The Seven Deadly Sins: When bad things happen to landlords · The Seven Deadly Sins: When bad...

The Seven Deadly Sins: When bad things happen to landlords!

MIKE CHOPOWICK

December 3, 2015

FRPO—Federation of Rental-housing Providers of Ontario 2

About FRPO

§  2,200 members!§  350,000 rental units!§  Lobbying on behalf of rental housing providers since 1985!§  Offers free legal information to members on landlord-tenant

disputes!§  Two expert law firms (5 lawyers and 2 paralegals) on retainer!§  FRPO provided significant amounts of input on the drafting of

the Residential Tenancies Act, 2006; Regulation 516/06; plus many Landlord Tenant Board Rules and Guidelines!

§  FRPO’s Legislation and Regulations Committee regularly reviews and provides input on changes to landlord-tenant law!

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Purpose of Presentation

§  Review past legal cases FRPO has dealt with!§  Draw lessons to prevent future risk and liability!§  Identify areas where legislative change is warranted!

DISCLAIMER: Do not rely this information as legal advice. Always hire your own licensed legal professional to represent your specific case.!

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Outline

1.  Damage to rental property!2.  Bed Bugs!3.  Marihuana use/possession!4.  Illegal Entry!

5.  Air Conditioner Fees!6.  Unpaid Water Bills!7.  Tenant Applicant Screening Process - Refugees!

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#1: Damage Caused By Tenants!!“Everything but the Kitchen Sink”!!DISCLAIMER: Do not rely on this information as legal advice. Always hire your own licensed legal professional to represent your specific case.!

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Undue Damage: Everything but the Kitchen Sink

Tenant lived in a 550 sq ft bachelor (16 unit building):!§  holes in the walls!§  broken bulkheads!§  the refrigerator door being crumpled at the top!§  the glass in the oven door missing!§  the countertops moved out of place and the backsplashes removed!§  the smoke detector disconnected !§  the closet doors taken off their rails!§  the wood flooring covered in burn marks!§  the ceramic sink in the washroom with its corner smashed away!§  the ceilings damaged throughout!§  floors of the kitchen cupboards being removed!§  numerous hangers that had been hooked into holes in the ceiling!

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Undue Damage: Everything but the Kitchen Sink

Total Damages: !§  $9,997, plus HST of $1,299 = $12,196!!Tenant also:!§  Added a new lock to door to suite!§  Refused entry to building staff and repair contractors!§  Exhibited violent behaviour!!!!!

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Questions

§  Were the damages caused by “wear and tear”?!§  Were the damages caused by Landlord’s neglect to

repair?!§  Could the damages be considered reasonable?!Also:!§  Are the estimated costs to repair the damage adequately

substantiated? !§  Has the Tenant has willfully or negligently caused undue

damage to rental unit?!§  Is the damage is serious enough to warrant a termination

of the tenancy?!

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Damage by Tenant: What the RTA says Compensation for damage 89. (1) A landlord may apply to the Board for an order requiring a tenant to pay reasonable costs that the landlord has incurred or will incur for the repair of or, where repairing is not reasonable, the replacement of damaged property, if the tenant, another occupant of the rental unit or a person whom the tenant permits in the residential complex willfully or negligently causes undue damage to the rental unit or the residential complex and the tenant is in possession of the rental unit.

Tenant’s responsibility for cleanliness 33. 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.

Tenant’s responsibility for repair of damage 34. The tenant is responsible for the repair of undue damage to the rental unit or residential complex caused by the willful or negligent conduct of the tenant, another occupant of the rental unit or a person permitted in the residential complex by the tenant.

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Section 34: What does it Mean?

The tenant is responsible for undue damage caused by :!•  the willful or negligent conduct of the tenant,!•  another occupant of the rental unit, or !•  a person permitted in the residential complex by the tenant!

Recent Board decision, M.A c/o M & R P.M (the 'Landlord') vs. S.S and N.B (the 'Tenants) (July 2015):!§  Police broke down door to rental unit to apprehend tenants

wanted for a criminal act!§  Landlord applied to LTB for $2400 in damage costs!§  Is the damage ultimately attributable the Tenants?!§  Yes: it should be the contemplation of the Tenants that

consequential damages might occur as a result of their activities !


