- Ashley Tulio
The eviction process in Ontario - What to do if your tenant stops paying rent
With the increased cost of living across the GTA and Ontario in general, the issue of tenants not paying rent has exponentially increased.
By now you’ve probably seen the headlines discussing landlords losing their properties due to payment discrepancies. Here at Pal Property Solutions, we have the expertise and passion for providing real estate solutions and the desire to help others feel financial freedom.
Unfortunately, the practice of tenants not paying rent negatively impacts the market in general, leading to higher rents, increased short-term rentals, and mortgage defaults.
What Landlords Can Do Proactively and Reactively to Minimize the Loss
Proactively: How to Screen Tenants to Avoid Payment Discrepancies
You can first do an initial 'pre-screening' to have those simple conversations, including when they are planning to move in or even their motive to rent your place etc.
Then you will need to request an application typically including personal information, employment information, rental history (if applicable), etc.
Once you have narrowed the pool of potential tenants, you can invite them to a screening to make sure you both are on the same page and have a better sense of whom your future renters are by asking more questions.
You can then start screening / background check. This will allow you to obtain a credit report and an applicant's rental history. Obtaining a credit report will allow you to measure the potential tenants' level of credit risk and the likelihood that they will pay their rent on time.
Make sure you always ask and check for their references. References are an effective strategy as you can better understand your potential renter. The best references would be from previous landlords, and if that is not available because this is the first time they are renting, others would be previous employers as well.
Reactively: What to Do When a Tenant Is Refusing to Pay Rent
Having a tenant that has yet to pay their rent owed to you puts you in a challenging position. First, you should start with a reminder, which can be either through text, email, call, or even in person.
If their reason is more significant than simply forgetting and involves job loss or illness, you can then have a conversion with them, creating a payment plan or a compromise that works for you both. If the tenant refuses to pay rent, you should then take the steps outlined below:
1. The first thing you want to do is submit an N4. The N4 form is a formal warning to notify the tenant that they must pay the rent or move out. It gives your tenant a 14-day period to settle their balance.
2. After 14 days, you'll have to file an L1 directly with the landlord-tenant board. The L1 form is an order that evicts the tenant and requires them to pay all the money owed. Unfortunately, we are seeing a pretty long wait (around seven to eight months). However, they're taking steps to decrease this timeline.
As a landlord, ensure you have a strong strategy and team in place for your property management duties. Also, developing a strong screening and proactive research can avoid a loss in revenue.
Pal Property Solutions manages all property management duties, including tenant screening, payment collection, and eviction process. Ready to make your money work for you? Book your free discovery meeting.