Understanding the law as a landlord: Part 3 of 4

This is part three in a four part series about my experiences as a landlord over the last five years.

The obvious first thing to say is I’m not a lawyer, and you shouldn’t take legal advice from me. If you decide you want to invest in a rental property at some point, you gotta do your homework by talking to all the appropriate professionals, including a lawyer who understands the Tenant Protection Act, or whatever the appropriate laws are that govern these sorts of things in your province.

There are a few things that I found a bit surprising when I became a landlord in Ontario:

  • Landlords can’t collect a security deposit. If there’s damage done to a place after the tenants vacate, good luck trying to get compensated if they’re not inclined to do so on their own
  • Landlords can’t request post-dated cheques. The tenant has a responsibility to ensure the rent cheque is in the hand of the landlord by the first day of the month (or whichever date they agree on).
  • Landlords are required to pay interest to the tenant on last month’s rate at a rate of 6%/year. (When’s the last time your savings account or GIC gave you 6%?)
  • Landlords cannot enforce a no pets clause unless there is proof of medical hardship (allergies, causes an unsafe environment for other tenants)

Most landlords will say that the tenant has the power as soon as they have the keys. I think this is likely true. I’ve been lucky with tenants (knock on keyboard), but there are folks out there that are determined to work the system. The act used to be called the Landlord Tenant Act, now it’s simply the Tenant Act.

It can also be tricky finding a new tenant.  If a potential tenant wanted to rent my property, we signed an agreement, and she provides me with first and last month’s rent, then in the eleventh hour decides not to rent from me, I would lose the deal. Meanwhile, I’ve likely also lost other potential tenants because I have stopped advertising. There isn’t much I can do about that.

An online resource I’ve discovered recently, at www.Ontariolandlord.ca has a great forum with advice for landlords and tenants. One landlord there noted he charged a non-refundable holding fee while potential tenants and landlords are in this phase. Therefore, if a tenant decides to walk before the keys are handed over, the landlord at least still has a chunk of their money in order to keep the lights on while searching for a new tenant again. If the deal goes according to Hoyle, the tenant gets the holding fee back.

Tenants are automatically eligible for legal aid in Ontario. In the event of a dispute, the tenant will have free legal advice, and the landlord will have to pay.

As I remind myself of all these things, and know there’s so much more that govern my actions as a landlord, I do feel particularly lucky. On the other hand, I’ve done my homework on tenants. I’ve done credit checks and reference checks. I go to the property on a quarterly basis to do a little walk-about and change the furnace filter. I send a little holiday gift. Sometimes I bring one of my daughters on a visit to remind them I’m just people too, and I too have a family. When it comes time to renew the agreement, I don’t increase the rent just because I can. In the past I’ve only increased the rent when I’ve done some reasonably major repairs and it’s created a bit of a cash flow crunch, or if the taxes were hiked. It’s my preference to let the rental rate sit where it is for a couple of years anyway. My tenants are people too!

I’m not an anti-pet landlord. The law tells me it wouldn’t do me much good anyway. My home would be a lot less amusing without cats (and less hairy), and I totally support family pets, as long as they’re not causing damage to the property.

Tonight I’m heading to Barrie to sign a new rental agreement with a nice young fella. He’s going to hand over first and last month’s rent. I hold the keys until move in date.  Wish me luck!

Tomorrow: Is there money in them, thar rental properties?

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