Posted May 24, 2022 | by Todd Garvie
What happens if my tenant doesn’t pay rent is the wrong question.
If you have a tenant who is refusing to pay rent, you’ve already lost. Look no further than the numerous examples in the media. Exacerbated by COVID, the Landlord and Tenant Board (LTB) is failing everyone relying on them.
This story here from CTV News on May 16th 2022 tells the story of tenants who paid September and October’s rent, then decided they prefer living rent-free. They stopped paying utilities too, racking up estimated arrears of $18,000. This Landlord, with the assistance of legal counsel, filed with the LTB on December 20th 2021 and hadn’t received a Notice of Hearing at the time of publication.
The LTB responded to CTV News with the comforting response that they recognize “..the impact that delays have on those who access its services and is taking steps to address the backlog, including modernizing our organization and adapting many of our core services”, and that “Depending on the application type, new matters are scheduled to be heard within three to seven months, on average.”
Three to seven months sounds favourable based on my actual experiences. You can see this real case that I was involved in. This tenant didn’t pay rent from April 1, 2020 to September 30, 2021. The first hearing, which by all appearances was won by our excellent legal representative, didn’t result in a conclusion as the adjudicator “did not issue an order before the end of her appointment” resulting in a “hearing de novo” on September 24, 2021. That’s right – payments stopped in April of 2020, the LTB hearing wasn’t until six months later, and then the adjudicator didn’t complete her work. So, the tenant continued to live in the rental unit without paying any rent while we waited to have a second hearing on September 24th 2021, having to entirely re-argue the matter because “any oral determinations made by the prior adjudicator at the first hearing will form no part of the present order”. This hearing fortunately resulted in an order, with the tenant owing a total of $19, 911.00 which was never recovered by the Landlord.
The next natural question we should be asking is how do I get a top quality tenant into my rental unit. It’s actually easier to invert the question and ask how do we get a tenant who almost certainly won’t pay rent.
Don’t solve major maintenance concerns. If there’s an insect infestation, only deal with it in part
Don’t hire trades people, they’re too expensive – a ‘handyman’ will do just fine
Leave your rental unit outdated, and unappealing. The corroded plumbing fixtures are fine, and who wants to pay for a new coat of paint? Someone will take it as-is
Don’t be conservative in your rent projections when purchasing a property. Seek top rent, at the cost of creditworthiness, reliable income, and a responsible rental history. Comparables found from market research may say that your optimal rent is $2,400, but you paid a lot for this property, and you need a specific number – so let’s get to that. Find a leasing agent that won’t give you any critical feedback and will do whatever it takes to get the rental amount you want
Put someone in immediately, don’t entertain the applicants that are looking to move two months from now
These are just a few of the fatal flaws I see, but this could be an entire series rather than a single post.
To summarize what you want to do:
Deal with your maintenance concerns, and have it done right, by qualified and licensed contractors and tradespeople
Create a great rental unit that someone would be proud to live in – high quality rental units attract high quality applicants
Have realistic expectations on rent, don’t get yourself into an investment where the numbers don’t make sense, and don’t overextend yourself
Be patient on finding a quality applicant. One month of vacancy is better than five months or more of non-payment with tenants in place
Even if everything is done right, you still have the risk of entering a tenancy agreement with a tenant, that at one point or another, won’t pay rent. It’s essential at this point that you hire a qualified legal representative so that you can utilize the remedies offered by the Residential Tenancies Act and the Landlord and Tenant Board in the correct, and most time-efficient manner as possible.