Being short on the rent can happen. This article speaks to options that Ontario tenants have when they are unable to pay their Rent in full or on time.
When I have tenant clients who are facing an application for termination for non-payment of rent there are a series of questions that have to be asked before becoming too concerned about dealing with the eviction. It is worthwhile for anyone who is having trouble paying the rent to answer these questions:
1) Why is the rent late? Is it because there is not enough income, unexpected bills, poor spending control, the rent is too high, roommate moved out, illness, loss of job, hours at work cut, on strike?
2) Can the reason that the rent is late be fixed so that the tenant is able to pay the future rents in full and on time? If not, is there a period of time over which the problem can be fixed? What is the timeline?
3) Is there enough income coming in that the rent can be paid in full on an ongoing basis and a small amount can be paid towards the arrears?
4) Is there a family member, friend, or someone who can and who is willing to help out?
5) How long is/was the tenancy and are there any special circumstances.
RENT ARREARS: NOT THE END OF THE WORLD
Being in arrears of rent is not a tragic situation. Getting evicted is not the obvious outcome and the likelihood is that you can indeed preserve your tenancy---i.e. you won't be evicted--depending on how you answered the questions above.
The Residential Tenancies Act is the law that governs landlord and tenant relationships in Ontario. As a provincial statute it is a law that takes precedence over any contract or lease document that a tenant may have signed. In fact, it doesn't matter what a tenant agrees to, in writing or not, if that agreement violates the provisions of the RTA then the agreement is void. The law does not allow a residential landlord and tenant to make just any deal that they wish. This includes agreements or terms that appear to be reasonable and fair to both parties. If the deal breaches the RTA--it is void---regardless of the perceived fairness of the arrangment.
The structure of the RTA matters--and its precedence over lease terms matters--as the RTA itself gives tenants many many chances to pay rent arrears, to make deals, and to seek relief from eviction from the landlord and tenant board. In fact, the structure of the RTA is such that the tenant gets the chances--whether the landlord likes it or not---and the hearing process is such that the law requires the adjudicator (judge at the Landlord and Tenant Board) to consider alternatives to eviction (called section 83 relief). As a tenant in a rent arrears situation you can access these chances and alternatives to eviction simply by participating in the process that the Landlord needs to follow. At some point in going through the process you will find yourself standing in front of an adjudicator--and depending on the answers to the questions I've set out above--you can likely save your tenancy.
At this point, I should make it clear to tenants that a landlord is NOT allowed to simply change the locks. A landlord is not allowed to enter your unit and evict you. A landlord is not permitted to demand that you move by a certain time and date and enforce that demand himself or through friends or acquaintances. A landlord does not have the right to remove a tenant who is covered by the Residential Tenancies Act from the rental unit. In Ontario, the only person who can physically evict a tenant from a rental unit is a Court Enforcement Officer--known as the Sheriff---and the Sheriff will only do that based on a valid Order from the Ontario Landlord and Tenant Board or the Superior Court of Justice. Landlord's have no self help right to kick out a tenant who has not paid the rent (regardless of what any lease or agreement to the contrary might say).
WHAT IS THE LEGAL PROCESS and how should a tenant respond to the steps?
When a tenant is in arrears of rent they should expect that a landlord might call to ask for the rent. In my experience it is best to be honest and straightforward with the landlord and advise truthfully about the reason for late payment. Often enough, a landlord will accept the explanation and make a deal to take care of the rent arrears. If this can be done an awful lot of anxiety and stress can be avoided. Note that you can only make a deal if you take the landlord's call---don't dodge the landlord or avoid him in the hopes that he will "forget" about the rent that you owe.
If the landlord does not call to talk to the tenant about the rent arrears or is unwilling to make a deal on acceptable terms, then the landlord will have to proceed with the legal way of terminating the tenancy and evicting the tenant. This process will take a fairly long time and the tenant will indeed get several opportunities to pay the rent and maintain the tenancy.