Photos of Damage

A PICTURE IS WORTH 1000 WORDS: The Nickoladze Decision (2015 Divisional Court)

§  While it might be prudent for a landlord to state in a notice to enter a rental unit that photographs may be taken, the failure to do so does not render the entry unlawful

§  The fact that photographs are taken, in and of itself, does not constitute an infringement of a tenants privacy rights. Only an infringement if done for an improper purpose.

§  “In this day and age, it is not at all surprising that either a tenant or a landlord would take pictures of relevant items in order to use them at a hearing before the [LTB].”

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Photos of Damage

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However, there is not an unfettered right on the part of a landlord to take photographs of a tenant’s unit:!!§  Take reasonable steps to avoid photographing any of a

tenant’s personal belongings !

§  Only photograph damaged property!§  Include intention to take photos on notice of entry!

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#2: Bed Bugs – Better Get ‘Em Good!!!DISCLAIMER: Do not rely on this information as legal advice. Always hire your own licensed legal professional to represent your specific case!


Bed Bug Infestation: Case #1

§  Tenant Reported Bed Bug Infestation to Landlord!§  Landlord promptly scheduled bed bug extermination

treatment!§  Tenant disposed of all clothes and most furniture!§  Bed Bug extermination was successful upon follow-up

inspection!§  Tenant was the only one in an 80-unit building with bed

bugs!§  Tenant applied to Landlord Tenant Board for cost of

belongings and furniture, plus rent abatement!§  What happened?!

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Bed Bug Infestation: Case #1

Board dismissed the tenant’s application!

Why?!§  “On a balance of probabilities”, tenant was seen as

responsible for the bed bug infestation!§  The landlord as not responsible for the bed bug

infestation!§  The landlord acted promptly to effectively exterminate

the bed bugs!

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Bed Bug Infestation: Case #2 §  February 3rd - Tenant saw bed bugs and immediately

reported to landlord!§  The Tenant provided with a preparation sheet for bedbug

treatment and Landlord arranged for the unit to be treated by its pest control contractor.!

§  February 6th – 1st Bed Bug Treatment (Unsuccessful)!§  February 23rd – 2nd Bed Bug Treatment (Unsuccessful)!§  March 2nd – 3rd Bed Bug Treatment (Unsuccessful)!§  March 24th – 4th Bed Bug Treatment (Unsuccessful)!§  June 9th – Unit declared “bed bug free”!§  Board ordered landlord to pay tenant $2400 in

compensation & rent abatement!!!

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Bed Bugs: Lessons

§  Pest control treatment must be effective!

§  Case #2: While the Landlord responded promptly, the treatments of the unit were ineffective!

§  The treatments were doomed to fail because the pest control company did not identify the source of the bedbugs!

§  Bed bugs can be a complicated pest control problem, bugs can infest from neighbouring units, behind walls etc...!

§  Investing in effective treatment from the first bug report can save landlords money in the long run (vs. cost of multiple, ineffective treatment + compensation to tenants)!

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#3: Marihuana use/possession!!DISCLAIMER: Do not rely on this information as legal advice. Always hire your own licensed legal professional to represent your specific case!


Marihuana Use By Tenants

A complicated issue in residential tenancy law:!§  Some people have a license to use marijuana for

medical purposes!§  The Ontario government almost allowed e-cigarette

“vaping” of medical marijuana, but back-tracked in late-November!

§  In 2014 federal government passed new laws prohibiting unlicensed growing of medical marihuana!

§  Current federal government promised to “legalize, regulate, and restrict access to marijuana.” !

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Marihuana Use/Possession

!TS vs. GM (2011)!!§  Landlord served eviction notices and applied for a

hearing to a tenant for the trafficking in an illegal drug or the possession of an illegal drug for the purposes of trafficking. !

§  Case was dismissed!

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Lessons

§  Improper N6 Notice: !•  the production of an illegal drug, !•  trafficking in an illegal drug,!•  possession of an illegal drug for the purposes of trafficking. !

§  NOT for personal use/smoking of illegal drugs!§  Improper N5 Notice:!

•  Two N5 notices on different, unrelated matters!•  N5 Notices did list required dates and times of alleged offences!•  Eviction application made 58 days too late (must be 30 days

within termination date in notice)!§  Meticulous record keeping of improper tenant behaviour

required!

