Ontario Landlords with “Bad Faith” Applications Beware

If a landlord gave a notice of termination in bad faith for landlord’s own use, purchaser’s own use, or for demolition, conversion, or major repairs, the board will now be able to order compensation for general damages to the former tenant in an amount not exceeding 12 months of rent at the last rate the former tenant paid the landlord.

To all Landlords:

These amendments to the Residential Tenancies Act under Bill 184 will go into effect on a date yet to be announced.

Landlords awaiting hearings who know they gave a notice of termination in “bad faith” for landlord’s own use, purchaser’s own use, or for demolition, conversion, or major repairs and renovations should beware. You should be scared of sections of the Residential Tenancies Act not yet in effect if, you have a case before the board.

The amounts of money a former tenant given a notice of termination in bad faith, can be awarded has risen dramatically. See section 57, 57.1, 71.1, 72, and 231.1 of the Residential Tenancies Act below for more information.

Landlords with “bad faith” applications currently before the board should consider withdrawing the applications.

Please note that although every effort was made to make sure these explanations are complete and accurate, it is very difficult to take sections of the RTA that are written in complex legal language and explain them fully in layman’s language.

Please check the precise wording of the amendments made in the Residential Tenancies Act. It is recommended that you obtain proper legal advice on interpreting the RTA, and how it applies to you.

Section 57(3) (8)

If a landlord gave a notice of termination in bad faith for landlord’s own use, purchaser’s own use, or for demolition, conversion, or major repairs, the board will now be able to order compensation for general damages to the former tenant in an amount not exceeding 12 months of rent at the last rate the former tenant paid the landlord.  

This section applies even if the tenant suffered no actual out of pocket damages. This section applies even if the Tenant’s application was filed before this section comes into force, provided the application was not decided prior to this section came into effect.

Section 57.1(2)(2.1)(2.2)

A Tenant given a Notice of Termination (N13) as the landlord intents to make major repairs or renovations to the apartment, has the right of first refusal to move back into the apartment when the major repairs or renovations are completed. If the landlord refuses to allow the tenant to move back in currently the tenant can apply to the board up to one year after they vacated.

This amendment will allow a tenant apply to the board up to two years after vacating. If a tenant has already applied to the board between one and two years after vacating, the application will be allowed to proceed.

If an application has already been dismissed as it was filed more than one year after the tenant vacated, the tenant will be allowed to re-apply if it is less than two years after they vacated.

Section 71.1(1)(2)

A landlord who applies for an eviction for landlord’s own use or purchaser’s own use will have to file an affidavit of the person who plans to move in with the board at the time the application is filed. The board will have the right to refuse the application if the affidavit is not filed at that time.

Section 71.1(3)(4)

A landlord who applies for an eviction for landlord’s own use, purchaser’s own use, or for demolition, conversion or repairs will have to indicate whether or not the landlord has given within the last two years, any notices to any tenant, at any property, for landlord’s own use, purchaser’s own use, or for demolition, conversion or repairs.

If a notice had been given to any tenant within the last two years, the landlord will also have to indicate: the date of the notice given, the address of the apartment related to the notice was given, identify who was supposed to move in.

If the landlord fails to comply with this section the board shall refuse the filing of the application.

Section 72(3)(4)

In determining the good faith intention for a landlord’s own use, or purchaser’s own use applications, the board may consider whether notices have been given to any tenant within the last two years under section 71.1(3)(4).

Section 87(1)(1.1)(3)(3.1)(4)(5)(6)(7)

A landlord will be allowed to apply to the board for a money judgment for non-payment of rent up to one year after the tenant vacates. This section will have to be effective on the day the tenant vacated.

The landlord will also be allowed to apply for daily rent from a former tenant, if the tenant remained in the apartment after being given any notice of termination, or there was an agreement to terminate the tenancy.

The tenant will have to be living in the apartment on the day this section came into effect. A landlord may apply to the board under this section while the tenant is still living there, or up to one year after the tenant vacated.

