The curse of the bad tenant

The curse of the bad tenant

Here’s how to deal with dodgy renters—and some tips on finding good tenants

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Long before the tenant hurled an axe through the bay window of their rental property, Susan Paczek and Brendan Labelle knew they were in trouble. Missing rent cheques and a notice from the city demanding they clean up the massive piles of garbage strewn across the back lawn had already tipped off the married couple, causing them no shortage of sleepless nights. But when Paczek and Labelle finally did gain access to their former family home, they were quite literally stunned by the extent of the ruination: dog feces littered the basement, while rats the size of cats ran freely through the house. That wasn’t the worst of it, though. In an effort to save on heating bills, the tenants had shut off the furnace during the long Nova Scotian winter, prompting pipes to freeze and eventually burst. The resulting flooding warped the home’s beautiful hardwood floors so badly that hallways now more closely resembled skateboard park ramps. With almost $12,000 in unpaid rent and damage, the couple fought to hold their tenants accountable. In the end, however, Susan and Brendan would receive just $400 in compensation—and only because they put up a fight.

Sadly, Susan and Brendan’s story is a common one. Across Canada, landlords recount endless tales of torment at the hands of bad tenants. Whatever the reason—from repeatedly bounced rent cheques, to smashed up granite countertops, to stolen furnaces—getting rid of a tenant from hell can be frustrating, expensive and, quite frankly, confusing. Part of the problem is that your only recourse is to use the legal system, which most landlords believe is skewed in the tenant’s favour. At present, tenants get free legal advice, and can significantly prolong the case using counter-complaints, adjournments and appeals—plus, there’s no consequence for frivolous or malicious use of the court’s time. Landlords, on the other hand, are expected to go-it-alone or pay for costly legal help, and wait patiently on the legal sidelines as month after month of unpaid rent goes by. “The whole process can be tremendously stressful as you flush time and money down the proverbial toilet,” says David Strashin, a Toronto lawyer who specializes in landlord legal issues.

But whether you’re a current rental property owner—or still nervously sitting on the fence about becoming one—we’ve laid out everything you need to know about dealing with troublesome tenants. With the following tips you’ll learn how to negotiate the legal system, while still protecting yourself and your rental unit. Be it an eviction for non-payment of rent, a judgement to force your tenant to pay for damages, or a court order to prevent your tenant from blasting their music at all hours of the night, we’ll show you how to arrive at a successful resolution­—and hopefully save you a few headaches, heartaches and bank overdrafts along the way.

#1. Keep it strictly business

The first and most important step when renting out your home or investment property is to check out the applicant. Sounds simple enough, but so many landlords fail to complete this step, explains Harry Fine, of KLP Paralegal Services. “If you were selling your Mercedes, you wouldn’t just hand the keys over to any buyer who turned up and showed an interest,” he says. “But this is essentially what landlords do when they hand over the keys to their rental suite without doing background checks.”

When you post your space for rent make sure potential applicants know you’ll be asking for their credit history. You can pay about $15 to a service that specializes in tenant credit checks, such as tenantverification.com. “This will weed out a few less-than-desirable applicants,” says Fine. But don’t stop there. Call and talk to at least two previous landlords, as well as current and past employers.

Sound tedious? It is. But it can also mean the difference between a long-term, respectful renter or a brutal tenant, as Susan and Brendan found out. They’d asked for references but when one of the references ended up being a friend of a friend they got lulled into “a false sense of security,” says Susan. Then, halfway through the lease, the couple split up and the person with the steady job moved out. Rather than act, the couple waited. “We thought she’d sort things out,” explains Susan. Instead, the remaining tenant dodged bills, set up an impromptu rooming house and even started breeding her dogs in the basement. That, of course, was merely the tip of the iceberg, sighs Brendan.

“Small landlords are often too nice,” Strashin says. They let small transgressions slide until they are big problems. The key is to view your rental unit as a loan business. So, if you’re asking $1,000 a month in rent, on a 12-month lease, then anyone who moves in is essentially getting a $12,000 loan from you. A bank wouldn’t accept late loan payments and neither should you.

