Before making up your mind about becoming a real estate investor/landlord or, if you are one, here's some great insight from a fellow property Manager. Here's a Guest Blog Written by Barbara Krauss
As a property management firm, it is our job to deal with tenant problems as they arise. After all, one of the biggest benefits for an owner in hiring a property management firm is to no longer have to deal with late rent, noisy parties, or tenant bickering.
The following article will deal with landlord and tenant relations as well as with due process and procedures as they apply in the province of Ontario under the Residential Tenancies Act and the Landlord and Tenant Board, where disputes that fall under the Act are resolved.
Before looking at the complexities of the Landlord and Tenant Board, let’s take a look at how to avoid ending up before the Board in the first place.
Tenants provide us with the revenue stream that, at the end of the day, makes real estate investments profitable. We as landlords provide tenants with a home. This simple statement is often at the root of disputes since what is being protected by the one is of little consequence to the other and vice versa. As landlords, it can be helpful to bear in mind where tenants are coming from when things do not go as we hope or as we feel they should. It may not change the outcome, but it might change the way in which we get there.
Being open to what tenants are telling you, writing them a simple letter asking that an issue be addressed or corrected, and making yourself available to them if they wish to talk or show you something can be useful tools in resolving conflicts without going before a legal instance.
In Ontario, the Residential Tenancies Act provides our industry with clear rules on what is permitted, what is not, and the circumstances under which the rules apply. As landlords, we may not always agree with those rules, but we certainly should be very familiar with them and keep our actions or inactions within those bounds. Once familiar with the rules, we should be mindful to apply them consistently.
When tenants approach us with individual requests, we all too often make up our minds based on the story that come with them: do we like the tenants, do we sympathize with their story, were they polite when they approached us? These are legitimate questions that we ask ourselves as human beings, but as landlords, we do not serve the property or the tenancy well by making exceptions and special cases. Why should one tenant have their rent increase waived and not the other?
Why should one tenant get a new fridge and the other not? When these decisions are made consistently and based on facts rather than personal stories, we avoid disputes and ill feelings towards the landlord. If your policy is to freeze the rent if it exceeds $ 1 000 for a particular type of unit, for example, then freeze it for everyone in that category.
Do not freeze the rent only for the tenants you feel sorry for. If your policy is to repair appliances rather than replace them, then do so for everyone with a defective appliance.
Do not provide the tenant you like with a new fridge and leave the tenant you do not like with an old fridge. If your policy is to send late reminders to every tenant in arrears on the 5th of a month, then do so for all that are in arrears, not only for those that have not contacted you to tell you their story. There is never a good answer when a landlord refuses a tenant something and they ask: but then why did you agree to it for so-and-so?
Make sure your tenants know what the building’s policies are, make sure that all policies are within the rules that govern landlord and tenant matters in your province, and apply your policies consistently.
Not all problems, unfortunately, can be avoided or resolved through proactive policies and their consistent implementation.
In our experience, the three most common types of disputes from a landlord’s perspective are non-payment of rent, persistent late payment of rent, and unruly behaviour or damages.
In Ontario, the Landlord and Tenant Board provides a series of forms that are categorized as follows: N-forms are Notices that landlords may use to advise tenants of their intention to pursue a matter at the Board if not immediately rectified.
N4 forms, for example, are used for non-payment of rent; N8 forms for persistent late payment of rent; and N5 forms for damages or behavioural disturbances. L-forms are Landlord applications to the Board to have a matter heard. T-forms are Tenant applications to the Board to have a matter heard.
There appears to be an urban myth out there that the bodies governing landlord and tenant disputes have a pro-tenant bias.
Our experience has been that while adjudicators may appear to display some degree of pro-tenant bias, it is not anchored in the concept of right and wrong, but rather in the concept that a tenant is an individual who in all likelihood has never stood before a Tribunal and that the landlord is a professional who stands before a Tribunal regularly.
Therefore, it sometimes feels like there is a bigger onus on the landlord to know and follow procedures correctly and more leeway for the tenant who may not be fully aware of these procedures. In actual fact, we know that the opposite can also be true: some tenants are seasoned visitors to the Board and know exactly how to apply the processes, and some landlords have very limited experience – if any – with bringing an application before the Board.
Generally speaking, however, the Board provides good opportunity for both a landlord and a tenant to be heard and a fair ruling to be arrived at.