The first legal document that a tenant will get is a form N4 (Notice of Termination for Non-Payment of Rent). Note I said "legal document". Letters, notes, texts, emails demanding the rent and threatening eviction if the rent is not paid are not "legal" documents. The Form N4 is a form from the Ontario Landlord and Tenant Board and only that form can be used to terminate and evict a tenant for non-payment of rent.
As a tenant, when you receive a Notice of Termination (like the N4) take a look at the notes that are at the end of the form. The print is small but the notes explain your rights very clearly and demonstrate that the big bold letters and boxes on the form don't mean exactly what you think they mean. The biggest example of this is the box that says "TERMINATION DATE". When you see the date in this box you will think that you need to move out by that date. In fact, that is not true. If you pay the rent by that date then the Notice of Termination is void. That date is a minimum of 14 days after you receive the Notice of Termination (and if the time period is shorter the notice is invalid).
If you are unable to pay the rent by the Termination date then you still do not have to move out. You can require the landlord to file an application with the Landlord and Tenant Board. You do this by not moving out of the apartment. If you refuse to move out then the only legal way for the Landlord to get the unit back is to apply for a hearing date with the Board.
Applying to the landlord and tenant board will take another week or two or three before the case comes on for hearing. If at any time before the hearing you come up with all of the rent arrears (plus the $170 application fee) then it is guaranteed that at the hearing the adjudicator will dismiss the application and allow your tenancy to continue (because you have paid all of the rent and the costs). Sometimes this works out because the passage of time between getting the N4 (waiting 14 days) and then another week or two passing before the hearing allows the tenant enough time to come up with the rent arrears.
If the tenant is unable to come up with all of the rent arrears before the hearing then it is worthwhile for the tenant to attend the hearing. At the hearing, the adjudicator will ask what the rent arrears are and establish what amounts are owing. Often enough the tenant is in a position to agree what is owed. The adjudicator, after determining what is owed, will begin to ask the tenant questions very similar to the ones I've set out above. The adjudicator will want to know whether the tenant wishes to continue the tenancy, the reason for the rent arrears, whether the reason for the arrears arising has been fixed, whether ongoing rent can be paid in full and on time, whether the tenant can offer a repayment plan on a reasonable time line, and whether there are circumstances that exist that should result in the adjudicator exercising his or her discretion to impose a deal on the landlord that allows the tenant to maintain the tenancy while still protecting the landlord's ongoing right to rent.
Even if the tenant has no decent explanation--no acceptable plan---and can't possibly ever pay the rent arrears and is unlikely to be able to pay future rent as it becomes due--the Landlord and Tenant Board will still issue an order giving the tenant 11 days to pay all of the rent arrears plus the $170 application fee and thereby void the eviction order. If the tenant does not pay the rent within those 11 days, then on the 12th day the landlord may go to the sheriff to file the eviction order. The Sheriff will give the tenant a minimum of 7 more days before returning to evict. If during the period that the sheriff has given notice to the tenant the tenant pays the rent arrears and costs then the eviction order is voided again and the tenant can stay (this can only be done once during a tenancy).
The point of the foregoing timeline is highlight how many opportunities a tenant is given to pay the rent arrears and maintain the tenancy---even when it is clear that payment is unlikely or impossible.
EXERCISE OF DISCRETION (section 83)
Let us presume for a moment that the answers to the questions I laid out were such that it was clear that the reason for the rent arrears was a one time event--an unfortunate occurrence. For example--the cash rent was stolen before it was handed over to the landlord. Or, a roommate moved out. Or, the tenant lost a month's pay because they broke a bone and couldn't work. All of these explanations result in a temporary inability to pay the rent. The rent arrears happened because the tenant lost the ability to pay the rent for a short period of time. However, the tenant earns new money to replace the stolen cash, the tenant gets a new roommate, the bone healed and the tenant returned to work, and therefore the things that caused the rent arrears are fixed.
The "fix" allows the tenant to pay future rent in full or on time. Or, the "fix" allows the tenant to pay most of the future rent in full and all of the rent in full in a month or two. The point is that the "fix" sets out a plan that shows how a tenant can get into a position to pay all of the ongoing rent in the future.
