In the last article, I discussed the advantages and disadvantages of buying investment properties. Here, I want to focus on how to deal with problematic tenants.
In the past, there was no actual governing body in place to deal with specific landlord and tenant issues. If, for example, a tenant was delinquent with his/her rent, the landlord would then have to go through the small claims court process. This often resulted in an inefficient, time consuming procedure which could have potentially cost the landlord thousands of dollars. Today, with the formation of the Ontario Rental Housing Tribunal all of that has changed.
On June 17th, 1998 the Landlord and Tenant Act was replaced with the Tenant Protection Act. Numerous changes resulted and among the most instrumental was the creation of the Ontario Rental Housing Tribunal.
The Ontario Rental Housing Tribunal was established for the specific purpose of resolving disputes between landlords and tenants and to also provide information to the consumer about the Tenant Protection Act.
Another noteworthy change was entitling landlords to charge market value rents when a new tenant took possession of his/her property. Previously, an owner was only permitted to charge a new tenant the same amount of rent the previous tenant was paying plus the allowable rent increases based on the rent control guidelines. Often times this figure was well below fair market rent.
Rent is considered overdue if the full amount is not paid by 12 p.m. midnight on the day it is due. Furthermore a landlord is under no obligation to accept a partial payment. Even if a partial payment is accepted the landlord can still commence with steps to collect the balance of the rent which includes terminating the tenancy.
If after the end of the first day the rent is not paid, the landlord has the right to ask the tenant to move out. (Practically speaking most landlords will allow a grace period of sorts.) The mistake many landlords make is waiting too long before proceeding with the termination process. Of course, circumstances will dictate the appropriate course of action.
The first step in the eviction process is to serve the tenant with a Notice to Terminate a Tenancy Early for Nonpayment of Rent (form N4). If the tenant rents weekly, the landlord must give the notice seven days before he wants the tenant to vacate ( known as the termination date). If the tenant is on a month to month basis, the notice must be served at least fourteen days before the termination date.
This notice indicates to the tenant that if the full amount of overdue rent is not paid before the termination date, they must move out. During this period of time if the rent is paid in full the application will be discontinued.
If the tenant has not vacated the premises by the termination date, the landlord or his agent would then complete an Application to Terminate the Tenancy (form L1) and submit this to the Tribunal along with a filing fee of $60. A Notice of Hearing would immediately be set which would typically not exceed three weeks (depending on availability). The landlord or his agent must also give the tenant a copy of the application and the Notice of Hearing at least five calendar days before the hearing. The landlord or his agent will then complete a Certificate of Service form showing how and when the documents where given to the tenant. The Certificate of Service form must then be filed with the Tribunal.
The tenant must then file a written dispute with the Tribunal within five calendar days after being given the Notice of Hearing. If the tenant does not oppose the application, there could be a default judgement and an Order to Evict would be issued against the tenant. If there is a hearing and the outcome is in favor of the Landlord an Order to Evict the tenant would be issued. It would typically take 11 days from the issuance of the Order before the Landlord can file the Order with the Court Enforcement Office (Sheriff) so that the eviction may be enforced.
The result is from the time the first notice is served to the tenant, it would take a maximum of 46 days to obtain vacant possession. If the tenant has paid last month’s rent, then the landlord would have only 16 days of unpaid rent. This certainly is a significant improvement from the old days where it would potentially take months and months to have a tenant evicted. After the tenant has vacated the property, the landlord can still pursue the tenant through various channels for any rental losses sustained.
It should be noted that a tenant cannot hold back rent because there are repairs and maintenance issues that need to be dealt with. This is a separate, independent issue. If a tenant holds back rent for this reason they may face eviction for doing so. If the tenant has put a request in writing to the landlord requisitioning repairs be carried out and if the landlord doesn’t effectively respond to the outstanding issues, the renter can file a Tenant Application About Maintenance (form T6) with the Tribunal. A hearing would be scheduled and the Tribunal can issue an order for the Landlord to perform the outstanding work.
The best way to avoid problems with tenants is by thorough, initial screening as discussed in my previous article. If , however, a tenant does cause unanticipated problems, the Ontario Housing Tribunal is a excellent administering body well equipped to deal with all Landlord and Tenant issues in a timely fashion.