#2. Act immediately. No exceptions

But what if you’re past the background check and already have a problematic tenant living in your rental property? Act quickly and decisively, says Strashin. No exceptions. Don’t ignore bad behaviour, such as a tenant who pathologically complains about another tenant, or a tenant who continually creates disruptive and unnecessary noise. Let this type of behaviour slide and you’ll probably end up with a bank account in the red when the rent cheques stop coming.

That was the potential situation Toronto realtor Shawna Fletcher found herself in when, at six months pregnant, she agreed to rent out her basement to another single mother. Within a month, a heavy-drinking boyfriend had moved in, loud fights and parties ensued, and the rent money dried up. Requests for payment only antagonized the couple, resulting in threats from the boyfriend. “It was terrible,” says Shawna. “I was afraid to come home. I was afraid to confront them and ask for rent. But I needed the money to pay bills.” Desperate, she went online and found help on the Ontario Landlord and Tenant Board’s website. “As soon as I learned that I could serve them with an eviction notice, I did.” Two weeks later, the tenants pulled a midnight move and skipped out on rent owed, but Shawna was grateful. “It could’ve been much, much worse.”

It’s in circumstances like this that Fine says he’s often called in. “Landlords are so fearful of getting involved in the system that they wait. But there’s only way one way to deal with a problematic tenant: using the legal system.”

Regardless of when the problem starts, the clock on a landlord’s legal case doesn’t start until the first official notice is given. “Phone calls, text messages, emails, even written letters don’t count,” explains Fine. Sound scary? It shouldn’t. The first notice is free and takes only five minutes to fill out, says Strashin. But you’ll need to fork out fees for additional notices, so make sure you pick the right notice for the offence the first time around. In Ontario, for instance, you’ll need to use an N4 if your tenant hasn’t paid rent, but an N6 if the tenant is breaking the law, or an N5 if they are persistently pestering others or causing damage to the unit or building. (To find these types of forms, as well as instructions, just go to the website of any provincial Landlord and Tenant Board—commonly referred to as LTB).

For Shawna, this meant attaching a copy of the N4 on her tenant’s front door 24 hours after the rent was due. She then had to wait 14 days before taking the next step, which is filing an application to evict (known as an L1 in Ontario). Keep in mind, though, that the length of time before taking the next step can range from seven to 20 days, depending on the problem, type of lease and the region you live in. Just read your provincial LTB website for details on how to proceed. Also, realize that at any time during this waiting period, your tenant can rectify the problem, such as paying the rent owed, which will make the notice go away.

#3. Keep meticulous paperwork

Shawna Fletcher considers herself lucky—her tenants from hell just took off. But if your problem renters don’t, that doesn’t mean you can simply toss out their belongings and change the locks at the end of the two-week waiting period. “To actually evict a tenant you need a court ruling,” explains Michael Currie, president of Fort Nova Group, a real estate investment and education company in Nova Scotia. You only get an eviction after filing an application, going to court and presenting your case. But first, you’ll need to open your wallet. Each eviction application costs between $40 and $200, depending on the province you live in. To keep fees down, make sure you list all the problems on one application. So, if the tenant caused damage and owes rent, submit just one application for both problems.

Once filed, you will get an LTB court date within four weeks. “This is when you need to understand your rights and the process,” says Strashin. Even a simple spelling mistake or the omission of a small detail—such as a unit number—can get your entire case thrown out. And don’t expect help from LTB administrators. They may quickly scan your application to see if information is missing, but they won’t flag errors.

The key to being successful throughout this process is to maintain meticulous records: keep track of every visit, complaint, missed payment, interaction and correspondence, and every attempt you’ve made to rectify problems. “The more evidence you have to show you’ve been a responsible and attentive landlord, the easier it will be to refute nuisance counter-claims and to prove your tenants are in breach of their obligations,” says Strashin. So, double-check that all information is accurate, that you’ve provided adequate details about the problem and that you have plenty of documentation—such as bank statements, pictures or witnesses—to back up your claims.