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Lessons

N5 Notice Process:!•  Issue 1st N5 notice (correctly filled out with dates and

times of offences)!•  If tenant voids 1st notice but re-offends within 6

months, issue 2nd notice, followed by eviction application (L2) within 30 days!

•  If 1st N5 notice not voided, serve eviction application within 30 days of the termination date!

•  When serving a 2nd N5 Notice, it must be for the exact same reasons as the 1st N5 Notice!!

.!

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Lessons

Proper Process for Eviction for Use of Marihuana!§  An Un-Voided N5 notice that clearly explains dates and

times of offences!§  In most tribunal cases at the Landlord Tenant Board,

marijuana use in general (within a rental unit) is treated like cigarette smoking.!

§  On a balance of probability the Landlord must demonstrate that the Tenant has seriously impaired the safety of any other person by smoking marihuana. !

§  It is often difficult for a housing provider to meet this threshold, and many eviction applications involving marihuana use by tenants are dismissed.!

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#4: Illegal Entry!!!DISCLAIMER: Do not rely on this information as legal advice. Always hire your own licensed legal professional to represent your specific case!


Illegal Entry: The Case

§  Tenant returned from vacation, discovered mirrors installed on bedroom walls!

§  Tenant claimed she never requested mirrors to be installed!

§  Tenant claimed never to receive notice of entry!§  Landlord admitted installing mirrors!

§  Landlord claimed that notice of entry given by email!§  Decision: Landlord ordered to pay $750 rent abatement

to tenant!

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Entering a Unit: What the RTA says

Subsection 27(1) provides that a landlord may enter a rental unit after giving 24 hours written notice to the tenant. The entry must only be for certain circumstances set out in the subsection, including to carry out a repair or an inspection.!

“Pursuant to subsection 26(1) a landlord may enter the rental unit at any time without written notice in cases of emergency or if the tenant consents to the entry at the time of entry.”!!Note: Verbal consent not reliable if tenant complains of illegal entry after the fact!

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Illegal Entry: Lessons

§  Landlord’s reason for entry didn’t comply with the Act!§  Installing mirrors: A repair? An emergency? An

inspection?!•  NO!

§  Landlord failed to provide proof or documentation of notice of entry!

§  Landlord did not otherwise obtain tenant’s consent for entry!

§  Claim that landlord gave notice of entry alleged by landlord’s agent at the hearing: Given less weight, not as credible as evidence given directly by the landlord!


Proper Written Notice of Entry

§  Specify date, reasonable window of time, reasons (repair or inspection)!

A landlord may deliver the notice of entry by:!§  handing it to the tenant!§  placing it in the tenant's mail box or where mail slot!§  sliding it under the tenant's door!§  by handing it to an apparently adult person!§  posting it on the tenant's door!§  or by courier or mail with additional time added!§  Email or Text Message Not Acceptable!!Note: Only the notice to enter the unit may be posted on the door. If you must serve any other document to a tenant, posting on the door is NOT an accepted method of delivery.!

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#5: Air Condi5oner Fees DISCLAIMER: Do not rely on this information as legal advice. Always hire your own licensed legal professional to represent your specific case


Air Conditioning Fees: Case Example

§  Landlord bought building!§  Many existing tenants were using window air conditioning

appliances in the summer!§  Citing s. 123 of the RTA, the landlord charged an

additional $25/month fee for air conditioning use!§  Some tenants signed new leases that included the $25/

month A/C fee!§  Tenants refused to pay anything extra in addition to their

regular monthly rent!§  Landlord applied to Board to enforce payment!§  Landlord Tenant Board dismissed the landlord’s

application. Why?!30


Fees For Air Conditioners

§  If a pre-existing tenant with no written lease has been using a window air conditioner, they are entitled to continue to use those appliances. !

§  If the landlord removes the ability for the tenant to use either the window air conditioner or portable dishwasher, the tenant is entitled to a rent reduction. !

§  In the case of the window air conditioner, the rent reduction would likely be the air conditioner charge for new tenants (i.e. the old tenant who has been using an air conditioner without extra charge will likely be seen to have the air conditioner charge included in their rent).!

