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Evicting for Persistent Late Payment

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phardy34

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I am a fairly new landlord. I have tenants that moved into a unit in February. They have been late paying their rent every single month since May.

There have been a variety of excuses (bank fraud, vet bills, EI cheque not arriving, blah blah blah . . . ). They have come through each month with cash, however it seems they are getting further and further in over their heads each month. May`s rent was a couple days late, June and July were late by about a week, and I have yet to receive August rent.

I issued N4 notices to them in July and this month. Assuming they come up with the rent before the deadline, I was considering pursuing the Termination of Tenancy for Persistent Late Payment of Rent (form N8).

Does anyone have any experience with this? Is it worth pursuing? Or will the board rule in favour of the tenants since I`ve only issued two N4`s to them?

Any feedback or advice would be appreciated.

Regards,

Paul
 
Not first hand but I do know the system through other LLs.

Continue to send N4 every time. The more the better to support your eviction.

The first time you file with the board the ruling will be to give the tenant another chance, If after that they are late again and you file they will most likely be evicted.
The highest possibility of eviction is after the first year lease expires.
The good part is the tenant will be charged with the filing fee of $170 and this is your best leverage.

Tell your tenant the next time they are late you will file the persistent late, it will cost them the $170 and if they are late again they will be eviction. This information alone may whip them into shape. If this does not work, and assuming you have 4-6 N4s on file you can proceed to file the eviction.

In the mean time I assume you have a late fee in your lease agreement.

I have one tenant that I can count on being late on a regular bases and simply consider the late fee as a bonus. Not a huge deal as I have 33 paying tenants.
 
Thanks for the advice, Greg.

Yes, I have a late fee in the lease, however I`ve only been able to collect it once. I don`t see a lot of leverage in the landlord / tenant act to enforce late fees either.

The lease was for 6 months and expired at the end of July. Would that make a difference in regards to a board ruling?
 
Keep track of the late fees not collected and ask the board to order payment when you file for the eviction.
Do all business with these tenants in writing. Send off the most resent N4 and a letter indicating how much is owed including all past late fees.

Also serve them with a 24 hr notice to inspect. You will need to do a complete inspection of the property before you move forward. Document everything, record the inspection with a video camera and make sure you take a witness with you. If you find any damage repair it and charge them for the cost. Make sure you ask them if there are any repairs they require as well to protect yourself.
Have them sign a letter noting the details of the inspection.
You must do this so they can not surprise you with any maintenance complaints at the board eviction hearing as well as to collect for damages after the eviction.

Once you have done all that meet with them and verbally tell them you will be filing for a eviction if they are late again and/or if they do not pay all delinquent late fees.

Being on month to month will usually assist in getting the board to evict on the second try.
 
Assuming the tenants have a fixed term lease, eviction for persitently late is not the appropriate application - at this time.

The correct procedure in Ontario is:
1. Document the occurence with an N4 - which you have been doing (make sure you tell the tenant that the Government of Ontario mandates you to do this when the rent is not paid by the date agreed - so you don`t look like the bad guy)
2. With the N4, send them a letter EACH TIME indicating that they will be evicted for being "persistently late" unless they normalize their rental payments. Make sure you use the term, "persistently late".
3. Assuming their deliquency continues, and they have accumulated a bunch of N4`s and persistently late notices, file the persistently late application near the end of their lease term.

Mike

QUOTE (phardy34 @ Aug 12 2009, 01:33 PM) I am a fairly new landlord. I have tenants that moved into a unit in February. They have been late paying their rent every single month since May.

There have been a variety of excuses (bank fraud, vet bills, EI cheque not arriving, blah blah blah . . . ). They have come through each month with cash, however it seems they are getting further and further in over their heads each month. May`s rent was a couple days late, June and July were late by about a week, and I have yet to receive August rent.

I issued N4 notices to them in July and this month. Assuming they come up with the rent before the deadline, I was considering pursuing the Termination of Tenancy for Persistent Late Payment of Rent (form N8).

Does anyone have any experience with this? Is it worth pursuing? Or will the board rule in favour of the tenants since I`ve only issued two N4`s to them?

Any feedback or advice would be appreciated.