#4. Be patient. don’t expect a payout

Even if you act promptly, file all the paperwork perfectly, and your tenant doesn’t counter with their own complaints, the full eviction process will take at least 10 weeks—and it can drag on much longer. For Torontonians Rosalind and Mike Cottingham, the problems with their tenants—a couple with two kids under age four—started when Rosalind called to ask why rent wasn’t paid. Their response seemed reasonable: the tenants apologetically explained they had been in hospital for a few days with their sick son. Rosalind, a new mom herself, felt bad and just reminded them rent was due. Another week went by and still no money—but the never-ending string of excuses continued. By day 33, the tenants were dodging her calls before turning belligerent and defiantly challenging Rosalind. “That’s when I knew we were in trouble,” she says.

Like Susan and Brendan, Rosalind and Mike finally took action. They served their tenants with an N4 and when the 14-day waiting period was over—and still with no rent received—they paid $170 to file an application to evict with the LTB. Four weeks later, Rosalind and her tenant stood before the adjudicator, who gave the tenant another 14 days to settle in full. This time they paid, not that Rosalind and Mike had any reason to believe their behaviour would change. So, when their tenants once again missed rent, Rosalind acted quickly and started the whole process yet again. In the end, they spent close to six months and lost more than $16,000 (including a $300 sheriff’s fee) to legally evict their conniving tenants.

“A resolution isn’t always about getting what you’re owed,” says Currie. In most cases, it’s about stopping the bleeding—the financial loss from no rental income.

Sometimes, however, there are other options, such as LTB mediators. These professionals will weigh all the evidence and listen to all the complaints and then come up with a legally binding solution that doesn’t favour tenant or landlord. “Often it means conceding on certain points,” explains one property owner who didn’t want to be named. “It’s free and faster than the tribunal, but neither side will walk away happy.” Keep in mind, too, that mediators are only useful when both tenant and landlord still want to find a working solution to a problem; the process is useless if one side digs in its heels.

#5. Know when to get legal help

In March of this year, Strashin was finally able to close an eviction case he’d started back in 2012. It involved a “Professional Tenant,” the term used to describe someone who habitually stops paying rent and then deftly uses the legal system to prolong the process. The tenant in question had lodged complaint after complaint against her landlord after he’d tried to evict her. Over the years, the case escalated from LTB hearing, to small claims court, to a criminal matter before the Ontario Superior Court of Justice. “At that point you’re looking at a pretty hefty legal bill,” says Strashin.

Thankfully, the vast majority of tenant issues don’t end up in superior court. Most end either with an LTB ruling or at small claims court—but the process is hardly problem-free, even at the lowest level. Rosalind Cottingham recalls how one landlord got a stern lecture from an LTB adjudicator after complaining that she was losing wages in order to appear at the hearing. “They don’t care how hard we work to pay the bills, and they don’t care if we rely on the tenant’s rent to pay some of those bills,” she says. Strashin isn’t surprised. “These provincial tribunals were created to level the playing field between landlords and tenants,” he explains. So tenants are given every opportunity to stay in their home and this can lead to long and expensive periods of waiting for the landlord.

While self-representation is the norm in LTB or small claims court, there are ways to pay for legal help without hiring a paralegal or lawyer to represent you. Strashin and Fine suggest that all landlords read the Residential Tenancies Act. “Yes, it’s a tough document to understand, but at the very least you need to be familiar with what it covers,” says Strashin. Fine also suggests that landlords pay $150 for an hour consultation with a paralegal (or $300+ for a lawyer) to learn how to quickly and effectively negotiate the system—or, better yet, learn how not to get suckered by a conniving tenant. “Consider it the cost of becoming a smart landlord and a successful business owner,” says Fine.

