All investors need to arm themselves with the know-how and knowledge of what the Landlord Tenant Board does and how it impacts your investments, especially if you are self-managing your property. With the rise of professional tenants and disastrous issues that have happened in the past few years, plus the new regulation of rent control (more on this next week), tenants have become way more savvy and knowledgeable about their rights under the Landlord Tenant Board. Ultimately, this makes tenants more difficult to deal with.
The Rise of Professional Tenants – The Landlord & Tenant Board can be seen as the judge who ultimately makes the call on how to settle a dispute between a landlord and a tenant. Of course, getting to the point where a judge is put into place can be a very long and drawn-out process. This gave birth to what we call “professional tenants”. These are tenants who know the Landlord & Tenant Board inside-out and can manipulate the system to live rent-free for extended periods of time. Don’t worry though, it’s not as bad as you think. That said, do continue reading the rest of this Insight Article to understand how you can protect yourself from these professional tenants.
Knowledge is Power – First off, everything at the Landlord & Tenant Board is super backed up and getting a hearing takes forever. Secondly, in order to get to the hearing, you must file the appropriate forms.
Obviously, you never want to be in the situation where you need to use the Landlord & Tenant Board, but in the case that you ever need to, you should equip yourself with the relevant knowledge well in advance. As a side note, if you ever get to the Landlord & Tenant Board, it doesn’t matter what your lease says because if it cannot be upheld in the Landlord & Tenant Board, then the actual signed lease itself means nothing. All rights of tenants and landlords as per the Landlord & Tenant Board will superceed the language used in any lease. An example of this is prohibiting pets in a rental unit. As per the Landlord & Tenant Board, you cannot forbid a pet from being in your unit, so it actually doesn’t matter if it’s in the lease or not.
The FAQ – The 2 most common questions that I get are, “How do I increase rent?” and “How do I evict a tenant?” I’ll break down these 2 common questions below in further detail.
#1 – How do I increase rent?
You simply need to fill out the N1 form (Notice of Rent Increase), which you can find in the link below.
Make sure you adhere to the maximum allowable rent increase as per rent control. In 2019, the maximum allowable increase is 1.8%. We’ll soon find out 2020’s allowable increase. I highly doubt it’ll be much more than that of 2019. If you are not sure whether your investment property is under rent control, all you need to know is if your unit was completed before or after November 15th, 2018. Other than a minor exception for major renovations, if your investment property was completed before November 15th, 2018, then your property is subject to the rent control rules. If the property was completed after November 15th, 2018, then your unit is not under rent control and you can increase your rent past the maximum allowable amount on lease renewals.
#2 – How do I evict a tenant?
The most common reason for evicting a tenant is a result of late rental payments, so I’ll use that as an example. If you wish to evict a tenant for late rental payments, then you must file an N4 form (Notice to End a Tenancy Early for Non-payment of Rent). This form can be found in the link below.
The N4 is the notice that must be served to your tenant in person or by mail before eviction. The N4 is the legal notice from the Landlord & Tenant Board telling your tenant that they must pay rent. You can only take the next steps of submitting a L1 form (Application to Evict a Tenant for Non-Payment of Rent and to Collect Rent the Tenant Owes) only after 14 days from when the N4 was served if handed to the tenant in person, or 19 days if mailed. From there, you will be in the queue to go to the Landlord & Tenant Board and get a date. If the judgement is ordered for an eviction, a Sheriff will then be hired to evict the tenant and give you vacant possession. This entire process can easily take anywhere between 4-6 weeks.
So if you don’t treat your investment properties like a business and file the N4 immediately, even if your tenant is 1 day late, it could spell trouble for you because it’ll only delay the 4-6 weeks that it normally takes to evict a tenant. Imagine giving the N4 notice 2 weeks late. This means it’ll take 8 weeks or even 2 months for you to evict your tenant, and during that period, the tenant doesn’t have to pay any rent.
The “professional tenants” who understand this can manipulate the system and I’ve heard horror stories about tenants taking as long as 6 to 12 months to be evicted, meanwhile the landlord is out of pocket for all of those months. At the end of the day, again, this is why you should always treat your investment properties as a business!
The Wrap – Do not worry if you’re reading this and the entire process scares you. Our team has contacts with paralegals that have dealt with this situation before. This is simply another perk for working with our team. If you’re ready for your next investment property, then make sure you reach out to me, Zhen at Zhen@PrimePropertiesTO.com to get started and more importantly, to protect your investment!
If you have any further questions regarding the Landlord & Tenant Board, you can read up on their frequently asked questions page here: http://www.sjto.gov.on.ca/ltb/faqs/#faq5
Until Next Time Happy Real Estate-ing,
Zhen
