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14 Jul 2020

What You Should Know About Negotiating Rent Repayment Plans During COVID19 Featured

Many tenants and landlords alike have become increasingly concerned about the changes that the Government of Ontario is proposing to make to the Residential Tenancies Act (“RTA”).

On June 12, 2020, we wrote an article highlighting some of the changes to the RTA that were intended to protect tenants from deceptive eviction practices by their landlords. 

A number of additional changes are being proposed to the RTA, which is called Bill 184, and that has concerned many tenant rights advocates. Landlords however believe that the changes are a fair and balanced way to ensure that the tenancy proceeds. 

The proposed changes to the RTA provide landlords with the ability to apply to the Landlord and Tenant Board (“LTB”) to evict tenants who have not paid their rent during the pandemic. The proposed changes do not explicitly allow the LTB to evict a tenant because they were not able to afford rent due to COVID-19. Rather, the LTB is permitted to take into consideration whether the landlord and tenant were able to negotiate a resolution to the repayment of rent. The LTB will be more likely to evict a tenant if the landlord has proposed reasonable methods of repaying arrears which the tenant has refused to agree to or if the tenant has defaulted on the agreement to repay. 

Many tenants and tenants’ rights advocates believe that this will give landlords the ability to force tenants to agree to repayment plans that they cannot afford, inevitably leading to their eviction. Landlords on the other hand believe that this gives them an opportunity to recover from the financial pressure created by tenants who did not pay rent during the pandemic and who could not be evicted due to emergency orders.

Guidance on what the LTB will take into consideration when determining whether to evict a tenant who has refused to agree to a repayment plan or who breached a repayment plan is not yet available. This is because the Government of Ontario is still debating Bill 184. Other provinces that have already enacted changes similar to Ontario’s Bill 184 can be looked at for guidance.

Alberta for example has provided that in addition to considering whether the landlord has offered a repayment plan, the adjudicator will also consider the reasonableness of the plan proposed by the landlord. For example, if a landlord proposes that a tenant repay four months of rental arrears in a single month, the LTB will likely decide that this was never a realistic or reasonable repayment plan and may be inclined to not evict the tenant. 

Landlords and tenants should consider a number of practical tips when it comes to renegotiating a repayment plan that the LTB will find reasonable. First, the landlord and tenant should consider the tenant’s income. A tenant who has worked throughout the pandemic and has not been financially impacted will likely be required to commit to an expedient repayment plan. Tenants who continue to be unemployed due to the pandemic should be given a longer period to repay. Landlords and tenants should also consider the effects of utilities or property tax deferrals. If the tenant usually pays for utilities and the landlord received a deferral due to the pandemic, the landlord will want to ensure that the repayment plan covers repaying the deferred utilities.

Lastly, a concern of many tenants has been the ability of a landlord to evict them if they are unable to follow the repayment plan due to additional waves of COVID-19. The landlord and tenant should consider allowing repayment obligations to vary depending on the tenant’s financial circumstances. 

It should be noted that the proposed changes allow the landlord to submit requests to the LTB to recover rental arrears, seek compensation for overholding (the tenant staying in the unit after the lease expired) and compensation for damage done to the unit.  As is the case with most landlord and tenant disputes, the best recommendation is for the parties to work out an agreeable compromise without the time and expense of going to the LTB or Courts.

Tanya Walker obtained her law degree from Osgoode Hall at York University in 2005 and her Honours Bachelor of Commerce with a minor in Economics from McMaster University in 2002. She was called to the Ontario Bar in 2006. Tanya is currently serving a term as Bencher of the Law Society of Ontario; elected by her peers as not only the first Black elected female Bencher from Toronto, in the 220-year history of the Law Society, but also as one of the youngest sitting Benchers.
 Tanya is a frequent speaker on legal issues to the Toronto Community and regularly appears on the CTV Show, Your Morning as a legal expert. She has also been named in the 2017 and 2018 Lexpert Guides as one of the Leading Lawyers to Watch in Corporate/Commercial Litigation and is also the recipient of the 2018 Women’s Business Enterprise of the Year Award.

 Tel: 647-342-2334 ext. 302 
 Email: tanya(at)tcwalkerlawyers.com

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