A landlord will be able to seek NSF cheque fees from a former tenant.

A landlord will be permitted to apply for non-payment of rent, daily rent compensation and NSF chqeues from a former tenant, even if the amounts were owed before this section comes into effect.

This section will not affect any claims against a former tenant that are already before the Small Claims Court or the Superior Court of Justice.

Section 88.1(1)(2)(3)(4)(5)(6)

A landlord will be allowed to apply to the board for reasonable out of pocket expenses related to the tenant or former tenant’s interference with the landlord’s reasonable enjoyment of the property, or another lawful right or privilege of the landlord.

This application will have to be made while the tenant is still living in the apartment, or up to one year after the tenant vacates.

The section applies even if the reasonable interference with enjoyment, lawful rights of the landlord, or the expenses occurred before this section came into effect.

This section will not affect any claims against a former tenant that are already before the Small Claims Court or the Superior Court of Justice.

Section 88.2(1)(2)(3)(4)(5)(6)

A landlord will be allowed to apply to the board for utility costs that the tenant or former tenant was required to pay the landlord.

This application will have to be made while the tenant is still living in the apartment, or up to one year after the tenant vacates.

The section applies even if the utility costs occurred before this section came into effect.

A landlord will be allowed to apply for reasonable out of pocket expenses utility costs already paid, or future costs related to utility expenses.

This section will not affect any claims against a former tenant that are already before the Small Claims Court or the Superior Court of Justice.

Section 89.1(1)(2)(3)(4)

A landlord will be allowed to apply to the board to pay for 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 that the tenant or former tenant was required to pay the landlord.

The damage must be to the apartment or the residential complex. The damage must be as result of the negligence or willful actions of the tenant or former tenant, or the negligence or willful actions of a person the tenant or former tenant allowed in the apartment.

This application will have to be made while the tenant is still living there, or up to one year after the tenant vacates.

The section applies even if the damage to the apartment or residential complex occurred before this section comes into effect.

A landlord will be allowed to apply for reasonable out of pocket expenses utility costs already paid, or future costs related to utility expenses.

This section will not affect any claims against a former tenant that are already before the Small Claims Court or the Superior Court of Justice.

Section 189.0.1

A landlord filing an application against a former tenant for unpaid rent, compensation for daily use, unpaid utilities, or damages to the rental unit or residential complex will have to locate a current address for service for the former tenant.

A landlord suing a former tenant must serve the former tenant with the application and notice of hearing, and file a certificate of service with the board.   

Section 191(1.0.1)

An application and notice of hearing served on a former tenant must be served either personally, by mail to the current address of the former tenant, handing the documents to an adult where the tenant currently lives, or by another method permitted by the rules.

Section 231.1(1)

The Rental Housing Enforcement Unit of the Ministry of Housing prosecutes offenses made under the Residential Tenancies Act. This section permits a provincial judge or justice of the peace, to issue orders for production of documents to assist in an investigation by the Rental Housing Enforcement Unit.  

Major Changes to the Residential Tenancies Act under Bill 184

Bill 184 (Protecting Tenants and Strengthening Community Housing Act, 2020) was passed by the Ontario Legislature on July 21, 2020. The bill made many changes to the Residential Tenancies Act. Some of the changes to the RTA went into effect immediately upon passage of the bill, while other changes will come into effect at a later date.

There are too many changes to the RTA to list them all here. This is a list of the most important changes currently in effect that I want my landlord clients to know about.

Please note that although every effort was made to make sure these explanations are complete and accurate, it is very difficult to take complex legal language and explain it fully in layman’s language.

Please check the precise wording of the amendments made in the Residential Tenancies Act. It is recommended that you obtain proper legal advice on interpreting the RTA, and how it applies to you.

