COVID-19 UPDATE: “MAY THE 4TH BE WITH YOU!”

As we go into the second
full month of COVID-19 shut-down, the issues and challenges for multi-res
landlords are sharpening into focus.  Innovative management and
administration strategies for stewardship and safety of employees, contractors,
and residents have been implemented. There is now consistent resident and
visitor messaging relative to maintaining health and safety in unprecedented
“stay home” occupancies in a high density, residential settings.
Despite most landlords “reaching out” to tenants to address rent
arrears while preserving their housing, it remains uncertain, on the eve of May
2020, what the month of May will bring in terms of rent defaults and the
ongoing adjudicative and administrative paralysis at the Landlord and Tenant
Board (LTB). By May 4’th, most landlords should be in a position to assess and
formulate a prognosis for the likelihood of collecting rent arrears and for
tenants to survive the COVID-19 pandemic with their housing (and hopefully
their health) intact.

Rent Arrears: Next Steps

Tenants who are parties
to rent arrears repayment agreements, or who apply for rent relief, should be
in a position to disclose income and to work with landlords to develop a
financial plan for payment of rent or, in extreme cases, agree to termination of
tenancy. Tenants who defaulted in April and again default in May, with no
reliable communication with the landlord despite landlords’ best efforts to
work with them, will be a known number within portfolios and action will be
needed to address those accounts. There was a relatively high default rate in
rent payments effective April 1 (15 – 18%), including a higher than usual
number of tenants who paid no rent at all.  In most cases the rent arrears
were attributable to COVID-19 fallout, but in some, there was either no
communication from tenants or they asserted that they would simply pay no rent.

In cases where tenants
did reach out to landlords and paid partial rent plus applied for rent relief,
landlords began processing Rent Arrears Repayment Agreements and it is expected
that such agreements will continue to be honoured, revised or otherwise
processed in May. A first practical step for landlords is to continue to work
with tenants to cure rent defaults if you can. The expectation is that further
substantial rent defaults in May will mean chronic default conditions such that
the tenant is unlikely to recover if their income continues to be restricted
due to COVID-19 despite receipt of emergency funding or, worse, if they are
ineligible for any financial lifeline. Tenants who made no effort to pay rent
in April or May, and who continue to be unresponsive to landlords’ efforts to
provide housing assistance, will require immediate action by landlords.

Where rent arrears
recovery is unlikely and expected to be chronic, then despite Ontario’s
suspension of eviction proceedings, landlords have little practical choice but
to issue N4’s and file eviction applications under the Residential
Tenancies’ Act (RTA) to “stop the bleeding”, or at a minimum, to
create enough leverage to extract a repayment plan or an agreement to terminate
the tenancy. A key to landlords’ next steps is to assess, on a case by case
basis, the financial circumstances of a delinquent tenant.  If the tenant
does have employment but is exploiting the financial crisis, or if the tenant
has a credit worthy guarantor, then an L9 (application for judgment for arrears
only) may be a prudent strategy.  The LTB processing of L9’s is a simple
administrative procedure at the LTB with the Board having no “discretion”
to delay or amend issuance of a judgment. Unlike evictions, the processing of
L9s is not formally suspended and if the tenant or guarantor are faced with the
prospect of a judgment which will adversely affect them (garnishment proceedings
and bad credit) then they may be more inclined to honour their respective
tenancy obligations.

Where a tenant file
convinces landlords that the tenant’s financial health as a result of the virus
is incurable, then the issuance of an N4 (eviction notice) is the next prudent
step and will at least place the matter in the queue for processing. Some
tenants may rely on the N4 to let them out of the lease early but at least that
frees the unit up for re-rental.  Other tenants may “play out the
string” for as long as possible, but sooner or later (yes later, but
“better late than never”) an order for termination and eviction will
issue. Where landlords can show the multiple efforts they made to reach out and
work with the tenant to keep the tenants’ housing secure, and where the tenant
was unresponsive or defiantly proclaimed a “keep your rent”
initiative, it is more likely than not that the LTB will simply issue the
eviction order rather than exercise a discretion to impose a payment plan or
otherwise delay the eviction.  If there is a prospect for payment of
arrears, the imminence of an eviction order may prompt the tenant to finally
meet their financial obligation. Bottom line for arrears issues? “May the
4’th be with you” and stay healthy financially and physically healthy!

Are ‘landscaping”
and “suite turnovers” Essential Services?  What about low
priority maintenance?

Ontario’s Emergency
Order restricts most work at residential complexes as follows:

“Maintenance, repair and property management services strictly necessary
to manage and maintain the safety, security, sanitation and essential operation
of institutional, commercial, industrial and residential properties and
buildings.”

Both the City of Ottawa
and the City of London have provided a relatively broad interpretation of the
Order which you can access at the following links: London Lawn care and Grass Maintenance  and Ottawa Property Maintenance Services Notice

It is clear from those cities that regular landscaping (mowing,
thatching, flower bed preparation) is acceptable; however, new landscaping
projects should not be undertaken.  In addition, the City of Ottawa has verbally
communicated to an Ottawa landlord group that suite turnover work involving
repairs and replacements of structural components (damaged cabinets, floors,
bathroom fixtures) falls within the scope of the Order.  It follows that
leasing of vacant units should also be permitted; however, that is best done
via “virtual” leasing to mitigate risk of exposure to COVID-19 by
staff and prospects.