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Air Conditioning Fees: What the RTA says Additional services, etc.!123. (1) A landlord may increase the rent charged to a tenant for a rental unit as prescribed at any time if the landlord and the tenant agree that the landlord will add any of the following with respect to the tenant’s occupancy of the rental unit:!1.  A parking space.!2.  A prescribed service,

facility, privilege, accommodation or thing. !

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Reg 516/06 - Prescribed services, facilities, etc.!16. (1) The following services, facilities, privileges, accommodations or things are prescribed for the purposes of subsection 123 (1) and section 125 of the Act:!1. Cable television; 2. Satellite television.!3. An air conditioner.!4. Extra electricity for an air conditioner.!5. – 11. etc…(see Reg. 516/06)!

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Lease Agreement Provisions & The Act

Cannot contract outside of the Residential Tenancies Act:!!Provisions conflicting with Act void!4. (1) Subject to section 194, a provision in a tenancy agreement that is inconsistent with this Act or the regulations is void. 2006, c. 17, s. 4.!!§  Charging extra for something a tenant has always

received for free, even if the tenant agrees in writing, is “contracting outside of the Act”!


Fees For Air Conditioners

§  If the landlord wants to prohibit the use of air conditioners because of energy conservation, the rent reduction will most likely be equal to the cost savings to the landlord if the air conditioner is not used. !

§  If the landlord wants to prohibit the use because air conditioner is not properly installed, and have caused damage to the rental unit or complex, or posed a dangerous hazard, the landlord can:!•  give a notice of termination for damage and!•  insist on the tenant fixing the damage and not using the air

conditioner unless it is satisfactorily inspected by the landlord. !§  If a tenant’s air conditioner has not yet caused damage (but

the landlord can prove that damage is likely to happen), the landlord could try giving a s.63 notice to terminate (10 day notice with no right for the tenant to void the notice).!

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Overall Lessons

§  A landlord cannot start charging extra for something that was previously permitted free or included in the rent!

§  Even if the tenant agree to pay an extra charge for A/C by signing a new lease, the landlord would first have to reduce the monthly rent based on the average cost of A/C per suite. The new charge would be considered a “withdrawal of service”!

§  Rationale for doing this? Protect the landlord against sky-rocketing hydro charges.!

§  Other solution: Suite-meter and individual billing for electricity !

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#6: Tenants’ Unpaid Water Bills!!!!DISCLAIMER: Do not rely on this information as legal advice. Always hire your own licensed legal professional to represent your specific case!


Unpaid Water Bills: What the Municipal Act says Debt!398. (1) Fees and charges imposed by a municipality or local board on a person constitute a debt of the person to the municipality or local board, respectively. !Amount owing added to tax roll!(2) The treasurer of a local municipality may, and upon the request of its upper-tier municipality, if any, or of a local board whose area of jurisdiction includes any part of the municipality shall, add fees and charges imposed by the municipality, upper-tier municipality or local board, respectively, to the tax roll for the following property in the local municipality and collect them in the same manner as municipal taxes:!!

1. In the case of fees and charges for the supply of a public utility, the property to which the public utility was supplied.!2. In all other cases, any property for which all of the owners are responsible for paying the fees and charges. !

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Unpaid Water Bills: What the Municipal Act says

Ontario Regulation 581/06 !§  Permits fees and charges for the supply of water, gas,

steam or hot water, sewage and/or waste management placed on the tax roll to have priority lien status under the Act. !

§  This provides a municipality with the ultimate means of collection in addition to the sale of land for tax arrears (which requires a three year wait on the part of the municipality), including by going to court to enforce the debt or by seizing personal property in the possession of the taxpayer. !

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Termination for Cause: What the RTA says

Termination for cause, damage, shorter notice period!63. (1) Despite section 62, a landlord may give a tenant notice of termination of the tenancy that provides a termination date not earlier than the 10th day after the notice is given if the tenant, another occupant of the rental unit or a person whom the tenant permits in the residential complex,!(a) wilfully causes undue damage to the rental unit or the residential complex; !

Termination for cause, reasonable enjoyment!64. (1) A landlord may give a tenant notice of termination of the tenancy if the conduct of the tenant, another occupant of the rental unit or a person permitted in the residential complex by the tenant is such that it substantially interferes with the reasonable enjoyment of the residential complex for all usual purposes by the landlord or another tenant or substantially interferes with another lawful right, privilege or interest of the landlord or another tenant. !!