Regards,

Paul
 
You don`t sit back and hope it resolves itself. You hit them right square in the wallet at the onset which will derail their tardy behaviour and will stop the problem going forward.

When you have a lease agreement that specifically says there is a fee for lateness, the FIRST time they are late, you slap them with the N4 and the eviction notice and DEMAND the late fee, and explain that you WILL evict them if this keeps up. This fee in itself usually trains the tenants to stop their lateness because they see they are paying extra rent each month. And if you INSIST on the fee EVERY TIME then they wont want to pay this extra fee and will pay on time as they will see the financial benefit to themselves in paying on time...

If I understand you correctly they seem to come up with the funds each month... If they keep being late and keep paying the fee, then I would ask your mortgage company to move the mortgage payment to the end of the month and keep collecting the late rent and the extra fee. Is it that bad having a free rental income increase compliments of the fee?
 
The bad thing about this tenant is that his behaviour is simply the tip of the iceberg.
Individuals that believe it is OK to ignore and break rules are irresponsible and disrespectful of there LL. LLs need to take swift action to train tenants on what is expected.

Is constantly having a late fee a bad thing? Not necessarily.
Is having a tenant believe he can take advantage of a LL a bad thing? Definitely.
 
Once again, thanks to all for some great advice.

I completely agree with taking a tough stance with these tenants. I was definitely WAY too easy on them the first couple times they were late and I now need to work a little harder to reclaim some credibility as a hard-nosed (but fair) landlord.

The #1 lesson learned is that I need to let my wife handle tenant relations going forward. She`s definitely way tougher than I am - LOL! She`s been working as a credit card bill collector for over 15 years and has zero tolerance for BS and sob stories. I definitely need to hand over the rent collection duties to her. She`ll whip things into shape pretty quick!

Regards,

Paul
 
All LLs in Ontario would benefit greatly from your wife`s training and experience.
Her skills are a valuable asset to the business.

I would normally say Good luck but in this case you have something better than luck.

Happy Hunting
 
Late fee is allowed?
Removal of prompt payment discount all that`s allowed??

QUOTE (dwb @ Aug 13 2009, 10:13 AM) You don`t sit back and hope it resolves itself. You hit them right square in the wallet at the onset which will derail their tardy behaviour and will stop the problem going forward.

When you have a lease agreement that specifically says there is a fee for lateness, the FIRST time they are late, you slap them with the N4 and the eviction notice and DEMAND the late fee, and explain that you WILL evict them if this keeps up. This fee in itself usually trains the tenants to stop their lateness because they see they are paying extra rent each month. And if you INSIST on the fee EVERY TIME then they wont want to pay this extra fee and will pay on time as they will see the financial benefit to themselves in paying on time...

If I understand you correctly they seem to come up with the funds each month... If they keep being late and keep paying the fee, then I would ask your mortgage company to move the mortgage payment to the end of the month and keep collecting the late rent and the extra fee. Is it that bad having a free rental income increase compliments of the fee?
 
In Ontario you are allowed to charge a late fee up to $20 plus any bank charges.

Prompt payment discount? Not in my lease agreement.
 
Is that correct and I`m mistaken? Do you know any judgments / legislation that allows for this?

I think you`re confusing it with $20 fee for dishonoured cheques plus bank charges? (and in practice they might allow you more at LTB! re not confirming bank charges?)

A prompt payment discount is allowed up to 2% I think... So structure the rent you want slightly higher at the start of tenancy...


QUOTE (invst4profit @ Aug 13 2009, 04:04 PM) In Ontario you are allowed to charge a late fee up to $20 plus any bank charges.

Prompt payment discount? Not in my lease agreement.
 
Hi Greg;
You should consider having a prompt payment discount. Here`s the example that Adam references:

1. Market value rent is, as an example, $400.

2. Lease states that the rent, $400, INCLUDES a 2% prompt payment discount.

3. Tenant pays rent late, he is no longer entitled to 2% prompt payment discount - so rent goes to $408.

Its just another, legal, tool you can utilize, in addition to the late fee to maximize $$$$$ on late paying tenant.

Mike

QUOTE (invst4profit @ Aug 13 2009, 04:04 PM) In Ontario you are allowed to charge a late fee up to $20 plus any bank charges.

Prompt payment discount? Not in my lease agreement.
 
