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Arrears Amass With Prolonged Dispute Settlement
May 12, 2011
Rental Housing Landlords Call for Streamlining
By Barbara Carss
Ontario’s lengthy eviction process typically costs rental housing owners about three months of rent income plus additional legal and administrative fees. Critics maintain that unnecessary procedural delays are increasing landlords’ losses and amplifying tenants’ debt loads, which makes it even more difficult for them to pay off arrears and retain their housing.
A recently released policy paper from the Federation of Rental-housing Providers of Ontario (FRPO) recommends several streamlining steps to resolve rent disputes in a time period more on par with practices in other Canadian provinces. This would allow the same opportunities for tenants to dispute eviction applications and/or to pay arrears at any time before the sheriff enforces an eviction order, but it would reduce waiting periods for the various steps of the process and forego hearings at the Landlord and Tenant Board (LTB) – which are currently mandatory – unless the tenant proactively asks for one.
In 2010, about 58,500 tenant households in Ontario received notices of the landlord’s intention to terminate their leases for non-payment of rent, but only about one-third of those tenants were ultimately evicted. While the majority took advantage of the essentially open-ended opportunity the process provides to settle their overdue accounts, the eventual defaulters stayed an average of 90 days without paying for their accommodations.
“No other business is required to provide goods or services without payment,” observes Vince Brescia, President and Chief Executive Officer of FRPO. “Yet landlords must, by law, allow tenants to remain in their apartments for months with faint hope of recovering the cost.”
FRPO’s recommendations target three distinct areas where slowdowns occur: filing; hearings; and enforcement.
MANDATED & UNOFFICIAL DELAYS
Firstly, landlords are statutorily required to wait at least 14 days after issuing a notice [known as an N4] to the defaulting tenant before they can launch an action with the Landlord and Tenant Board (LTB). This interim, which stretches to 19 days if the N4 is sent by mail, dates back to the period prior to 1969 when the same rules governed residential and commercial landlords, and both were required to wait 14 days before changing locks on a premises. That waiting period is still entrenched even though several subsequent iterations of legislation have added other brakes on the process.
Once landlords apply to the LTB, other time consuming steps are imposed. Most notably, FRPO questions the provision in the Residential Tenancies Act, 2007 (RTA) that requires all applications to go to a hearing before the LTB. This stipulation has added an average of 29 days to the process while parties await the hearing, and statistics thus far show that more than half of the tenants have not shown up for the scheduled hearing.
“That means a full 50% of the LTB’s hearing workload is unnecessary,” the FRPO report contends. “These matters could have been dealt with administratively and not taken up hearing time, nor incurred the delays inherent in scheduling a hearing time.”
Since the LTB already sends letters to inform tenants that an action for non-payment is underway, FRPO suggests this should include a dispute form that gives the tenant a 10-day window to request a hearing. In the absence of the tenant’s request, LTB administrators could issue an order based on the documented evidence, which is the established practice in most other provinces.
PROCESS & ENFORCEMENT DISRUPTIONS
Critics also contend that hearings are too easily thwarted with strategic delay tactics. The RTA allows tenants to request an adjournment to the hearings, which typically means another extended wait before the resumed hearing fits into the LTB’s schedule.
Perhaps more contentiously, tenants can raise issues that don’t relate to the arrears and that would otherwise be addressed only upon a formal application to the LTB. This, too, leads to adjournments because landlords then need time to respond to the allegations and/or the adjudicator needs more time to deal with what has become a multi-faceted case.
“This new process adds hundreds of dollars to the landlord’s legal and preparation costs and thousands of dollars in additional lost rent due to delay,” the FRPO report asserts. “Solutions to non-payment problems are simple and singular – an order requiring payment of rent. This is not a highly technical matter that requires a hearing. Holding expensive hearings to allow for excuses and venting is not productive; it is a waste of resources.”
Landlords must wait a further 11 days after the LTB issues an order for non-payment before applyingo the sheriff to enforce the eviction – something FRPO sees as a superfluous grace period given that tenants already have flexibility to pay their arrears and halt the eviction at any point before the sheriff actually arrives. Alternatively, in cases where the tenant doesn’t pay, it simply means more lost income and an additional 11 days before the landlord can reclaim the unit.
In practice, backlogs in the sheriff’s office almost invariably give tenants more than 11 days anyway to pay their arrears or occupy the unit without paying after an order is issued. Landlords in many jurisdictions report long delays to get orders enforced, perhaps most notably in Peel Region where wait-times of more than two months have been recorded. FRPO urges the Ontario government to allow private bailiffs to carry out the role – an option that is available to landlords in Alberta, British Columbia, Nova Scotia and Quebec.
PROMOTING EFFICIENCY, SAFETY & FAIRNESS
FRPO also advocates extra resources and performance targets to help reduce the LTB’s administrative bottleneck. “A steady flow of applications has been maintained at a 29-30 day delay over a long period. All that is needed is a one-time effort to reduce the delay from 29 to five days. Once the delay has been reduced to five days, the LTB could operate exactly as it has been over the past decade and maintain a consistent delay period of five days,” the report reasons.
Beyond recommendations for dealing with the non-payment of rent, the report focuses on two safety and security concerns. To better protect landlords’ property, it calls for the reinstatement of security deposits to guard against willful damage by departing tenants. Perhaps more crucially for other sitting tenants’ safety and peace of mind, it asks the LTB to accept written affidavits rather than requiring personal testimony at hearings from witnesses of a tenant’s abusive or unlawful behaviour.
The report stresses that landlords are open to compromise and, indeed, almost always prefer to negotiate payment plans with tenants who are behind on rent payments before initiating action through the LTB. Finding ways to keep tenants in their housing is recognized as the most cost-effective business practice.
“For many landlords, the rent dispute process is not really considered an eviction process,” the FRPO report states. “It is a process to collect rent or a process to protect the majority of their customers from the disturbing behaviour of another occupant – an important quality of life issue in a multi-residential setting.”
FRPO is optimistic that the administrators of the dispute settlement system are open to constructive criticism. “Surely the country’s most populous province with the most rental units can come up with a modern, efficient system to resolve rent disputes that is both fair to the tenants and the landlords,” Brescia affirms.
The complete text of Justice Denied: Ontario’s Broken Rent Dispute Process can be found on the Federation of Rental-housing Providers of Ontario web site at www.frpo.org.
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