An adjudicator needs to see--or have it explained to him or her by the tenant, how the future rent is going to be paid. Once the adjudicator is satisfied that future rent is going to be paid and that the "fix" or the "plan" is a reasonable one--then the adjudicator will turn their minds to the rent arrears that built up while the tenant was having the problem (i.e. while the bone was broken, when the roommate left, when the cash was stolen).
The adjudicator will not forgive the rent arrears and will indeed expect these arrears to be paid to the landlord. However, the adjudicator will be very open to the idea of an affordable payment plan whereby the tenant pays off the arrears over time. It is certainly true that this "payment plan" often makes landlords very upset. However, the "payment plan" is indeed a very logical thing to allow. The landlord is already out the money. Nothing can force a tenant to pay the money any faster than in a way that they can afford. Nothing that the Board can order will force a repayment if the tenant doesn't have the money. Evicting the tenant--for the rent arrears---will not result in the landlord getting the money any faster. Therefore, and so long as the tenant is in a position to pay ongoing rent in full, and on time, then it makes sense to grant the tenant a reasonable repayment plan for any sum of rent arrears. The repayment plan can be anything that makes sense within the tenant's budget.
To propose a payment plan, a tenant should be ready to put the details of their financial life on the table. Show paystubs, benefit stubs, and the sources of income. Show expenses and the things that the income is necessarily spent on. Show what the surplus is, or if there is no surplus of income show where you could cut back in the budget to pay the landlord an amount towards the rent arrears. Where a tenant produces a clear picture of their income, provides confirmation of income sources, and demonstrates what amount can reasonably be paid from the budget, it is my experience that for the most part, the Board will allow the tenancy to be maintained so long as the payment plan is followed.
Most payment plans of rent arrears are conditional on future rents being paid in full and on time. It is most important to pay ongoing rent--in full. The reason for this is that the Board, in exercising its discretion to maintain your tenancy and allowing you to remain in your apartment, will impose a section 78 condition on your tenancy. Section 78 allows the landlord to apply to the Board in the event that you breach the conditional order, without notice to you and obtain a without notice eviction order.
If a tenant has failed to make a payment towards the arrears as required by the discretionary order not all is lost. Even though a landlord may apply under section 78 for an eviction order, a tenant may set aside that eviction order on motion and again seek the exercise of discretion depending on the reasons for the breach of the eviction Order. Note however, that getting the exercise of discretion (relief) repeatedly becomes increasingly difficult as the failure to comply with an order arouses a suspicion that the tenant simply can not afford the rental unit.
THE THEME OF THE LEGISLATION
If you are a tenant who is in rent arrears, I hope that you have taken from this article the notion that being in arrears of rent is not a catastrophe. Losing your home, being evicted, is not the automatic consequence of falling behind in the rent. If the rent arrears are the result of an unexpected event, a tragedy, an illness, a problem of some kind, the RTA has built in chances and opportunities for tenants to recover from these problems. Ultimately, the RTA builds in compassion and understanding from adjudicators who are directed by law to consider alternatives to termination and eviction. Falling behind in the rent is not an insurmountable problem if the issues that lead to the arrears can be fixed and a viable plan is created that demonstrates that future rent can be paid and that arrears will be paid in a structured manner.
HOPELESS CASES
Sometimes, the reason for the rent arrears arises from a problem that can not be fixed. Sometimes a tenant's income will fall, or the circumstances are such that paying the future rent is simply not realistic. As indicated earlier in this article, the Board will still grant time to pay and the process of going to the sheriff will add more time to the ultimate eviction. Even in these circumstances, though, if the reasons are sufficient, it is worthwhile to participate in the proceeding and explain what is going on to the adjudicator. A tenant can ask for more time, or delayed eviction, or try to make a deal premised on partial payments or an indication of an honourable intention to pay the debt at a future time. Many landlords will agree, sometimes with the urging of an adjudicator to agree to a timeline that is least traumatic to the tenant--or the tenant's children---and allow an orderly end to a tenancy that simply can not continue.