Here are the sections of the Residential Tenancies Act whose major changes are already in force:

  • Section 49.1(1)(2)

If an N12 Notice for Purchaser’s Own Use was given to the tenant after July 21, 2020, the landlord must pay compensation to the tenant equal to one month’s rent, or offer the tenant another apartment suitable to the tenant.

  • Section 52(2)

If an N13 Notice for demolition or conversion to non-residential use was given to the tenant after July 21, 2020, and the building contains fewer than five residential units, the landlord must pay compensation to the tenant equal to one month’s rent, or offer the tenant another apartment suitable to the tenant. This section applies if the demolition was not ordered to be carried out.

  • Section 54(3)(4)

This section applies if:

  • an N13 Notice for major repairs requiring vacant possession and a building permit was given to the tenant after July 21, 2020;
  • the building contains fewer than five residential units;
  •  the tenant does not give notice to the landlord before vacating that the tenant is exercising their right of first refusal to move back in after repairs are made;
  • the major repair was not ordered to be carried out.

The landlord must pay compensation to the tenant equal to one month’s rent, or offer the tenant another apartment suitable to the tenant.

However, if the tenant does give notice before vacating that they plan to move back in after the repairs are completed, than the landlord shall pay the tenant the lessor of one month’s rent or the period the apartment was under repair or renovation.

  • Section 55.1

If the landlord gives a notice of termination for landlord’s own use, purchaser’s own use, for renovation and repair, conversion to no residential use, or for demolition, any compensation the landlord is required to pay the tenant must be paid by the termination date set out in the notice of termination.

  • Section 78(1)(3)(4)(7)(12)

Section 78 allows a landlord to apply to the board for an eviction order, without a hearing being held if the landlord had previously applied to the board for an eviction order, and the board ordered that there would be no eviction if the tenant met certain conditions. The tenant failed to meet one or more of the conditions, and the order of the board permitted the landlord to apply for an eviction order under section 78 if the tenant failed to one or more of the conditions.  

These amendments deal with the section 206.  Now a landlord can also apply for an order evicting the tenant if the tenant fails to meet the conditions in the Payment Plan filed with the board.

  • Section 82(1)(2)(3)(4)

At a non-payment of rent hearing a tenant is entitled to raise any issue that could be raised in an tenant’s application (e.g.: maintenance, harassment,) as if they had filed an application and paid a filing fee to the board.

 This new section now requires the tenant to give to the landlord and the Landlord and Tenant Board written notice of their intent to raise issues which could be raised if a tenant’s application had been filed. The proposed rules require the tenant to give a written description of each issue the tenant plans to raise, and to serve a copy of the issues and of all evidence the tenant plans to rely on at least five business days before the hearing.

 However, the tenant may still be able to proceed with their claim if the tenant provides a satisfactory explanation to the board why they were unable to comply with this requirement.

  • Section 83(6)

The Landlord and Tenant Board is required on all eviction applications to use its discretion based on all the circumstances disclosed at an eviction hearing to determine whether it would be fair to delay or deny an eviction.

The new section deals with non-payments of rent applications where the rent owed in whole or in part is during the COVID-19 period starting on March 17, 2020. The Board is now required to consider whether it would be fair to delay or deny an eviction based on whether the landlord has attempted to negotiate an agreement or payment terms with the tenant.

  • Section 135.1

If a tenant pays an illegal rent increase for 12 consecutive months, and if the tenant does not make an application to the board challenging the illegal rent increase within 12 months of the date of the increase, then this rate becomes the legal rent payable.

This section applies to an illegal rent increase made before or after July 21, 2020, provided the board validity of the rent increase was not determined by the board prior to July 21, 2020.

This section removes the loophole that once an illegal rent increase was made, the tenant could dispute the lawful rent being charged years later.

  • Section 194(1)

The board always had mediators on site to assist the parties, if they voluntarily chose to speak with a mediator, to try come to their own solution to the application before the board.

This amendment now permits the board to order the parties to attend mediation or another dispute resolution process. Mediation may be forced upon the parties.

