Note that you can only make a deal if you take the landlord's call---don't dodge the landlord or avoid him in the hopes that he will "forget" about the rent that you owe.

If the landlord does not call to talk to the tenant about the rent arrears or is unwilling to make a deal on acceptable terms, then the landlord will have to proceed with the legal way of terminating the tenancy and evicting the tenant.  This process will take a fairly long time and the tenant will indeed get several opportunities to pay the rent and maintain the tenancy.

The first legal document that a tenant will get is a form N4 (Notice of Termination for Non-Payment of Rent).  Note I said "legal document".  Letters, notes, texts, emails demanding the rent and threatening eviction if the rent is not paid are not "legal" documents.  The Form N4 is a form from the Ontario Landlord and Tenant Board and only that form can be used to terminate and evict a tenant for non-payment of rent.

As a tenant, when you receive a Notice of Termination (like the N4) take a look at the notes that are at the end of the form.  The print is small but the notes explain your rights very clearly and demonstrate that the big bold letters and boxes on the form don't mean exactly what you think they mean.  The biggest example of this is the box that says "TERMINATION DATE".  When you see the date in this box you will think that you need to move out by that date.  In fact, that is not true.  If you pay the rent by that date then the Notice of Termination is void.  That date is a minimum of 14 days after you receive the Notice of Termination (and if the time period is shorter the notice is invalid). 

If you are unable to pay the rent by the Termination date then you still do not have to move out.  You can require the landlord to file an application with the Landlord and Tenant Board.  You do this by not moving out of the apartment.  If you refuse to move out then the only legal way for the Landlord to get the unit back is to apply for a hearing date with the Board. 

Applying to the landlord and tenant board will take another week or two or three before the case comes on for hearing.  If at any time before the hearing you come up with all of the rent arrears (plus the $170 application fee) then it is guaranteed that at the hearing the adjudicator will dismiss the application and allow your tenancy to continue (because you have paid all of the rent and the costs).  Sometimes this works out because the passage of time between getting the N4 (waiting 14 days) and then another week or two passing before the hearing allows the tenant enough time to come up with the rent arrears.

If the tenant is unable to come up with all of the rent arrears before the hearing then it is worthwhile for the tenant to attend the hearing.  At the hearing, the adjudicator will ask what the rent arrears are and establish what amounts are owing.  Often enough the tenant is in a position to agree what is owed.  The adjudicator, after determining what is owed, will begin to ask the tenant questions very similar to the ones I've set out above.  The adjudicator will want to know whether the tenant wishes to continue the tenancy, the reason for the rent arrears, whether the reason for the arrears arising has been fixed, whether ongoing rent can be paid in full and on time, whether the tenant can offer a repayment plan on a reasonable time line, and whether there are circumstances that exist that should result in the adjudicator exercising his or her discretion to impose a deal on the landlord that allows the tenant to maintain the tenancy while still protecting the landlord's ongoing right to rent.

Even if the tenant has no decent explanation--no acceptable plan---and can't possibly ever pay the rent arrears and is unlikely to be able to pay future rent as it becomes due--the Landlord and Tenant Board will still issue an order giving the tenant 11 days to pay all of the rent arrears plus the $170 application fee and thereby void the eviction order.  If the tenant does not pay the rent within those 11 days, then on the 12th day the landlord may go to the sheriff to file the eviction order.  The Sheriff will give the tenant a minimum of 7 more days before returning to evict.  If during the period that the sheriff has given notice to the tenant the tenant pays the rent arrears and costs then the eviction order is voided again and the tenant can stay (this can only be done once during a tenancy).

The point of the foregoing timeline is highlight how many opportunities a tenant is given to pay the rent arrears and maintain the tenancy---even when it is clear that payment is unlikely or impossible.

EXERCISE OF DISCRETION (section 83)

Let us presume for a moment that the answers to the questions I laid out were such that it was clear that the reason for the rent arrears was a one time event--an unfortunate occurrence.  For example--the cash rent was stolen before it was handed over to the landlord.  Or, a roommate moved out.  Or, the tenant lost a month's pay because they broke a bone and couldn't work.   All of these explanations result in a temporary inability to pay the rent.  The rent arrears happened because the tenant lost the ability to pay the rent for a short period of time.  However, the tenant earns new money to replace the stolen cash, the tenant gets a new roommate, the bone healed and the tenant returned to work, and therefore the things that caused the rent arrears are fixed. 

The "fix"  allows the tenant to pay future rent in full or on time.  Or, the "fix" allows the tenant to pay most of the future rent in full and all of the rent in full in a month or two.  The point is that the "fix" sets out a plan that shows how a tenant can get into a position to pay all of the ongoing rent in the future.