Michael K. E. Thiele
QTMG LLP
Ottawa Lawyers
When I have tenant clients who are facing an application for termination for non-payment of rent there are a series of questions that have to be asked before becoming too concerned about dealing with the eviction. It is worthwhile for anyone who is having trouble paying the rent to answer these questions:
1) Why is the rent late? Is it because there is not enough income, unexpected bills, poor spending control, the rent is too high, roommate moved out, illness, loss of job, hours at work cut, on strike?
2) Can the reason that the rent is late be fixed so that the tenant is able to pay the future rents in full and on time? If not, is there a period of time over which the problem can be fixed? What is the timeline?
3) Is there enough income coming in that the rent can be paid in full on an ongoing basis and a small amount can be paid towards the arrears?
4) Is there a family member, friend, or someone who can and who is willing to help out?
5) How long is/was the tenancy and are there any special circumstances.
RENT ARREARS: NOT THE END OF THE WORLD
Being in arrears of rent is not a tragic situation. Getting evicted is not the obvious outcome and the likelihood is that you can indeed preserve your tenancy---i.e. you won't be evicted--depending on how you answered the questions above.
The Residential Tenancies Act is the law that governs landlord and tenant relationships in Ontario. As a provincial statute it is a law that takes precedence over any contract or lease document that a tenant may have signed. In fact, it doesn't matter what a tenant agrees to, in writing or not, if that agreement violates the provisions of the RTA then the agreement is void. The law does not allow a residential landlord and tenant to make just any deal that they wish. This includes agreements or terms that appear to be reasonable and fair to both parties. If the deal breaches the RTA--it is void---regardless of the perceived fairness of the arrangment.
The structure of the RTA matters--and its precedence over lease terms matters--as the RTA itself gives tenants many many chances to pay rent arrears, to make deals, and to seek relief from eviction from the landlord and tenant board. In fact, the structure of the RTA is such that the tenant gets the chances--whether the landlord likes it or not---and the hearing process is such that the law requires the adjudicator (judge at the Landlord and Tenant Board) to consider alternatives to eviction (called section 83 relief). As a tenant in a rent arrears situation you can access these chances and alternatives to eviction simply by participating in the process that the Landlord needs to follow. At some point in going through the process you will find yourself standing in front of an adjudicator--and depending on the answers to the questions I've set out above--you can likely save your tenancy.
At this point, I should make it clear to tenants that a landlord is NOT allowed to simply change the locks. A landlord is not allowed to enter your unit and evict you. A landlord is not permitted to demand that you move by a certain time and date and enforce that demand himself or through friends or acquaintances. A landlord does not have the right to remove a tenant who is covered by the Residential Tenancies Act from the rental unit. In Ontario, the only person who can physically evict a tenant from a rental unit is a Court Enforcement Officer--known as the Sheriff---and the Sheriff will only do that based on a valid Order from the Ontario Landlord and Tenant Board or the Superior Court of Justice. Landlord's have no self help right to kick out a tenant who has not paid the rent (regardless of what any lease or agreement to the contrary might say).
WHAT IS THE LEGAL PROCESS and how should a tenant respond to the steps?
When a tenant is in arrears of rent they should expect that a landlord might call to ask for the rent. In my experience it is best to be honest and straightforward with the landlord and advise truthfully about the reason for late payment. Often enough, a landlord will accept the explanation and make a deal to take care of the rent arrears. If this can be done an awful lot of anxiety and stress can be avoided. Note that you can only make a deal if you take the landlord's call---don't dodge the landlord or avoid him in the hopes that he will "forget" about the rent that you owe.
If the landlord does not call to talk to the tenant about the rent arrears or is unwilling to make a deal on acceptable terms, then the landlord will have to proceed with the legal way of terminating the tenancy and evicting the tenant. This process will take a fairly long time and the tenant will indeed get several opportunities to pay the rent and maintain the tenancy.
