Tenant not paying on time. What to do?

past due

As a professional REALTOR I do a number of residential rentals for my investor clients. The process I follow to screen tenants includes obtaining credit check, rental application, employment letter, references,and personal meeting. There’s generally enough information in this process for the landlord to make a yes or no decision. The landlord cares about two things: 1. the rent is paid on time and 2. that the tenant looks after the property.

What should a landlord do if the tenant is always late with rent? Unfortunately, when the tenant is late once or twice and the landlord happens to be a “nice guy”, I have noticed that the unpaid rent period gets longer and longer. Tenants forget that they entered into a legal contract with the landlord to pay the rent on time. In my view, the landlord should move swiftly to tender notice to the tenant on the second day of the rent due date. Here’s how you do that:

The province of Ontario has forms that the landlord must use to communicate with their tenants. Use Form N4 Notice to End a Tenancy Early For Non-Payment of Rent. Forms are available at the Ontario Landlord Tenant Board (LTB) website at www.ltb.gov.on.ca

Win Win

Serve Form N4 to your tenant on the second day (or third day at most) after missing the payment date. The reason for acting so swiftly does two things: 1) it trains your tenants that you want your rent paid on time, and 2) the sooner the notice is served, the sooner you can process the eviction if it is required.

The Form N4 is a legal notice that could lead to you being evicted from your home. The operative word here is “could” and does not necessarily mean it will happen. The notice has a termination date typically 14 days, which is the deadline date for the tenant to pay their rent before the landlord can apply to the LTB for an eviction hearing.

In most cases, tenants get the message and get their act together.  The landlord is paid within those 14 days and the the matter is closed. (If it happens again, repeat with a new N4.)

Lose Lose

If 14 days pass and the tenant has not paid their rent, we fill out a Form L1 Application to evict a tenant for non-payment of rent and to collect rent the tenant owes. The application fee is $170.00. The application is faxed to the nearest branch that services the area which is listed under Regional Offices and Locations on their website. Guess who will be responsible for all these added costs?       Yup! The tenant.

You will get response within 2 to 14 days of the hearing date. You must attend the hearing in person or send an authorized representative.

The hearing is scheduled anywhere from two weeks to two months. In most cases it is within 2 weeks.  Hearing happens in front of the adjudicator. If the tenant is present the adjudicator may allow some leeway and recommend to the landlord to permit the tenant the option to pay up the back rent in instalments. If the tenant does not show up the landlord wins by default. The adjudicator assigns “the must move out date” for the tenant and rules on compensation owed to the landlord.

Tenant is still there past “must move out date”.

The Landlord is then allowed to file the Order with the Court Enforcement Office (Sheriff) to enforce the Order on the following day. They mail out the “Notice To Vacate”; one gets mailed to the landlord and one gets mailed to the tenant.

The Sheriff will go to the property on the eviction date. If the tenant is not home the Sheriff will post a note on the door. The rental unit is now technically in the landlord’s possession. However, the tenant has an additional 72 hours to remove their personal belongings.

After the 72 hours the tenant is still there.

This is when you call the police and have the police escort the tenant off the premises. If the tenant becomes vindictive or causes a disturbance you may fill out a “Trespass Notice to Prohibited Person” available at the police station. This Notice must be served to the tenant prior to their vacating their unit and prohibits them from entering the building or else they will be arrested and fined.

Let’s say, the landlord has still not been paid back rent. The landlord will have to go to Small Claims Court to get the LTB judgment converted to an Ontario Small Claims Court judgement. This process is pretty straight forward as it is just a bunch of paperwork.  

Getting paid can be tedious and may require some detective work. (You may want to hire a collection agency to do this for you.) This is where your rental application and employment verification comes in.  You can get a motion from the Court to garnish wages. In case of tenants being husband-wife this could apply to both of their employers. You can also report the delinquency by filing the judgement to the Credit Bureau. In this tough regulated financial environment, good luck qualifying for a mortgage with the new credit rating.

I have painted of course, a worse case scenario in which nobody wins. If tenants think they can take the landlord for a ride, there’s a lot to lose.

So,

Who you gonna call? Well, definitely not me.

Please consult with a paralegal or a qualified attorney that works in the area of landlord tenant issues and small claims, as required.

Disclaimer: The information contained in this blog and website is general real estate information and should not be construed as legal advice to be applied to any situation. I recommend that you consult with your own lawyer for legal advice.

Andy Sagu