Landlords Have Legitimate Issues with Canada’s Half Baked Legislation

The Federal government didn’t bother to get into specifics on upcoming marijuana legislation.

The tabled cannabis law proposes allowing Canadians to grow 4 plants per person at home – whether they own or rent, provided the plants aren’t taller than 100 centimetres. It sounds benign when it’s framed as a new and progressive law – which in many ways it is – however the practical implications of the legislation are something that a growing number of national and provincial landlord groups aren’t happy with in the least. The government has not said if landlords will be able to prohibit tenants from growing pot in their apartments.

The Professional Property Managers Association and  The Canadian Federation of Apartment Associations are both looking to compel the government to change this aspect of the law. They both seek a ban on tenants growing plants in rented homes or multi-unit buildings. Full disclosure: we also support this change in the law as it is rooted in common sense. We touched on some of the complicated aspects of growing marijuana in a rented unit – particularly the insurance nightmare it has the capacity to create.

“I think the government is obviously balancing a lot of issues here. They do want to break the black market, and that’s important. But we think we can break the black market if they let people [only] grow it in their own owner-occupied homes, and the product is readily available in stores or by mail order.” -John Dickie, Canadian Federation of Apartment Associations

Optimal conditions for growing marijuana include warm temperatures, extensive lighting and high humidity. In order to grow weed, you need these three things. Creating the hydroponic conditions in a residence in an effort to achieve this key trifecta is not something you can do without affecting the domicile in some capacity. That’s just a fact. Water that is fed to plants will transpire and evaporate from the containers into the surrounding air. Cannabis plants also require warmth. Excess water vapour and high temperatures can create humidity damage. Large mold accumulations can follow and grow fast in humid environments and can lead to structural decay.

To boot, unusually high amounts of steam coming from vents in winter can damage exterior finishes on houses. The smell of weed seeps into drywall the same way tobacco smoke does, and even when it’s not being smoked, marijuana can create a permanent odour that can be repulsive to people – like other tenants and incoming ones in the future.

The electricity required for lighting in even a small cultivation of weed is high. It also introduces a fire concern with having that much botanical lighting in a house – and that’s assuming that a tenant doesn’t re-wire the electrical in a home (which they can’t do). Most wall outlets are on a 15-amp, 120 volt circuit. Many outlets are generally on that one circuit. One 1,000 watt metal halide or high pressure sodium light draws 9 amps at 120 volts. So just by using one of those plugged into a wall outlet, you have already significantly maxed your circuit – and that’s not taking into account the other devices, computers, or appliances that are also typically in a unit. Maxing a circuit is not a good thing. Your circuit breaker (if it’s working properly) may shut down your circuit because you’ve overloaded it. Your wiring may heat up, flame up, short out or otherwise fail. Lastly, there is an increased fire hazard danger due to people drying marijuana in a household stove.

Even four plants in a building can change the risk assessment on a property, and creates a greater likelihood of water damage, mould, fire, vandalism and burglary. Under most basic home insurance policies, marijuana-related damages or anything that companies believe is “high risk” is not covered. That view is shared by many insurance companies, according to the Insurance Bureau of Canada.

“Landlords currently have little recourse available if a tenant is growing medical marijuana and aren’t required to be told if it’s happening” -Avrom Charach, The Professional Property Managers Association

Under new federal rules introduced last August, landlords are left a little high and dry (no pun intended) if a tenant is growing licensed medical marijuana. They don’t even have the right to know it’s happening. None of that is right. The federal government should formally include a clause in the Cannabis Act including restrictions on any and all rented dwellings or they should at least mandate that provincial legislation needs to compensate for the loophole this creates.

 

 

An Argument Against Rent Control To Deal With Ontario’s 1991 Rent Exemption

Living in Downtown Toronto Condos Is Not A Right.

We made the news this week! The CBC’s Lisa Naccarato called me on Monday to offer a comment on Ontario’s 1991 Mike Harris rental “loophole” – apparently a controversial topic for many who live in Toronto. Toronto city councillor Mary Fragedakis moved a motion Tuesday that would see council come out in support of a private member’s bill at Queen’s Park that would extend rent control to apartments built after 1991. Her motion supports NDP MPP Peter Tabuns’s private member’s bill aimed at eliminating what he also refers to as the “loophole”. I don’t agree with eliminating this exemption and I’ll tell you why. Before we get into that…let’s start with a few facts.

FACT: Rent control in Ontario only applies to units that were first built or occupied before November 1, 1991. If the rental unit is in an apartment building constructed (or converted from a non-residential use) after November 1, 1991, then the rent control provisions of the Residential Tenancies Act, 2006 do not apply.

FACT: The post-1991 rent exemption was originally introduced by Bob Rae’s Ontario NDP government. It’s been maintained over time by Mike Harris’ PC provincial government (they made it permanent) as well as the governing Liberals. A low vacancy rate dropped even lower as developers were disincentivized by the regulated rental market for the freedom of condominiums. The exemption provided the incentive that private developers needed to build much of the existing condo stock as we know it and to recover from years of virtually no rental increases at all. Any changes to this incentive will undoubtedly have a negative effect on the market and real estate development (especially outside of Toronto where vacancy rates can vary) – not to mention the construction that is currently in the pipe.