The key for landlords, especially given the Board’s assumption that we do this type of thing on a regular basis, is to ensure that the paperwork required is accurate, complete, and properly filed.
“What are the most common mistakes that landlords make when filing an application?” Cathy Corsetti, President of Corsetti Paralegal and Chair of the Paralegal Standing Committee, and I came up with a Top Ten list of procedures and pitfalls for landlords to be aware of:
Procedure: on an N4, the termination date must be no earlier than 14 days after the Notice has been served.
Pitfall: the 14 days start from the day the tenant is served, not the day the documents are prepared. If the Notice was served to the tenant by mail, 5 extra days must be added to the calculation to allow for the delivery period.
Procedure: an N4 may not include anything other than rent.
Pitfall: There may be other charges such as NSF fees or maintenance back-charges on a tenant’s ledger card. While these are legitimate charges and may appear on a ledger card, the amounts may not be included in the N4 or the subsequent L1 application.
Procedure: the amount the landlord is claiming for must be correct and the dates on the forms must be correct.
Pitfall: we can all make a mistake adding up the numbers or a typographical error when filling in the dates. Double check the Notice and the Application for accuracy.
Procedure: an application can be withdrawn if the matter has been resolved prior to the hearing date.
Pitfall: do not withdraw the application on the promise of tenants to pay. Wait until the funds have been received and cleared before withdrawing an application. Make an attempt to obtain certified funds. If the tenants break their promise and do not pay, the whole process will have to be started over: a new N4 must be issued, 14 days must past, and L1 application must be filed, and a hearing date must be set.
Procedure: the Certificate of Service should be filed with the Board prior to the hearing. If it is not, it must be presented at the hearing.
Pitfall: if this procedure is incomplete, your matter will not be heard. Having your paperwork in order and a copy of the Certificate of Service at the top of the pile will allow you to proceed efficiently. Your claim may end up under additional scrutiny if you look disorganized to the adjudicator.
Procedure: information on N5 or N8 notices must be precise so that tenants know exactly the case they have to meet.
Pitfall: saying “loud partying every night” is not specific, nor is saying “the rent is always late”. Exact dates and incidences are important. Tenants must be able to defend specific allegations.
Procedure: when the first N5 is served, the tenant has 7 days to correct the issue at hand. If the issue is corrected but repeated within 6 months of the first N5, a second N5 can be filed with no provision for correction for the tenant.
Pitfall: these time periods must be very closely monitored and documented. If the N5 has been served by mail, the 5 extra days must again be added and the monitoring therefore starts 5 days after mailing. If the tenant does not correct the issue within the requisite 7 days, file for termination immediately, not several weeks later. If the tenant corrects the issue but repeats it within 6 months, serve the second N5 immediately, not at the second or third repetition of the issue.
Procedure: the onus is on the plaintiff to provide proof in a matter.
Pitfall: when in the grey area of behavioral issues such as defining what is loud music or what is late noise-making, it is important to bring witnesses to the hearing. This can be your superintendent or other tenants whose reasonable enjoyment of the premises has been compromised by the defendant’s behaviour. Not having witnesses to bear out the case can lead to a case being dismissed for lack of evidence.
Procedure: you must provide tenants with 24-hour notice that you or a person contracted by you will be entering the tenant’s unit.
Pitfall: even if you have a waiver through your maintenance work order or a verbal agreement to enter from the tenant, always provide proper 24-hour notice in writing in conflict situations so that the tenant cannot claim illegal entry before the Board.
Procedure: if you have filed a Sheriff’s Order to have a tenant physically removed from the premises, you must confirm the necessity for the Sheriff to attend prior to the actual eviction date. You will be provided with a call-in date and time to do so.
Pitfall: do not miss the call-in date with the Sheriff’s office. In Toronto, this is a 2-hour window on a given day. If you miss it, the Sheriff’s Order ($ 250 in Ontario) must be re-filed.
If you are unsure of any of these procedures, it can be helpful to contact a licensed paralegal for advice or to take over your case. If you need to find a licensed paralegal in Ontario, the law society’s website: www.lsuc.on.ca provides a paralegal directory.
Property manager Barbara Krauss takes up the myriad issues between tenant and landlord that too often end in bickering and, ultimately, before the board. There is a way to avoid most, if not all of that argy-bargy, says the property expert.
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