Considering buying an income property to save for retirement? Have a free basement that you are considering refurbishing into a rental unit? In either case, subject to certain rare exceptions, by renting out living space in Ontario you are subject to the Residential Tenancies Act (RTA). The RTA is a comprehensive piece of legislation that governs most residential landlord and tenant relationships in Ontario. The Landlord and Tenant Board (LTB) hears disputes related to residential tenancies.
There are a lot of corporate landlords in the GTA who have an army of staff and legal representatives protecting their interests. Small landlords often get in trouble simply for lack of knowledge. So, let’s go over some strategies to protect yourself as a small landlord in Ontario.
Vet your Tenants
This is perhaps the most important step a residential landlord can take. Ask your prospective tenants for proof of employment, a personal reference from a former landlord, ask for a credit report. Get as much information as you can, from your tenants, however be aware of limits. For example: landlords are prohibited by human rights legislation from discriminating against tenants based on race, age, sex, etc. Another example, contrary to popular belief, tenants are not required to give landlords their Social InsuranceNumbers to rent an apartment.
Follow Rent and Deposit Rules
Landlords must give tenants 90 days notice and use the proper N1 Notice of Rent Increase form to advise their tenants of a rent increase. In most cases, landlords are prohibited from raising the rent for existing tenants over the annual rent increase guidelines (in 2019 it is 1.8%), also rent cannot be raised more than once per year to the same tenants.
A common mistake made bynew landlords may be charging an application fee, to a prospective tenant. These charges are illegal according to the RTA, and your tenant or prospective tenant may apply to the Board for a rebate as well as any associated costs related to their application. Also only a rent deposit (first and last month’s rent) can be charged, other deposits (security deposit, hydro deposit, etc.) are illegal.
Take Photographs of State of Unit, During Walk-Through
Tenants can lay claims against their landlord if they breach their obligations. The most common type of tenant’s claim is related to landlords failing to maintain the property. Tenants are entitled to a home fit for habitation. Tenants also have the right to continue receiving the same services that they are included in their rent. For example,if the dishwasher breaks down, the unit is still habitable but the tenant is receiving less than they were before the breakdown. If the property is not properly maintained, the tenants can get a rent abatement (rent reduction and/or rebate) awarded from the LTB. As such the best way for landlords and tenants to protect themselves is to do a walk through together in a new unit, and for both sides to take photographs of the unit. If any issues are apparent, repair them as soon as possible.
Provide an Electronic Means of Communication.
Ensure that you and your tenant have an electronic means of communicating (be it text message, email, etc.). That way you both indisputably have a record of any issues that arise, such as maintenance requests, noise complaints, issues with rent, etc.
Be Cautious Accepting Cash Payments of Rent, and Always Give Rent Receipts.
The problem with paying rent in cash should be obvious. The tenant could argue they did pay rent and the landlord would have no way of proving otherwise and likewise the landlord could argue the that tenant did pay not pay rent and the tenant would have no way of proving otherwise. Credibility contests are not a good starting point if you have to go to the LTB. Try to establish a means of rent payment with a paper trail (i.e.: e-transfer, cheque, etc.) and always, regardless of means of payment, give a rent receipt as soon as you receive payment.
Ensure you are Familiar with Basic Eviction Procedures.
Locking out a tenant prematurely is one of the most severely punished offences under the RTA. Guilty parties can be fined up to $25,000 as well as be ordered to pay their tenants damages up to $25,000. As such it is very important that landlords follow proper eviction procedures. The Ordinary way to evict a tenant involves a number of steps:
- Select and serve an appropriate Notice form to give to a tenant (found on the LTB website), which form will depend on the reason (i.e.: unpaid rent is an N4 Notice).
- If the tenant does not vacate, the landlord would apply for a hearing at the LTB
- At the hearing the LTB can Order an eviction,
- If the tenant does not leave based on the Order, a landlord would take the Order to the Sheriff to enforce
Hire a Competent Legal Representative.
There are a lot of potentially difficult disputes that can arise during a tenancy. The best way to protect yourself is to hire a lawyer or paralegal with experience appearing before the Landlord and Tenant Board. Protect your assets and your income. At Mehdi Au LLP we have knowledgeable and experienced lawyers who could help with your case.
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