Our Head of Sales, Darren Short, recently had the pleasure of hosting none other than Ontario’s own Harry Fine at a webinar. Harry Fine is a widely-renowned paralegal in the Ontario area, with over 20 years in the industry. He has also served as a former adjudicator at the Landlord and Tenant Board, Ontario.
In the webinar, Harry dropped many truth bombs on us, usually accompanied by his dry, no-nonsense sense of humor. He scoffed at the common assumption that being a landlord meant bringing in passive income, and summed it up in one sweeping statement - “Everything you know is wrong.” Harry stressed the importance of running a rental operation like a proper business, in order to avoid a lot of problems that’ll cost time and money.
Listed below are some common landlord myths and misconceptions that Harry Fine talked about in the webinar.
- Myth #1: At the end of the lease term, the tenancy must be extended by signing a new lease, otherwise the landlord can end it.
Reality: When a term ends, nothing happens. All the rights and obligations in the lease continue. However, a new lease can be signed if you want to increase rent in line with current norms. You need to have given the proper notice of rent increase months earlier.
- Myth #2: Evictions are quick as long as you start the process right away.
Reality: It takes months to get a hearing with the LTB (Landlord and Tenant Board). You could wait 6 months for something as basic as rent arrears.
- Myth #3: A term’s last month’s rent deposit (the 12th cheque) gets applied to the 12th month.
Reality: The last month’s rent deposit is applied to the last month of the tenancy, not the term. It’s applied when a tenant moves out. A landlord would lose the leverage of deposit by applying to the last month of term, so it’s not a smart move.
- Myth #4: A landlord can decide how many people can live in the unit by including it in the lease.
Reality: A landlord has no say. They can evict only if there is overcrowding based on municipal property standards occupancy laws. Condo owners need to be extra careful and conduct regular inspections as overcrowding can be a serious fire safety hazard.
- Myth #5: A landlord and tenant can agree to things outside the RTA (consent to entry, multiple month deposits, etc)
Reality: The RTA is designed to protect a stronger party from taking advantage of a weaker party. It’s not wise to agree to anything that violates the RTA.
- Myth #6: The interest on the LMR Deposit is still 6%.
Reality: Interest rate owed on the rent deposit varies every year, same as the percentage for annual rent increase. This year, it is 2.2%. You don’t have to pay interest, it can be used to ‘top up’ the last month’s rent deposit if you’re increasing the rent. A professional landlord never pays out interest.
- Myth #7: Selling a rented home ends a current tenancy and the tenant has to move out.
Reality: Some people think that when it’s time to sell, they can force a tenant out in order to stage and show a property. However a tenancy survives a sale. Tenants must be assumed by the purchaser unless the landlord manages to make a deal, or if the purchaser intends to move in and the proper forms are served by the landlord (N12).
- Myth #8: Tenants can easily be removed if a landlord or buyer claims that they want to move in.
Reality: The RTA does allow evictions for personal use, but it’s subject to some conditions. It’s not automatic. The tenant has to be month-to-month, not term. They have to be served with proper notices. Fines for bad faith evictions are huge. Also, corporate landlords aren’t allowed to evict for personal use.
- Myth #9: Condominium rental is easy.
Reality: The RTA does allow evictions if the tenant is interfering with the condo owner’s lawful rights under the Condominium Act. But if the landlord doesn’t have a good compliance clause in your lease, and doesn’t provide the tenant with a copy of the Rules, Declarations, and Bylaws, the LTB may decide not to evict. It can lead to huge legal trouble, and lots of expenses. 60% of condo rentals are cash flow negative currently.
- Myth #10: If a tenant changes their mind and doesn’t move in after signing the lease, the landlord can keep the first and last month’s rents even if they re-rent.
Reality: It depends on the wording in the lease agreement. It should specifically state that once accepted, if the tenant changes their mind, the LMR is applied to the rent. If the lease mentions ‘forfeiting’, or ‘consideration for all damages’, held-back deposits are illegal and can be challenged at the LTB.
- Myth #11: If a tenant leaves during term time, the landlord can sue for the remaining time.
Reality: ‘Term’ doesn’t mean much. If the tenant leaves mid-term, and the landlord is able to re-rent, they cannot sue. If they are unable to re-rent, and suffer a loss, but have served an N4, they cannot recover damages.
- Myth #12: Evictions at the LTB are guaranteed if the tenant is proven to have not paid rent, or other bad things.
Reality: An LTB adjudicator is always required to consider giving relief from eviction on all applications. If the landlord is found in serious breach of any obligation, the LTB cannot evict the tenant.
- Myth #13: The rules of the house can be changed whenever the landlord wishes to.
Reality: The relationship between landlord and tenant is statutory, and contractual. This relationship will be governed by what’s in the lease agreement.
Common rookie landlord mistakes
- Mistake: Not checking references, tenancy history, online presence, credit and ID, and Google Search prior to signing lease. Using poorly drafted leases.
Result: Landlords can steer clear of most problem tenants by diligently checking with references, employers, and previous landlords. Always run a credit check. Never accept one given by a tenant.
- Mistake: Not doing a proper move-in inspection with the tenant, signed, with pictures.
Result: Without a move-in checklist and inspection report signed by both parties, with pictures, you will not be able to make a successful damage claim. Take the time to walk through the unit with the tenant, take dated pictures of everything, and note all deficiencies or damage.
- Mistake: Not understanding how rent control works under the RTA
Result: If rent is increased without proper forms and timing even once, then all your rent increases from that point may be illegal. You will owe the tenant a lot of money and will be unable to evict.
- Mistake: Not inspecting the unit at least annually, with proper written notice.
Result: By not checking the unit regularly, the tenant starts taking liberties. If damage is wilful and serious, eviction is in order. Fire safety inspections need to be done annually as furnace filters need to be changed.
- Mistake: Waiting too long before starting eviction process at the LTB for bad conduct.
Result: When you have a problem with a tenant, it usually doesn’t go away on its own. Too many landlords wait, afraid of the long process at the LTB, and this empowers the tenant and makes the landlord’s life miserable.
Thanks to Harry Fine, we learned a lot, and hope you do too!
For the complete webinar, please click here.
About Harry Fine
Harry Fine is a paralegal of 17 years after sitting as an adjudicator at the Ontario Landlord and Tenant Board. In 2018 Harry was honoured with the Law Society’s prestigious William J. Simpson Distinguished Paralegal Award. He is one of only 7 paralegals to receive that honour. Harry is also a Commissioner for taking oaths and affidavits, and a Notary Public in Ontario.
Harry is committed to providing excellent Landlord & Tenant Board expertise to individuals and businesses, big and small, across Ontario. His philosophy of “staying out of trouble” rather than “getting out of trouble” inspired him to make video training materials and a package of comprehensive forms for landlords, investors, and Realtors.
Harry also served as the volunteer President of the Landlord’s Self-Help Centre, the only landlord-side legal clinic funded by Legal Aid Ontario. While there, Harry dealt with issues such as law reform, community outreach and governance.