Offering a 2% discount to tenants would only result in decreasing my income by 2%

My numbers do not indicate any advantage in discounting tenant rent. I have 33 tenants which means 396 rent checks per year. Last year I had a total of 3 lates. Giving all tenants a 2% discount would be unnecessary money out of my pocket. The reason for those three lates would have still resulted in three lates even if I did give a discount. Contrary to the REIN policy of discounts and gifts for tenants I do not believe it is beneficial to LLs. Yes there may be a warm fussy feeling a LL gets from doing it but I have never heard of a tenant being unhappy or complaining because they did not receive a bonus or gift from there LL. Have yet to receive a note from a tenant asking where there Xmas turkey is.

As far as rent discounts are concerned I do not believe there is any evidence to support the benefit of providing discounts. Tenants either pay on time because they believe it is the right thing to do or they pay late and pay more.
 
QUOTE (invst4profit @ Aug 17 2009, 09:32 AM) Offering a 2% discount to tenants would only result in decreasing my income by 2%
Giving all tenants a 2% discount would be unnecessary money out of my pocket.

Not necessarily, Greg. It all depends on how you`re setting it up. With a new tenant, if you would normally ask for $1 000 per month, , instead set the rent at $1 020. With the discount, you`re getting the same $1 000, unless they`re late, at which point you`d get more. So, there`s no way that this would decrease your income - it can only increase it.

Have a good one!

JohnS
 
The concept is still beyond my full understanding.

If I set the rent at $1020, as in your example, I see that as asking $20 more than the market rate and having to convince applicants that the discount will reduce it to market. Doesn`t seem worth the trouble for the LL.
If that is the case where is the incentive for the tenant to rent from me as opposed to a LL at market rate of $1000.

If on the other hand $1020 is a market rent then I am again back to taking a 2% loss on what I could receive as rent.

Because rent discounts are not a standard in the industry I am not pressured by competition to provide it and therefor still see no advantage in it.
The vast majority of tenants pay on time because they are conscientious individuals not because of a bonus or punishment system associated with payment.

I think LLs using the incentive are mistaken in believing they would have significantly higher late payments without the incentive.
 
Advertise at $1000
Have lease written up that says rent is $1000 including 2% prompt payment discount
Re my past post than others you have nothing to fear - many landlords use this with success!



QUOTE (invst4profit @ Aug 17 2009, 01:46 PM) The concept is still beyond my full understanding.

If I set the rent at $1020, as in your example, I see that as asking $20 more than the market rate and having to convince applicants that the discount will reduce it to market. Doesn`t seem worth the trouble for the LL.
If that is the case where is the incentive for the tenant to rent from me as opposed to a LL at market rate of $1000.

If on the other hand $1020 is a market rent then I am again back to taking a 2% loss on what I could receive as rent.

Because rent discounts are not a standard in the industry I am not pressured by competition to provide it and therefor still see no advantage in it.
The vast majority of tenants pay on time because they are conscientious individuals not because of a bonus or punishment system associated with payment.

I think LLs using the incentive are mistaken in believing they would have significantly higher late payments without the incentive.
 
In essence since the rent advertised is actually $1000 this is actually a late fee disguised as a rent reduction for on time payment.


In my case there is no need to implement this plan as my existing practices are providing the same results.
 
QUOTE (phardy34 @ Aug 12 2009, 01:33 PM) I am a fairly new landlord. I have tenants that moved into a unit in February. They have been late paying their rent every single month since May.

There have been a variety of excuses (bank fraud, vet bills, EI cheque not arriving, blah blah blah . . . ). They have come through each month with cash, however it seems they are getting further and further in over their heads each month. May`s rent was a couple days late, June and July were late by about a week, and I have yet to receive August rent.

I issued N4 notices to them in July and this month. Assuming they come up with the rent before the deadline, I was considering pursuing the Termination of Tenancy for Persistent Late Payment of Rent (form N8).

Does anyone have any experience with this? Is it worth pursuing? Or will the board rule in favour of the tenants since I`ve only issued two N4`s to them?

Any feedback or advice would be appreciated.

Regards,

Paul

Download the N8 Form here

It has to be at the end of the lease.

Keep all paperwork and notices for proof at the hearing
 
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