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Author: Anika Helen - Paralegal
Edited By: Ryan Carson

What has changed for landlords and their tenants in the midst of Covid-19?

The Covid-19 crisis had a significant impact on our economy and still continuing to do so. The government had previously decided to close all non-essential businesses to stop the spread of the virus. It has left a significant amount of people with no jobs. According to IPSOS, one in three (36%) Canadians say they have been laid off, on reduced hours/pay (13%), or have shuttered their small businesses (5%). In addition, three in ten (31%) Canadians have less than a week savings to pay for bills if no income is coming in. As a result, many are struggling to make rent payments on time or in many cases, are not able to pay rent at all.

Though there is hope that we will be able to return to normal very quickly after things start to re-open, there will be people who will not be able to get their jobs back right away. Even though, the economy will recover fairly quick, not everyone will be able to get back on their feet instantly. The government have implemented certain changes that is supposed to somewhat help tenants and landlords until the pandemic is over.

Changes to the Eviction Process

Tribunals in Ontario have suspended all eviction-related activity. No renter households are currently at imminent risk of eviction for non-payment of rent. However, while evictions are stopped for now, the current expectation is that tenants will eventually have to get caught up on rent. A landlord is free to give written notice to their tenant; however, the tenant does not have to move out. Property owners are not permitted to lock-out tenants on their own. Only the law enforcement is permitted to do so. Tenants are encouraged to contact the Province’s Rental Housing Enforcement Unit in case their landlords have locked them out of their rental units. The government urges people to pay rent if they are able to. People who were not laid-off or still have the ability to earn, should be paying their rent. Tenants are not encouraged to not pay rent. If you are able to, you should be paying your rent without undue hardship.

Possible Solutions for Landlord

Because Tribunals in Ontario are not allowing landlords to evict their tenants anymore, there is not much a landlord can do at this point. Unfortunately, landlords have to be patient and understanding. While we are all aware that landlords are facing financial hardship as well due to mortgage payments, certain financial institutions are offering mortgage deferrals up to a certain point during this pandemic. Landlords are encouraged to get in touch with their financial institution to seek any help available to them.

As for dealing with tenants not being able to pay rent, landlords should have a discussion with their tenants and agree to reduce rents or defer payments where possible. As mentioned above, tenants are not going to be allowed to not pay rent and not make up for those non-payments. Landlords should get into agreements with their existing tenants that allow tenants to pay back their rent arrears in small increments within a defined period of time. For example, if a tenant arrears in the amount of $5,000, the landlord and tenant can agree that when the tenant starts paying rent again, they can pay extra $300-400 a month on top their rent until the $5,000 have been recouped by the landlord. Tenants might not agree to a specified amount but landlords and tenants should come to an agreement together with an amount that works best for both parties.

Unfortunately, tenants are not always able to keep their side of a promise. If a tenant stops paying their incremental amount, they are breaching the repayment agreement. At that point, the landlord can and is permitted to file an application with the Landlord and Tenant Board to obtain an order for eviction. The application can also include the repayment of arrears. If a tenant does not leave after an order has been obtained, a landlord can have a sheriff remove the tenant from the rental unit. If the tenant fails to pay the repayment of arrears, the landlord must enforce the order with the help with small claims court.

Entering a Rental Unit and Physical Distancing

Before the pandemic, a landlord was permitted to only enter a tenant’s unit in specific circumstances. In most cases, the landlord must:

Give the tenant 24 hours written notice
State what day and time they will enter (between the hours of 8 a.m. and 8 p.m.)
State the reason for entering the unit

There are certain special circumstances such as emergencies where the landlord can enter the unit without notice and the tenant cannot refuse to let the landlord in. Due to Covid-19, landlords are encouraged to request entry only in urgent situations and strictly follow the physical distancing guidelines.

In conclusion, both tenants and landlords are facing unusual circumstances in the midst of this pandemic. However, the above-mentioned changes will aid tenants and landlords with their specific situations. If a tenant or a landlord is facing such hardships, they should seek legal consultation or help to guide them in the right way. There are free legal clinics available to tenants as well as landlords. Seeking help and getting the correct information in this situation is the first step to recovering from this crisis.