An adjudicator needs to see--or have it explained to him or her by the tenant, how the future rent is going to be paid.  Once the adjudicator is satisfied that future rent is going to be paid and that the "fix" or the "plan" is a reasonable one--then the adjudicator will turn their minds to the rent arrears that built up while the tenant was having the problem (i.e. while the bone was broken, when the roommate left, when the cash was stolen).

The adjudicator will not forgive the rent arrears and will indeed expect these arrears to be paid to the landlord.  However, the adjudicator will be very open to the idea of an affordable payment plan whereby the tenant pays off the arrears over time.  It is certainly true that this "payment plan" often makes landlords very upset.  However, the "payment plan" is indeed a very logical thing to allow.  The landlord is already out the money.  Nothing can force a tenant to pay the money any faster than in a way that they can afford.  Nothing that the Board can order will force a repayment if the tenant doesn't have the money.  Evicting the tenant--for the rent arrears---will not result in the landlord getting the money any faster.  Therefore, and so long as the tenant is in a position to pay ongoing rent in full, and on time, then it makes sense to grant the tenant a reasonable repayment plan for any sum of rent arrears.  The repayment plan can be anything that makes sense within the tenant's budget.

To propose a payment plan, a tenant should be ready to put the details of their financial life on the table.  Show paystubs, benefit stubs, and the sources of income.  Show expenses and the things that the income is necessarily spent on.  Show what the surplus is, or if there is no surplus of income show where you could cut back in the budget to pay the landlord an amount towards the rent arrears.  Where a tenant produces a clear picture of their income, provides confirmation of income sources, and demonstrates what amount can reasonably be paid from the budget, it is my experience that for the most part, the Board will allow the tenancy to be maintained so long as the payment plan is followed.

Most payment plans of rent arrears are conditional on future rents being paid in full and on time.  It is most important to pay ongoing rent--in full.  The reason for this is that the Board, in exercising its discretion to maintain your tenancy and allowing you to remain in your apartment, will impose a section 78 condition on your tenancy.  Section 78 allows the landlord to apply to the Board in the event that you breach the conditional order, without notice to you and obtain a without notice eviction order.

If a tenant has failed to make a payment towards the arrears as required by the discretionary order not all is lost.  Even though a landlord may apply under section 78 for an eviction order, a tenant may set aside that eviction order on motion and again seek the exercise of discretion depending on the reasons for the breach of the eviction Order.  Note however, that getting the exercise of discretion (relief) repeatedly becomes increasingly difficult as the failure to comply with an order arouses a suspicion that the tenant simply can not afford the rental unit.

THE THEME OF THE LEGISLATION

If you are a tenant who is in rent arrears, I hope that you have taken from this article the notion that being in arrears of rent is not a catastrophe.  Losing your home, being evicted, is not the automatic consequence of falling behind in the rent.  If the rent arrears are the result of an unexpected event, a tragedy, an illness, a problem of some kind, the RTA has built in chances and opportunities for tenants to recover from these problems.  Ultimately, the RTA builds in compassion and understanding from adjudicators who are directed by law to consider alternatives to termination and eviction.  Falling behind in the rent is not an insurmountable problem if the issues that lead to the arrears can be fixed and a viable plan is created that demonstrates that future rent can be paid and that arrears will be paid in a structured manner.

HOPELESS CASES

Sometimes, the reason for the rent arrears arises from a problem that can not be fixed.  Sometimes a tenant's income will fall, or the circumstances are such that paying the future rent is simply not realistic.  As indicated earlier in this article, the Board will still grant time to pay and the process of going to the sheriff will add more time to the ultimate eviction.  Even in these circumstances, though, if the reasons are sufficient, it is worthwhile to participate in the proceeding and explain what is going on to the adjudicator.  A tenant can ask for more time, or delayed eviction, or try to make a deal premised on partial payments or an indication of an honourable intention to pay the debt at a future time.  Many landlords will agree, sometimes with the urging of an adjudicator to agree to a timeline that is least traumatic to the tenant--or the tenant's children---and allow an orderly end to a tenancy that simply can not continue.

Michael K. E. Thiele
QTMG LLP
Ottawa Lawyers  

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About Michael Thiele

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Ottawa lawyer and partner at Quinn Thiele Mineault Grodzki LLP.  Graduate of Queen's University in Kingston, Ontario.  Called to the bar in Ontario in 1997.  Undergraduate degree at Colby College, Waterville Maine, U.S.A.