#6. Know when to move on

Remember Susan and Brendan? All told, it took them four months to clean up their tenant’s mess and to fix the $12,000 in damage done to their Halifax property. With all their evidence, the landlords easily won their LTB case, but they were after more than an eviction. “We wanted the tenant to be held accountable,” says Susan, “but when she moved out of the house, the LTB couldn’t force her to pay us back what they said she owed us.” Fine adds: “It’s one of the major limitations of the LTB—once a tenant vacates the property the tribunal has no jurisdiction.”

To enforce an LTB ruling, landlords need to go to another court. Since Susan and Brendan’s claim was less than $25,000, they paid $200 to start a case at small claims court. (The maximum claim threshold is different for every province and ranges from $5,000 to $25,000; anything above the threshold has to be registered in a superior court of justice.) Once again, Susan and Brendan argued their case. Once again, the court ruled in their favour. Once again, they didn’t see a penny—after their former tenant immediately filed for bankruptcy.

Fine sees these kind of outcomes all the time. “Probably 90% of LTB cases are due to rent but I’d be surprised if even 15% of this money is ever recovered once a tenant is evicted,” he says, adding that some forms of income are “judgement proof.” That means that even with a ruling in a landlord’s favour, disability, welfare, pension cheques and income from cash jobs cannot be garnished. “It’s one thing to prove they owe you and quite another to actually collect,” says Fine. Perhaps this is why most landlords just cut their losses and drop the case once the tenant vacates the property.

But not Susan and Brendan. Susan recalls how at the start of the ordeal they’d kept quiet. “We’d felt ashamed for being taken for a fool.” But as the months dragged on and with each new court hearing, they had a change of heart. “We were overwhelmed at how badly they’d treated our home,” she says. In the end, they paid one last fee—$50—to be listed as a creditor on their former tenant’s bankruptcy case. As a result, they finally did receive a $400 pay-out. “But it was ridiculous,” says Susan. “The amount barely covered all the application fees we’d paid.”

No one would fault Susan and Brendan if they’d called it quits, sold the house and turned their backs on being landlords. But they didn’t. In fact, they continue to own rental properties—they currently have nine units in the Halifax area with plans to acquire more. But that doesn’t mean they haven’t learned a thing or two from this ordeal. These days they diligently check all references and communicate with other small landlords in the area. “We try to pass on information to help keep bad tenants out of our units.” They’ve even modified their rental terms—offering an initial three-month lease, with scheduled visits to the property to help determine if the tenant is “a good fit.” (For more tips, see “Finding A Dream Tenant” below.)

Of course all of this represents much more work for the couple, but as Susan quickly points out, she’d rather leave her rental empty then “run the risk of getting another tenant from hell.”

Finding a dream tenant

Avoiding the drama and agony of a tenant from hell means finding—and keeping—a good occupant. Here are five tips to help you do just that:

1) Lower your rental rates. The best way to attract good tenants is to rent it out your property a bit below market value. You’ll get more applicants and this allows you to select, rather than settle, on a tenant.

2) Do your due diligence. Check all references. For instance, make sure the employer or landlord cited is legitimate and not just a friend or family member vouching for a possible deadbeat.

3) Sign a lease. This legally binding contract identifies the roles and responsibilities of both the tenant and the landlord—and it’s the first document courts refer to should a problem arise. It also helps avoid assumptions that can lead to problems. For instance, if a tenant calls asking for more toilet paper, a lease will clarify that all-inclusive means utilities and water, not household supplies.

4) Find workarounds. Keep in mind that students and new immigrants may not have a credit history, but that doesn’t mean they won’t make good tenants. Ask for written references from current and former banks or lending institutions. You could also ask for a guarantor—a person who will sign the lease and take legal responsibility for rent owed or damages.

5) Be responsive. Is your tenant having troubles with the locks? Are there mice in the apartment? Whatever the issue, deal with it quickly and effectively. The fastest way to sour a landlord-tenant relationship is to treat your tenant’s concerns as a waste of your time.

 

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