The interpretations and opinions of the City of London and Ottawa are
not “binding” on a Justice of the Peace or a Judge; however, those
opinions would carry substantial weight for a defence if a landlord in another
city is charged with violating the Emergency Order for doing work which falls
within the interpretations given by London and Ottawa. In addition, landlords
in other cities who are told to cease work or face charges can rely on the
Ottawa and London examples to challenge the enforcement officer or, at a
minimum, to avoid being ticketed or charged.

“Urgent Motions” to Enforce Evictions: A New LTB Process. What
is the test?

In recent weeks the LTB
has introduced a new procedure for addressing “Urgent” circumstances
which warrant the issuance and enforcement of an eviction order. The basic
process involves completing an “Urgent Motion” form and submitting it
to the Board.  The form itself requires disclosure of the facts to support
the landlord’s contention that it is urgent that an eviction order issue and
that the sheriff enforce it. Most landlords will recognize that simple
non-payment of rent or a refusal of a tenant to move out in accordance with an
agreement to terminate, or a notice to terminate given by the tenant, are
unlikely to meet the test of urgency required to be met if the motion is to be
granted. Absent extraordinary circumstances (imminence of insolvency and
consequent tenants’ loss of vital services?), it is our view that a landlords’
financial hardship will not support a successful Urgent Motion.

So what is the test? In
cases where Urgent Motion hearings have been scheduled, it is clear that the
eviction proceedings relate to issues of imminent, ongoing potential risk to
the health and safety of occupants and staff in multi-res buildings. We have
reviewed interim orders we have received in response to Urgent Motion filings
and the language of the LTB members is consistent: “the Tenant’s use of
commercial air freshening products is having an on-going and serious impact
on the health of another tenant with environmental sensitivities“;
and in the case of an occupant threatening with a weapon: “A
potentially serious and ongoing health or safety issue…”.
Based on these early decisions, it is clear that for an Urgent Motion to be
successful, the key words and phrases of the test are “serious”,
“ongoing” and “health or safety”.  Landlords and their
legal advisors will need to include facts and provide evidence to satisfy an
LTB Member that the conduct of the tenant meets the legal test.  Will a
tenant/occupant diagnosed with COVID who persistently fails or refuses to
comply with quarantine and isolation protocols meet the test for Urgent
Motion?  We expect to find out shortly.

Assuming you can meet
the test: what’s next to get the Sheriff to act? Where the LTB orders eviction
after an urgent motion, the landlord must then apply to Superior Court for an
Order directing the Sheriff to enforce the order and evict the tenant. This
involves court filing fees, the filing of documents and either a lawyer or a
self-represented landlord must attend the court hearing (Paralegals do not have
status for these proceedings) and persuade the court that the Board made the
right call.  If the LTB has granted the Urgent Motion and ordered eviction
it is likely the Court will approve and issue an order to the sheriff to
enforce eviction, but the process still takes time; costs money; and, results
in ongoing delay in ultimately removing the offending tenant or occupant from
the building.

Why bother with an
urgent motion?

It is well established
that landlords have a legal duty of care to tenants and occupants of their
multi-res buildings. If the landlord does not meet its duty of care, the
landlord is exposed to a personal injury lawsuit from any tenant who is harmed
as a result of the landlord’s breach of that duty. It is clear that where there
are facts known to a landlord where it is clear that the conduct of an occupant
in a building creates a “serious and ongoing” risk to the health and
safety of another occupant, the landlord is required to act to mitigate that
risk.  The landlord is empowered to take steps to remove the offending tenant/occupant
from the building by serving the appropriate notice of termination (N6,
“illegal act” and/or N7, “impaired safety”); consequently,
if the landlord fails to act and another tenant or occupant suffers harm which
should have been forseeable by the landlord, then the landlord is likely to be
named in a personal injury lawsuit.  If the landlord acts quickly to file
an Urgent Motion, then the landlord will be in compliance with its duty of care
by meeting an appropriate “standard of care”.  If the LTB
rejects a properly supported Urgent Motion, and there is subsequent harm to
another resident, the landlord will have a defence to a lawsuit by the injured
resident since the landlord met its standard of care and it was the LTB, not
the landlord, who exposed other residents to injury.

An Urgent Motion may not
be required for every situation where there is a serious, ongoing risk to the
health and safety of other residents.  For example, if a specific staff
member is the target of the threat, then reassignment of that staff is the
obvious solution.  If a specific resident is the target of a physical
threat, then Police involvement is the first step to take.  There are many
situations, however, where Police will not be involved (or bail is granted) and
where there is no practical option, thereby leaving the landlord in a position
to file an Urgent Motion.  Bottom line: if a landlord knows of a serious,
ongoing threat to the health and safety of anyone in the building, the landlord
has a legal duty to act, failing which the landlord will be financially liable
for any harm suffered by a person at the building.

Food and Package Delivery Restrictions

In addition to the
closure of common amenity areas of residential complexes and the introduction
of strict rules relative to laundry rooms, lobby areas and elevator use,
landlords are introducing policies and rules to restrict food and package
deliveries to buildings.  In essence, the restrictions prohibit deliveries
to tenant suites and instead, require tenants to meet the delivery person at
the entrance to the building, with exceptions made for persons with mobility or
other issues (ie: COVID quarantine) who require “accommodation”. A
template for a letter advising of delivery restriction rules is available in
PDF and Word formats at: Landlord and Condo Letters for Visitor Policy

If you have questions
about this Bulletin or require services in relation to the issues described
above, please contact Joe at hoffer@cohenhighley.com or use landlordreps@cohenhighley.com.