On today’s show we’re looking at some of the leading indicators to predict what might happen in the housing market three to six months from now.
We’re currently in the middle of a moratorium on both evictions and foreclosures.
Let’s talk about rentals first. We will talk about foreclosures on Tuesday. The moratorium on evictions doesn’t mean that tenants don’t need to pay rent anymore. It simply removes one of the remedies that landlords have in the case where tenants don’t pay their rent.
In most states and provinces, there is a landlord tenant tribunal that deals with disputes between tenants and landlords. In Ontario where I live, the current landlord tenant board has a backlog of more than 80,000 cases.
The tribunal is not handling eviction cases, except in severe cases where safety is threatened. But a little known remedy within the tribunal system is to get the tribunal to render a judgement on arrears. The judgement simply states whether the tenant owes the money to the landlord or not. The landlord still can’t evict, but armed with the judgement, can take other collection actions. You see if the landlord can demonstrate that the tenant still has the means to pay, and is using Covid-19 as an excuse not to pay, they could likely win a judgement in their favor.
I’m going to cover two cases.
The first case involved a student tenancy where 4 tenants had entered into the standard industry lease, the terms of which bind all tenants on a “joint and several” basis. Prior to the lease commencement date, 2 of the 4 tenants informed the landlord that due to COVID-19 and the prospect of on-line classes, they would not require the tenancy and would not be moving in. Two tenants agreed to honour the lease and paid rent for the commencement of the tenancy. The defaulting tenants took the position that the application should be dismissed since they never moved into the unit: they were not “in possession”
In the second case, a tenant proposed to vacate without proper notice on the basis of his fear that the risk of COVID-19 in a multi-res building was very high and he wished to move his family into a lower risk environment. The tenant stopped paying rent and, since L9 applications don’t require advance notice, the landlord immediately applied to the LTB for judgment for arrears.
In an ARREARS application, the LTB’s only function is to determine whether there are rent arrears; furthermore, in contrast to eviction applications where the LTB has a discretion to delay or deny eviction and force the landlord into a repayment plan for arrears, in an ARREARS application there is no “overriding discretion” to refuse or delay a remedy, the only issue is whether rent is owing. In its analysis, the LTB Member stated:
“With respect to the health risks arising out of Covid 19, I am sympathetic to the fear this pandemic has placed on everyday living practices. However, once I have made a finding that the rent for May 2020 is owing, I do not have the jurisdiction to tell a Landlord that he must forfeit rent that is validly owing.”
Now I’m not a lawyer, and the law varies widely from one jurisdiction to another. You definitely need to seek your own legal advice and examine the facts that are specific to your case.
These two cases illustrate that there might be other remedies apart from eviction. Don’t just assume that a moratorium on evictions means that landlords are stripped of any tools to enforce a duly signed rental contract.
As cases like these become more highly publicized, you may start to see greater compliance. The fact that Ontario has a pending eviction case affecting about 4.7% of all rental properties in the province. The real number could be much higher. You see some landlords will not have even filed paperwork if they believe the application will be denied.
Check out your local remedies.