Disclaimer

The content on this web site is provided for general information purposes only and does not constitute legal or other professional advice or an opinion of any kind. Users of this web site are advised to seek specific legal advice by contacting members of Carson Law, Carson IP, or their own legal counsel regarding any specific legal issues. Carson Law does not warrant or guarantee the quality, accuracy or completeness of any information on this web site. The articles published on this web site are current as of their original date of publication, but should not be relied upon as accurate, timely or fit for any particular purpose.

With the current environment, tenants and landlords are in the same boat when it comes to rent. Tenants are worried about their inability to make rent; landlords are worried about their operating costs and many people from both parties find themselves unable to meet the obligations of their contracts. 
Currently, no new eviction orders will be issued until further notice and sheriff’s offices will postpone any scheduled enforcement of current eviction orders.3 

Tenants who are able to pay their rent must do so, to the best of their abilities. If not, an honest conversation between a landlord and tenant is often the best first step in dealing with this challenging problem. With this conversation, deferring payments is the most common approach at this moment.  Looking into the future of lease agreements due to COVID-19, we can perhaps start to see ‘pandemic clauses’ become a standard feature of leases and agreements.1 

In the meantime, here is a list of short-term solutions that landlords may consider:

•	Basic Rent abatement or deferral.2 

•	Basic Rent suspension for defined periods i.e. 3-6 months or longer depending on the nature of the tenancy.2

•	Basic Rent deferrals for a defined period and a corresponding increase of Basic Rent at a point in the future to make up for a Basic Rent deferral.2

•	Either eliminating or reducing the obligation to pay Basic Rent and replacing it with the requirement to pay Percentage Rent for a defined period of time.  A switch to paying Percentage Rent is similar to a "pay what you can" approach.2 
  
•	Less common, is abating or suspending both Basic Rent and Operating Costs. Typically, landlords like to recover at least their out of pocket expenses such as realty taxes, insurance, utilities still and maintenance costs.2

•	Reduction or elimination of administrative fee and/or management fee component of operating cost charge.2

•	Reduction or elimination of promotional and marketing fees.2

•	Reduction of services offered and performed at the property to effect a reduction in operating costs to be charged to tenants during the COVID pandemic crisis.2

•	Depending on the size of the property, number of tenants and nature of the tenancies in a given property, a landlord can consider a reduction of services provided to tenants during the state of emergency, which would potentially reduce operating costs.2

•	If the landlord would rather that a particular tenant vacate its premises, then the landlord may consider building in an automatic termination or an option to terminate for the landlord.2

•	Ensure that any concession you agree to clearly provides the following2:

         → insert a consideration clause;

         → clearly state when the concession expires;

         → the lease is otherwise in full force and effect and remains unamended;

        → time shall continue to remain of the essence;

        → the concession is not a waiver of any other clause in the lease;

        → the indemnifier signs the amendment, if applicable.

Assistance for Tenants

If you need help financially you can:
• contact your local service manager
• apply for COVID-19 emergency assistance
• access federal government programs

Assistance for Landlords

Landlords may wish to:
• talk to their municipality about help with property taxes and municipal service fees.
• inquire with their mortgage lender about mortgage payment deferrals
• investigate federal government programs

Disclaimer

References

¹Hinton, K., & Mckenzie, R. (2020, April 1). 5 tips for handling commercial leases and contracts during COVID-19 and beyond. Retrieved April 20, 2020, from https://www.bcbusiness.ca/5-tips-for-handling-commercial-leases-and-contracts-during-COVID-19-and-beyond. ²Lanteigne, J., & Rosen, S. D. (2020, March 26). COVID-19 (coronavirus) advisory: Commercial landlord survival guide. Retrieved April 19, 2020, from https://gowlingwlg.com/en/insights-resources/articles/2020/covid-19-commercial-landlord-survival-guide/ ³Ministry of Municipal Affairs and Housing. (2020, March 28). Renting: changes during COVID-19 (coronavirus). Retrieved April 19, 2020, from https://www.ontario.ca/page/renting-changes-during-covid-19

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