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.

Settlement Agreements at the Landlord Tenant Board Ontario (LTB)

At the start of an LTB hearing session, the board member will highly recommend that the opposing parties volunteer to meet with a trained, impartial mediator, to help them reach a settlement agreement. Even though the word “settle” implies accepting something that is not the best, in a landlord and tenant dispute, a settlement may be the best option for resolving the dispute. Sometimes, it is the only option!

To avoid an eviction order being granted in a hearing, a tenant may be willing to attempt a settlement through mediation. The landlord and tenant can create a conditional agreement where the tenant agrees to meet a condition, or else be evicted.

For example, if the Notice of Termination alleges that the tenant, contrary to the lease agreement, smokes in the apartment, the tenant can consent to an agreement containing the condition that, for the next year, they will not, nor allow anyone else to, smoke in the apartment, or else be evicted.

A settlement agreement can be made legally enforceable by the Consent Order of a board member, if it contains a condition that relates to the Notice of Termination served on the tenant.

In mediation, the landlord and tenant can agree to discuss:

  • any issue in the tenancy, and not just those in the current application,
  • terms that are contrary to the Residential Tenancies Act, that, the RTA does not permit the board member to impose
  • remedies, that, although legal, the RTA does not permit the board member to enforce 

The only restrictions that the parties must follow are:

  • A rent increase more than 3% per annum above the permitted annual guideline increase is not permitted.
  • EVERYTHING discussed in the mediation is CONFIDENTIAL!

In a hearing, when making a decision, the board member can consider:

  •  only the issues contained in the application and/or Notice of Termination. (Exception: in a non-payment of rent application, the tenant’s issues can be added. Explained in more detail later)
  • only the terms that comply with the RTA 
  • only the remedies that the law allows the LTB to impose and enforce.

Since a landlord and tenant can create terms and remedies in their agreement that are broader than those the board member has the power to impose or enforce, this gives them a better chance of creating a win-win scenario for both parties. 

If the parties cannot come to an agreement in mediation, their hearing will not be cancelled. In the hearing, you are not permitted to share anything discussed in the mediation with the board member.

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Reasons Why You Should Seriously Consider Doing a Settlement 

Attempting a settlement can save you from the risks that going into a hearing exposes you to AND it can give you advantages that a hearing cannot.

Risk of the Hearing Not Being Called or Completed on the Scheduled Date 

The order in which the cases are called is at the discretion of the board member. Generally, it is withdrawals, settlements, adjournments, and then hearings where only one party is present, and then hearings where both parties are present.

Since some applications take hours to resolve, there is a risk that your case might not get called or not be completed on that hearing date.

Currently, it will take months to get another hearing date for your case. The time and expense of this risk might not be worth it.

Risk of Dismissal Due to a Critical Error

In the hearing, the board member will review the Notice of Termination. If it contains a critical error, it is mandatory for the board member to declare the Notice of Termination invalid and dismiss the application.  A simple mistake could become very costly!

Critical errors found on notices include:

  • an improper representative (e.g. real estate agent, a property manager that deals with multiple properties.)
  • not all tenants are listed
  • not all landlords are listed
  • inadequate identification of the rental apartment (e.g. unit number, basement apartment missing)
  • the wrong rental period 
  • the wrong termination date
  • insufficient details describing the problem that triggered the application, and specific date and time it occurred
  • incorrect amount of rent owing
  • improper method used to serve the Notice of Termination
  • failure to pay any  mandatory compensation by the specified date 
  • and more

You should consider consulting an experienced paralegal to prepare your Notice of Termination and application.

If you have already submitted a Notice of Termination that contains a critical error to the LTB, other than withdrawing your application and starting over again, a settlement is the only option. Hiring a paralegal to represent you in a settlement negotiation may save your application from a mandatory dismissal in a hearing. Board members usually ignore a flawed Notice of Termination when they are told the parties have reached an agreement.