Section 206

If the landlord has filed an L1 application (non-payment of rent) with the Landlord and Tenant Board, and the landlord and the tenant agree in writing to a payment plan signed by all the parties on how the arrears are to be paid, this may be filed with the board in advance of the scheduled hearing. If filed, the board may order a payment plan without holding a hearing. If this happens, then no eviction will be ordered.

The agreement may include payment of the arrears of rent, NSF cheque fees incurred, and NSF administrative fees, payment of the LTB filing fee, and future rent that will become due during the period that the rent arrears are being paid off. 

The board will issue an order that will contain a section 78 clause. If tenant fails any make payment as set out in the signed agreement, the landlord may within 30 days of that breach file an L4 application with the board setting out which terms were breached. The board may order an eviction without holding a hearing.

Alternatively, a landlord may file a request to reopen the application and have a hearing, even if a section 78 clause was included in the order.

A landlord or a tenant may file a request to reopen the application within 30 days of the L1 payment plan order being made alleging the other party coerced them or deliberately made false or misleading representations which had an effect on the agreement and the order issued as a result of the signed payment agreement. 

 Section 238(1)

The Rental Housing Enforcement Unit of the Ministry of Housing investigates and prosecutes contraventions of the Residential Tenancies Act.

The maximum fines for individuals (landlords or tenants) found guilty increases to $50,000.00. This is up from $25,000.00.

The maximum file for corporate landlords found guilty increases to $250,000.00. This is up from $100,000.00.

WHAT SHOULD A LANDLORD DO IF THEIR TENANT IS NOT PAYING RENT DURING THE COVID-19 PANDEMIC?

It is important that your application gets into the LTB queue as soon as possible as the queue for LTB hearings was already very backlogged before this Covid-19 situation began. Ideally, LTB applications should be processed in a month, but it was already taking 2 – 3 months to get a hearing date. Now, it will be much longer.

Due to the extraordinary COVID-19 situation, many tenants are having trouble with their finances. In light of this, the provincial government has suspended the Ontario Landlord Tenant Board holding eviction hearings until further notice. The only exceptions to this order are matters related to an urgent issue such as an illegal act or serious impairment of safety.

If a tenant has not paid their April rent, the first action the landlord should take is to contact the tenant to ask why the rent was not paid.

Has the tenant’s income severally dropped? Did the tenant lose their job?

You should inquire if the tenant will be automatically receiving or applying for any of these government benefits:

•Employment Insurance

•The new Canada Emergency Response Benefit available for application starting Apr 6, 2020

•An increase in the Canada Child Benefit in May 2020

•The Special Goods and Services Tax payment payable on April 9, 2020

•Increased access to Employment Insurance Sickness Benefit

See https://www.canada.ca/en/department-finance/economic-response-plan.html

Be careful not to harass your tenant. You should document or note any conversations you have had with the tenant about how they will pay rent during this time.

If the tenant is making the effort to pay all or part of their rent, and is availing themselves of government initiatives, a landlord should try to work with the tenant.

If your tenant is deliberately refusing to pay rent, refusing to work with you, or refusing to provide you information on their financial circumstances and the government benefits they have applied for, you should immediately apply to the Landlord and Tenant Board (LTB) for an eviction hearing.

It is important that your application gets into the LTB queue as soon as possible as the queue for LTB hearings was already very backlogged before this Covid-19 situation began. Ideally, LTB applications should be processed in a month, but it was already taking 2 – 3 months to get a hearing date. Now, it will be much longer.

Our office continues to help our landlord clients by serving N4 notices and issuing L1 non-payment of rent applications with the Ontario Landlord and Tenant Board. If you are in Toronto or the GTA and you need to hire a paralegal, contact Marshall Yarmus of Civil Litigations at 416-229-1479 or visit https://www.civilparalegal.com/our_services/landlord-and-tenant-board/