Introduction
Few issues create more stress for Ontario landlords than a tenant who stops paying rent. Whether a landlord owns a single rental property or an extensive portfolio, rent is often required to cover mortgage payments, property taxes, insurance, maintenance expenses, utilities, and other operating costs. When rent payments stop, the financial consequences can quickly become significant.
Many landlords hope that a missed payment is simply a temporary problem. In some cases, that may be true. In others, a single missed payment can become several months of accumulating arrears before the landlord takes meaningful action. The Residential Tenancies Act, 2006 provides a process for landlords dealing with non-payment of rent, but the process is procedural in nature and requires careful attention to timelines, documentation, notices, and evidence.¹ Understanding the issue early and maintaining proper records can often place landlords in a stronger position should further action become necessary.
Why This Issue Matters
Non-payment of rent remains one of the most common reasons landlords commence proceedings before the Landlord and Tenant Board (“LTB”). Unlike many tenancy disputes, rent arrears generally continue to grow each month that passes. While a maintenance dispute or neighbor complaint may remain relatively static, unpaid rent frequently becomes a compounding financial problem. The consequences may include:
- Significant rent arrears;
- Cash flow difficulties;
- Inability to meet mortgage obligations;
- Increased legal expenses;
- Delays in recovering possession of the rental unit; and
- Difficulty collecting arrears even after a tenant vacates.
In addition, many landlords underestimate how long it may take to resolve a non-payment matter. Delays can arise because of procedural errors, incomplete evidence, adjournments, review requests, appeals, or enforcement proceedings. For these reasons, landlords frequently benefit from understanding the process before arrears become overwhelming.
Common Mistakes Made by Landlords
Waiting Too Long to Address the Problem
Perhaps the most common mistake is waiting several months before taking any action. Many landlords wish to preserve a positive relationship with their tenant and hope that the tenant’s financial difficulties will resolve themselves. While that may occur in some circumstances, delaying action can also result in substantial arrears that may become difficult to recover.
Failing to Maintain a Proper Rent Ledger
A rent ledger is often one of the most important documents in a non-payment proceeding. Landlords who cannot easily identify:
- rent due dates;
- amounts paid;
- dates payments were received; and
- outstanding balances,
may encounter unnecessary difficulties proving the extent of the arrears.
Relying on Verbal Agreements
Informal payment arrangements frequently become the subject of disagreement later. A landlord may believe the tenant promised to pay by a certain date, while the tenant may recall the conversation differently. Written documentation often reduces uncertainty.
Incomplete Documentation
Emails, text messages, payment records, notices, photographs, and correspondence may all become relevant at a future hearing. Documentation created contemporaneously with events is often more persuasive than recollections months later.
Treating the Matter as a Personal Dispute
Non-payment of rent is often frustrating and emotional. However, landlords generally benefit from approaching the issue as a business problem requiring documentation, organization, and compliance with applicable legal requirements.
Court Decision on the Issue
Facts
In Schwartz v. Fuss, the parties were involved in residential tenancy litigation concerning an LTB eviction order arising from rent arrears.² The tenant sought to challenge the eviction order and requested a stay pending appeal. As a result, the Divisional Court was required to consider the competing interests of the parties while the appeal process unfolded. A central concern was the continuing accumulation of rent arrears during the litigation.
The Decision
The Divisional Court granted a stay of eviction pending appeal but imposed conditions requiring the ongoing payment of rent and payments toward arrears.³ The Court recognized that landlords may suffer significant prejudice where a tenant remains in possession while rent obligations continue to go unpaid. The decision reflects an important principle frequently encountered in non-payment disputes: rent arrears often continue to grow while proceedings are ongoing, and courts may seek to balance the interests of both parties.
Why the Decision Matters to Ontario Landlords
Although Schwartz v. Fuss involved a stay pending appeal rather than the initial non-payment process itself, the decision highlights a practical reality familiar to many landlords. Time matters. The longer rent arrears remain unresolved, the greater the financial exposure may become. The case also demonstrates that courts recognize the potential prejudice suffered by landlords when rent continues to accrue without payment. For landlords, the decision serves as a reminder that early documentation, prompt action, and proper use of available legal processes may help reduce the risk of increasingly large arrears.
Practical Considerations for Ontario Landlords
When dealing with non-payment of rent, landlords may wish to consider maintaining detailed records from the outset. These records often include:
- Written tenancy agreements;
- Rent ledgers;
- Copies of notices;
- Proof of service;
- Payment records;
- Correspondence with the tenant; and
- Notes regarding relevant events.
Landlords may also wish to review whether their internal procedures consistently document payments and arrears. For larger landlords, property managers, and corporations, standardized record-keeping practices can assist in ensuring that information is available if proceedings become necessary. Landlords should also recognize that each tenancy situation is unique. Factors such as payment histories, tenant communications, partial payments, payment arrangements, and other circumstances may affect how a matter proceeds.
As discussed in previous GLLLP articles regarding payment agreements, review requests, and procedural changes at the Landlord and Tenant Board, errors made at the beginning of a case can sometimes create avoidable complications later in the process.
Conclusion
A tenant’s failure to pay rent is not simply an inconvenience. It is often a developing financial problem that can become increasingly difficult to resolve as arrears accumulate. While every situation is different, Ontario landlords frequently benefit from maintaining accurate records, documenting communications, understanding the applicable legal framework, and addressing issues promptly.
The Divisional Court’s decision in Schwartz v. Fuss serves as a useful reminder that time can significantly affect the financial consequences of a non-payment dispute. The longer a matter remains unresolved, the greater the potential prejudice to all parties involved. Ontario landlords facing rent arrears may benefit from obtaining legal advice regarding their specific circumstances and the options available to them under Ontario’s residential tenancy legislation.
Disclaimer
This article is provided for general informational purposes only and does not constitute legal advice. Every tenancy is unique and the outcome of any particular matter will depend upon its specific facts and circumstances. Reading this article does not create a paralegal-client, lawyer-client, or solicitor-client relationship. If you require legal advice regarding your situation, you should obtain professional legal assistance.
Footnotes
- Residential Tenancies Act, 2006, SO 2006, c 17, including ss. 59–69 respecting non-payment of rent proceedings.
- Schwartz v. Fuss, 2021 ONSC 1159 (Div Ct).
- Schwartz v. Fuss, 2021 ONSC 1159 (Div Ct) at paras 14–21.
- Landlord and Tenant Board, Interpretation Guideline 11: Rent Arrears.
- Residential Tenancies Act, 2006, SO 2006, c 17, ss. 59, 69.