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N5 Notices for Unpaid Water/Utility Bills

Common N5 Form Mistake: Reason 1 vs. Reason 2!Reason 1: !§  Substantial interference with lawful rights, privileges, or

interests of the landlord þ!Reason 2:!§  Willfully or negligently damaged the rental unit or the

residential complex ý!!

Why is this mistake common? !Reason 2 asks tenant to pay a specific $ amount for damage costs. !Reason 1 only asks tenant to “correct the behaviour” (eg: paying the unpaid water bill)!!!!!


Unpaid Water Bills: Preventative Measures

§  Immediately contact the municipality in all jurisdictions where you hold property to determine what the existing municipal policy is in respect of tenant utility arrears !

§  Ask your municipality to confirm their policy in writing !§  Request to be advised in writing if the municipal policy in

respect of tenant utility arrears is to change. !

§  Ensure your leases give you the explicit right to recover any sums paid to a utility by a landlord from tenants in respect of utility consumption in the event of a failure of any tenant to make payment of utilities. !

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Unpaid Water Bills: Preventative Measures

!New Leases!

§  Ensure any offer to lease specifically addresses the issues created by tenancy default in payment of utilities. !

§  Option: Negotiate a higher monthly rent, include water charges in the rent, and pay the water utility bill directly!

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#7: Prospective Tenants Who Are Refugees or New Immigrants!!DISCLAIMER: Do not rely on this information as legal advice. Always hire your own licensed legal professional to represent your specific case!


Screening Prospective Tenants: Refugees

Common Human Rights Code Violations:!!

§  Not renting to refugees or new immigrants!§  Imposing different criteria to approve newcomers!§  Dismissing rental applicants due to lack of credit!§  Requiring guarantors – but only for refugees/immigrants!§  Inappropriate questions/comments about religion!!

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Screening Prospective Tenants: The Law Reg. 298/98 (Human Rights Code)!A landlord can:!§  request credit references and

rental history information, or either of them, and request authorization to conduct credit checks !

§  consider credit references, rental history information and credit checks, alone or in any combination, in order to assess the prospective tenant !

§  request income information from a prospective tenant only if the landlord also requests credit references and rental history information!

§  consider income information, & select or refuse the prospective tenant accordingly only if the landlord considers income information along with credit references, rental history information & credit checks!

§  if, after requesting credit references, rental history information, credit checks & income information, a landlord only obtains income information about a prospective tenant, the landlord may consider the income information alone!

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The Case: Ahmed v. 177061 Canada Ltd. The tenants:!§  Young couple recently from Bangladesh!§  Wife had job, husband looking for work!§  No credit cards or credit references!§  $25,000 in savings!Ø  Landlord rejected their application for “failing to meet the

minimum income, work history, and credit history criteria”!!

Outcome: Landlord found to commit discrimination, ordered to stop rejecting applicants who have no credit history in Canada, ordered to pay $5,000 in damages to the tenants.!!46


Tenant Screening Discrimination

Lessons:!§  No Credit History ≠ Bad Credit!

§  Can consider “income information” but cannot use “minimum income” criteria!

§  Cannot apply selection criteria that put people under protected grounds (race, ethnic background, place of birth) at a disadvantage!

§  If requiring a guarantor, must require request a guarantor from all prospective tenants!

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No Credit? No Problem!

§  Know the minimum documents immigrants and newcomers must have (such as a Permanent Resident Card or 8-digit Client ID from Citizenship and Immigration).!

§  Know what questions are appropriate and compliant with current Human Rights legislation. Sponsors and/or translators can be helpful guides. !

§  Require contact and/or presence of the applicant’s sponsor or official case-worker.!

§  Stay abreast of significant resettlement programs in your area and how to respond; staff of local MPs’ offices are generally prompt and helpful in answering questions. !

§  Remember: a rental experience is most likely the first ongoing and traceable economic relationship immigrants will establish in their new homes.!

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Mike Chopowick ��Vice President Federation of Rental-housing Providers of Ontario tel: 416-385-1100 email: [email protected]

The Seven Deadly Sins: When bad things happen to landlords · The Seven Deadly Sins: When bad...

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