The first legal document that a tenant will get is a form N4 (Notice of Termination for Non-Payment of Rent). Note I said "legal document". Letters, notes, texts, emails demanding the rent and threatening eviction if the rent is not paid are not "legal" documents. The Form N4 is a form from the Ontario Landlord and Tenant Board and only that form can be used to terminate and evict a tenant for non-payment of rent.
As a tenant, when you receive a Notice of Termination (like the N4) take a look at the notes that are at the end of the form. The print is small but the notes explain your rights very clearly and demonstrate that the big bold letters and boxes on the form don't mean exactly what you think they mean. The biggest example of this is the box that says "TERMINATION DATE". When you see the date in this box you will think that you need to move out by that date. In fact, that is not true. If you pay the rent by that date then the Notice of Termination is void. That date is a minimum of 14 days after you receive the Notice of Termination (and if the time period is shorter the notice is invalid).
If you are unable to pay the rent by the Termination date then you still do not have to move out. You can require the landlord to file an application with the Landlord and Tenant Board. You do this by not moving out of the apartment. If you refuse to move out then the only legal way for the Landlord to get the unit back is to apply for a hearing date with the Board.
Applying to the landlord and tenant board will take another week or two or three before the case comes on for hearing. If at any time before the hearing you come up with all of the rent arrears (plus the $170 application fee) then it is guaranteed that at the hearing the adjudicator will dismiss the application and allow your tenancy to continue (because you have paid all of the rent and the costs). Sometimes this works out because the passage of time between getting the N4 (waiting 14 days) and then another week or two passing before the hearing allows the tenant enough time to come up with the rent arrears.
If the tenant is unable to come up with all of the rent arrears before the hearing then it is worthwhile for the tenant to attend the hearing. At the hearing, the adjudicator will ask what the rent arrears are and establish what amounts are owing. Often enough the tenant is in a position to agree what is owed. The adjudicator, after determining what is owed, will begin to ask the tenant questions very similar to the ones I've set out above. The adjudicator will want to know whether the tenant wishes to continue the tenancy, the reason for the rent arrears, whether the reason for the arrears arising has been fixed, whether ongoing rent can be paid in full and on time, whether the tenant can offer a repayment plan on a reasonable time line, and whether there are circumstances that exist that should result in the adjudicator exercising his or her discretion to impose a deal on the landlord that allows the tenant to maintain the tenancy while still protecting the landlord's ongoing right to rent.
Even if the tenant has no decent explanation--no acceptable plan---and can't possibly ever pay the rent arrears and is unlikely to be able to pay future rent as it becomes due--the Landlord and Tenant Board will still issue an order giving the tenant 11 days to pay all of the rent arrears plus the $170 application fee and thereby void the eviction order. If the tenant does not pay the rent within those 11 days, then on the 12th day the landlord may go to the sheriff to file the eviction order. The Sheriff will give the tenant a minimum of 7 more days before returning to evict. If during the period that the sheriff has given notice to the tenant the tenant pays the rent arrears and costs then the eviction order is voided again and the tenant can stay (this can only be done once during a tenancy).
The point of the foregoing timeline is highlight how many opportunities a tenant is given to pay the rent arrears and maintain the tenancy---even when it is clear that payment is unlikely or impossible.
EXERCISE OF DISCRETION (section 83)
Let us presume for a moment that the answers to the questions I laid out were such that it was clear that the reason for the rent arrears was a one time event--an unfortunate occurrence. For example--the cash rent was stolen before it was handed over to the landlord. Or, a roommate moved out. Or, the tenant lost a month's pay because they broke a bone and couldn't work. All of these explanations result in a temporary inability to pay the rent. The rent arrears happened because the tenant lost the ability to pay the rent for a short period of time. However, the tenant earns new money to replace the stolen cash, the tenant gets a new roommate, the bone healed and the tenant returned to work, and therefore the things that caused the rent arrears are fixed.
The "fix" allows the tenant to pay future rent in full or on time. Or, the "fix" allows the tenant to pay most of the future rent in full and all of the rent in full in a month or two. The point is that the "fix" sets out a plan that shows how a tenant can get into a position to pay all of the ongoing rent in the future.
