Friday, July 24, 2020

The Sky is Not Falling - RTA Changes Mostly Benefit Tenants

Tenant advocates will read this post and just scream that landlords butter my bread and that I should be ignored.  But let's get one thing straight.  I do more work for tenants than for landlords.  I'm in nobody's boat, unlike FRPO, the FMTA, ACTO, Parkdale Organize etc.

These are my thoughts on Bill 184, now passed and awaiting proclamation.  There are four types of changes to the Residential Tenancies Act brought about by Bill 184;  jurisdictional, fairness/process, landlord side and tenant side.

Starting with jurisdictional.  I'm not sure how anyone can claim that this bill gave landlords what they wanted with the government finally clarifying the issue with utilities and post occupation rent and damage insofar as LTB v. Small Claims Court jurisdiction is concerned. That would include the one-year time limit for landlords to now make claims at the Board. The Landlord Tenant Board is now a one-stop-shop which it should have been since 1998. A tenant who has moved out has always had the right to avail themselves of LTB litigation for up to a year after move out. Now landlords have that same right.

Then there's some fairness issues finally resolved.  Prior to the passage of Bill 184, landlords had no remedy at the LTB to recover damages in law other than physical damage. That has been fixed.  So if the landlord is fined or charged because of a tenant wrongfully pulling a fire alarm, or parking on the lawn, those costs will now be recoverable. 

Also with fairness, most small landlord rents have been illegal since 2007 since a court of appeal decision called Price vs Turnbull's Grove [2007] which wasn't remedied until 13 years after the Court made this decision based on a legislative drafting error. That error has now been fixed.

Another fairness issue had to do with Provincial Offences.  By providing easier access to judicial production orders, the Rental Housing Enforcement Unit got more power to investigate bad landlords (and tenants) who have committed offenses under the Act.

Reviewing the tenant-side changes, there is much-needed, compensation from small landlords for demolition, renovation and conversion eviction applications, and serious compensation for bad faith notices. Also big increases in fines against landlords. Compensation will now be required for N12 eviction notices served based on the intended use by a purchaser, as well as by a landlord. 

The requirements for landlords to disclose and file their declarations about their intended use ahead of time along with information about any previous N12 or N13 notices that they have served will also be helpful for adjudicators in arriving at the proper outcome in these cases.

Then there are the changes to help landlords, which in my mind were not really designed for landlords at all but are a way for the Landlord Tenant Board and the Ministry to speed up the process, respond to the Provincial Ombudsman's complaints and stay out of the newspaper.

Requiring a tenant to provide notice before filing what is essentially a deemed application at a hearing is hardly unfair, otherwise you have trial by ambush and tons of unnecessary adjournments. 

The change is really just a shell game, because adjudicators are still required under section 83 and in particular section 83(3) to hear evidence about any serious breaches by the landlord and deny eviction if the landlord is in serious breach. And... the new legislation still allows the Member to hear the claim at their discretion even if advance notice of the claim was not given. What other court allows claims to be actually litigated at a hearing without providing the other party with advance notice of both their intentions and the details of the claim? Those who say this small change is unfair are being disingenuous and are just shills.

And finally the big one, the whole "eviction without due process" thing. Yes, it's a serious change but actually not much different than it was prior to Bill 184.  The reporting on this has been dreadfully inaccurate.

This amendment is an attempt by the Ministry to make a provision (section 206) introduced in 2007 work.  It failed badly in 2007 and is rarely used. They've made it more attractive to landlords now by allowing them to file an eviction application ex parte (no notice to tenant, no hearing) if the tenant has breached the terms of an agreement.

However, most of it hasn't changed. You must have served an N4 termination notice first. You must have filed an L1 application following that. You must fill out a specific Board form with information for the tenant which becomes your agreement. You must have received the consent order from the board based on the agreement.

If there is a breach of the agreement, the landlord can file an L4 application for eviction without notice and without a hearing, but the board does not have to issue the eviction order, they can send it to a hearing instead.  And even if they do issue the eviction order ex parte, the tenant has 10 days to file a set aside motion in order to appear before the Board and explain why (or if) the breach occurred.  And failing that, the tenant can file a request to review the eviction order within 30 days of the issuing of the order.

Yes, this amended s.206 will end up causing some faster evictions for tenants who have entered into one of these section 206 agreements with their landlords, where the tenant subsequently breached. But it is not without process, and it is certainly not without an opportunity to be heard.  And moreover, it has nothing to do with COVID as informal agreements without the above process are NOT subject to the ex parte eviction application.

On balance, I think there's a lot more in this new legislation for tenants than there is for landlords if we put aside the jurisdictional and fairness issues.  It certainly does nothing to address small landlords' most pressing problem, the length of time it takes, often up to a year, to evict a non-paying tenant.

In fact, I think the section 82 change which will require advance notice of claims by tenants will be somewhat meaningless because of the section 83 requirement, and I also think that to some extent that s.82 change slides into the "fairness" category.

Is it a good climate for landlords in Ontario? Absolutely not, it sucked before these changes and it still sucks.  But why should it be a good climate? It's not the job of the government to make the small-landlord real estate industry profitable. No investor has a God-given right to make six, seven, eight or 10% return on investment without significant risk.  Nobody twists a person's arm forcing them into the business.

In my 20 year experience, small landlords are often unsophisticated investors and uneducated in the rules regarding their business.  Yet, they are operating a sophisticated and complex investment.  Most don't see the need to lobby government or be part of a paid membership organization.  And most don't research or investigate before getting into the business.  The industry which benefits most from small landlord investing, real estate boards, Realtors, OREA etc., led by a former Conservative party leader, has done nothing for small-landlord investors.  Yes Tim Hudak, that's YOU. 

It's the only industry I know where the customer tends to know more about the rules governing the business then does the business owner.  Can small landlords really blame the government for the state they are in?

For anyone interested in a 90 minute webinar going over the changes, I'm doing one for just $50 on Wednesday, July 27th.  Sign up here:

Bill 184 Zoom Webinar - Wednesday, July 29th, 7pm

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