Risk of Dismissal on Every Eviction Application Due to the Landlord Violating the Tenant’s Rights

It is mandatory that the board member deny granting the eviction if the tenant can prove that:

the landlord is in serious breach

  • of the landlord’s responsibilities under the RTA, (e.g. seriously failed to repair or maintain the property)
  • of a term of the lease or tenancy agreement,

OR

the landlord filed for an eviction order because the tenant:

  • complained to a governmental authority about the landlord’s violation of a law dealing with health, safety, housing or maintenance standards
  • has or is attempted to secure or enforce their legal rights
  • has children occupying the rental unit. (Occupation by children is not overcrowding.) 
  • is organizing or is a member of a tenants association

If a landlord believes that the tenant might raise any of these issues, they should attempt to reach a settlement rather than risk a mandatory dismissal of their application in a hearing.

Risk of Dismissal Due to Insufficient Evidence

If you lack enough documentary evidence, such as emails, letters, photos, receipts and bank statements or all of the witnesses necessary to testify before the board to prove your case, it will get dismissed in the hearing.

Risk of Eviction Not Being Granted

The conduct of a tenant / their occupiers / guests:

  • damage to the property
  • interference with the reasonable enjoyment of others on the premises 
  • safety, cleanliness 
  • harassment 
  • overcrowding 
  • persistent late payment of rent 
  • non-payment of rent etc.

may lead to an eviction application being brought against the tenant. 

For a landlord who wants to maintain the tenant, it makes sense to attempt to reach a settlement agreement. Often, when the landlord and tenant develop an agreement together, they work out an agreement that would be more to their liking than the one the board member may impose on them.

In a hearing, the board member must be as fair as possible to both parties in making a decision. Rather than grant an immediate eviction, the board member may instead issue a conditional eviction order to give the tenant a chance to avoid getting evicted.

The tenant will be ordered to stop the specific,  undesired conduct, mentioned in the Notice of Termination, for one year, or else be evicted. If there was willful or negligent damage to the apartment, the board member may also order financial amends be made for that conduct. 

For a persistent late and/or incomplete payment eviction application, the tenant must immediately become up-to-date with the rent, and continue to pay the total rent on-time each month, or else be evicted.

For a non-payment of rent eviction application, the board member may issue a pay-and-stay conditional eviction order. If the tenant pays the rent owed according to a payment plan that the board member imposes, they can stay on as a tenant. The tenant must continue to pay the total rent on-time each month, but they will be given 11 days, or more, to pay the past rent owed, and or else be evicted. 

If the tenant succeeds in complying with all of the conditional eviction order, for one year, they cannot be evicted under the current application. (Another incident of poor conduct, after the one year period would require another application process.)

Risk of Tenant Bringing An Application in a Non-payment Eviction

Under Section 82 of the RTA, in a hearing, a tenant is allowed to raise issues against the landlord. They are not required to submit an application or pay a fee to the LTB to raise their issues, or give the landlord any advance notice of their intention to raise issues. 

Their allegations may include, but are not limited to:  the collection of an illegal deposit or fee, an illegal rent increase, illegal entry, harassment, interfering with the tenant’s reasonable enjoyment of the unit, and maintenance or repair issues.

Many of these allegations can lead to the landlord being ordered to pay money to the tenant, which can be used to offset the rent owing, and may also require the application to be dismissed entirely.

Advantage of Ability to Offer Incentives to Vacate

When a tenant owes money for unpaid rent or undue property damage, a settlement negotiation may persuade the tenant to willingly vacate the apartment.  Rather than risk an eviction not being granted in a hearing, a landlord may offer to waive all, or part, of, the money owed to persuade the tenant to vacate. The risk involved in keeping a troublesome tenant often is too great to not consider this advantageous option.

Advantage of Ability to Add Other Issues to the Application

If at the time that the application was filed, issues were missed or if new issues developed after it was filed, the opposing parties can agree in a settlement negotiation to settle all of the issues that both the landlord and the tenant have with the tenancy.