An adjudicator needs to see--or have it explained to him or her by the tenant, how the future rent is going to be paid. Once the adjudicator is satisfied that future rent is going to be paid and that the "fix" or the "plan" is a reasonable one--then the adjudicator will turn their minds to the rent arrears that built up while the tenant was having the problem (i.e. while the bone was broken, when the roommate left, when the cash was stolen).
The adjudicator will not forgive the rent arrears and will indeed expect these arrears to be paid to the landlord. However, the adjudicator will be very open to the idea of an affordable payment plan whereby the tenant pays off the arrears over time. It is certainly true that this "payment plan" often makes landlords very upset. However, the "payment plan" is indeed a very logical thing to allow. The landlord is already out the money. Nothing can force a tenant to pay the money any faster than in a way that they can afford. Nothing that the Board can order will force a repayment if the tenant doesn't have the money. Evicting the tenant--for the rent arrears---will not result in the landlord getting the money any faster. Therefore, and so long as the tenant is in a position to pay ongoing rent in full, and on time, then it makes sense to grant the tenant a reasonable repayment plan for any sum of rent arrears. The repayment plan can be anything that makes sense within the tenant's budget.
To propose a payment plan, a tenant should be ready to put the details of their financial life on the table. Show paystubs, benefit stubs, and the sources of income. Show expenses and the things that the income is necessarily spent on. Show what the surplus is, or if there is no surplus of income show where you could cut back in the budget to pay the landlord an amount towards the rent arrears. Where a tenant produces a clear picture of their income, provides confirmation of income sources, and demonstrates what amount can reasonably be paid from the budget, it is my experience that for the most part, the Board will allow the tenancy to be maintained so long as the payment plan is followed.
Most payment plans of rent arrears are conditional on future rents being paid in full and on time. It is most important to pay ongoing rent--in full. The reason for this is that the Board, in exercising its discretion to maintain your tenancy and allowing you to remain in your apartment, will impose a section 78 condition on your tenancy. Section 78 allows the landlord to apply to the Board in the event that you breach the conditional order, without notice to you and obtain a without notice eviction order.
If a tenant has failed to make a payment towards the arrears as required by the discretionary order not all is lost. Even though a landlord may apply under section 78 for an eviction order, a tenant may set aside that eviction order on motion and again seek the exercise of discretion depending on the reasons for the breach of the eviction Order. Note however, that getting the exercise of discretion (relief) repeatedly becomes increasingly difficult as the failure to comply with an order arouses a suspicion that the tenant simply can not afford the rental unit.
THE THEME OF THE LEGISLATION
If you are a tenant who is in rent arrears, I hope that you have taken from this article the notion that being in arrears of rent is not a catastrophe. Losing your home, being evicted, is not the automatic consequence of falling behind in the rent. If the rent arrears are the result of an unexpected event, a tragedy, an illness, a problem of some kind, the RTA has built in chances and opportunities for tenants to recover from these problems. Ultimately, the RTA builds in compassion and understanding from adjudicators who are directed by law to consider alternatives to termination and eviction. Falling behind in the rent is not an insurmountable problem if the issues that lead to the arrears can be fixed and a viable plan is created that demonstrates that future rent can be paid and that arrears will be paid in a structured manner.
HOPELESS CASES
Sometimes, the reason for the rent arrears arises from a problem that can not be fixed. Sometimes a tenant's income will fall, or the circumstances are such that paying the future rent is simply not realistic. As indicated earlier in this article, the Board will still grant time to pay and the process of going to the sheriff will add more time to the ultimate eviction. Even in these circumstances, though, if the reasons are sufficient, it is worthwhile to participate in the proceeding and explain what is going on to the adjudicator. A tenant can ask for more time, or delayed eviction, or try to make a deal premised on partial payments or an indication of an honourable intention to pay the debt at a future time. Many landlords will agree, sometimes with the urging of an adjudicator to agree to a timeline that is least traumatic to the tenant--or the tenant's children---and allow an orderly end to a tenancy that simply can not continue.
Michael K. E. Thiele
QTMG LLP
Ottawa Lawyers