This opportunity, for either party to have all of their issues dealt with,  would not be possible in the limited forum of a hearing, since the only issues the board member can consider there are those raised in the current application. A settlement would erase the cost and frustration of fighting future applications.

Advantage of Decreased Chance of a Successful Outcome getting Reversed

A settlement has a much lower chance of being challenged than a hearing decision in your favour does. Even if you receive an order in your favour, the opposing side may attempt to get the outcome reversed by filing a Request for Review with the LTB and/or file an appeal with the Divisional Court. The order you received will be not permitted to be carried out until the case is reviewed or resolved.

If the case is taken to Divisional Court, you will wait months, even a year to get a hearing date. Also, you will need a lawyer to represent you in this lengthy legal process.

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If a landlord does not attempt a settlement negotiation, they will face risks in a hearing that could lead to a dismissal of their application, possible penalties being brought against them, a less appealing payment plan imposed upon them by the board member, and the costly possibility of a challenge to their favorable outcome.

Rather than wasting time waiting for a hearing to get the same result: the end of offensive behaviour, on-time rent payments, repayment of rent owed, financial amends for damages, it is worth trying to come to a settlement agreement.

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Settlement Agreements and Consent Orders

If the landlord and tenant come to a consent agreement:

  • the mediator will write out a Mediated Settlement Agreement, and have the parties sign it and give each a copy of the agreement. (The LTB will not keep a copy.)

OR

  • The mediator will take the agreement and the parties to the hearing room. The board member, if needed, will interrupt a lengthy hearing in session to write out a Consent Order.

Things to note about a Consent Order:

  • The board member is allowed to include in the Consent Order only the terms and conditions in the agreement which are permitted by the Residential Tenancies Act.
  • Only the terms or conditions that relate to the Notice of Termination served will be enforceable.
  •  Any terms or conditions that are not part of the current Notice of Termination will not be enforceable; if the tenant does not meet these terms or conditions, there is no legal penalty that the LTB can enforce for their failure to do so.

An example of a condition that is allowed on a Consent Order, but is not enforceable: “When the tenant vacates, they will leave the apartment in a broom-swept state.” This condition is not forbidden by the RTA, so it is allowed to be included in a Consent Order. However, since it is not a condition that a board member is permitted to impose, this condition is not legally enforceable.

An example of a term that is not allowed on a Consent Order: “The tenant will be responsible for paying 15% of the cost of maintenance of the apartment.” Since in the RTA, the landlord is always responsible for maintenance of the apartment, the board member would not be permitted to include that term in the Consent Order.

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Settlement Breach

If a tenant breaches a Mediated Settlement Agreement or Consent Order by doing the same prohibited behavior within the next 12 months, the landlord can, within 30 days of that breach, without notice to the tenant, return to the Landlord and Tenant Board and complete a Application to End a Tenancy and Evict a Tenant – Tenant Failed to Meet Conditions of a Settlement or Order (L4-B form). In most cases, the board will issue an eviction order without holding a hearing.

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Paralegal Representation

Having an experienced paralegal who knows:

  •  the law, the RTA
  • the case law the board member must follow,
  • the wider options you have in a settlement versus the limited options in a hearing,
  • the risks you may face in a hearing
  • how to skillfully create a well-crafted settlement agreement that can be a win-win situation for both parties
  • how to get a legally enforced consent order to protect you

     will save you time and expense, stress and frustration.

Every day I receive calls from landlords wanting to hire me for LTB and Small Claims Court Ontario matters. I have over 23 years of experience as a paralegal.

If you are in Toronto or the GTA and you need to hire an experienced, paralegal Ontario, contact me:

Marshall Yarmus

Civil Litigations

(416) 229-1479

https://civilparalegal.com/home_services/landlord-and-tenant-board/