FACT: 85% of rentals in Ontario are covered by provincially mandated rent control.

FACT: It’s an exemption – not a loophole. These are two fundamentally different things. A loophole is defined as an ambiguity or inadequacy in the law. There are plenty of those in Ontario’s Residential Tenancy Act. This exemption was intentionally legislated. While it is undoubtedly true that many tenants have seen their rents increase significantly and at considerably more than the mandated provincial increase, there is no evidence to suggest there is widespread abuse of the exemption or that it qualifies as enough of an urgent issue that it needs legislative intervention.

FACT: Ontario’s Residential Tenancy Act heavily – almost hilariously – favours tenants. It always has. It favours tenants so much that Ontario Superior court justices have called for the provincial government to adjust the law and end what is a growing issue of tenants gaming the system. In 2014-15, the Ontario LTB received 79,740 applications. The ratio of landlord to tenant applications has remained relatively constant since 1998. 2014-15 was no exception, with 90% of applications filed by landlords. 70% of those landlord applications filed were related to non payment of rent. A stated purpose of the Residential Tenancies Act, 2006, is to balance the rights and obligations between landlords and tenants. It’s plainly clear that the law in fact does the opposite. The last thing landlords need is another short sighted unfair law that hobbles their ability to run their property portfolios as a business.

FACT: This issue is logical hogwash and is politically motivated. As per Martin Regg Cohn at the Toronto Star, “…rent hikes are a result of reduced supply and increased demand, which is what puts pressure on politicians for rent controls, which then depresses supply even further. Extending rent controls to newer (costlier) units would benefit the middle and upper class more than the working class (who tend to be stuck in older units anyway). Why target rentals while exempting the rest of the real estate market, notably the housing speculation that is driving much of the current crisis? It’s much cheaper and politically popular for governments to make landlords swallow foregone rent increases by imposing or extending price controls (vs. housing subsidy vouchers).”

“In the mid-1970s, NDP firebrand Stephen Lewis seized on media accounts of landlords gouging tenants. He goaded the government of then-premier Bill Davis into promising rent controls lest his Tories lose power. It seemed like a good idea at the time. But history is littered with good political intentions — and contortions — that create economic distortions.”
– Martin Regg Cohn, Toronto Star 

FACT: Condo landlords have it tougher than the average landlord. The owner of the condominium will have fixed, predictable costs in the form of mortgage payments and property taxes, but the maintenance fees (commonly called condo fees) can and often change – sometimes dramatically. Condo landlords are bound by two pieces of provincial legislation. The lease agreement is between the owner and the tenant and that relationship is still governed by the Residential Tenancy Act, 2006, in Ontario. However, within the building itself, the Condo Act has precedence and landlords are responsible to make sure that their tenants follow condo rules.

FACT: Landlords want tenants. If they raise prices above what the market is willing to pay then rent will adjust accordingly. The vacancy rate is low for a reason. It takes an average of only 17 days to rent a condo in Toronto. The city averagely sees 200,000 new people move to the 416 area code each year. This issue is supply and demand. Not greedy landlords.

Housing speculation is driving much of the current crisis. Toronto is clearly a city where people want to live. Hundreds of thousands have come here from around the world. Young people want to live where the action is as gentrification has firmly rooted itself.

I admire ethical landlords. I admire ethical tenants even more. Most landlords and most tenants are both. My solemn advice to any landlord who has a Toronto unit that falls under the exemption: Act in good faith. Be straightforward and upfront with your tenants. Tell them that your unit qualifies as exempt and explain the degree of exposure that exists. Be empathetic about having to potentially uproot your living arrangement and consider the discomfort, hassle, and inconvenience associated with losing your home after a year. Ultimately – a happy long term tenant is better than expensive turnover. Exercise common sense, and demand that politicians do the same.

 

Tenant Assured Isn’t What Landlords Need

British data mining startup Score Assured has developed a system that claims to accurately determine a person’s financial and personal worthiness based on their social media reputation and history. The company has plans to market their system to employers and dating services but, for now, called it Tenant Assured, and is focusing on landlords as customers.

This is how Tenant Assured works:

A landlord who’s signed-up with Tenant Assured sends all of their rental applicants to a special link on the Tenant Assured website. They are then asked  to provide full access to up to four of their social media profiles—on Facebook, Instagram, LinkedIn and Twitter. These are then thoroughly crawled, scraped, and analyzed by Score Assured. The scrutiny includes conversation threads, private messages, and contact lists. A report is produced and delivered to the landlord. Landlords makes a decision on whether they want to rent to an individual based on the information provided.

Caitlin Dewey of the Washington Post wrote a piece on voluntarily going through the process herself. She found it uncomfortable. As per the piece:

…It’s not just the amount or detail of data that’s problematic, either. Tenant Assured reports include information such as whether you’ve mentioned a pregnancy and how old you are, which are both protected statuses under U.S. housing discrimination law. 

My personal tenant report includes a list of my closest friends and interests, a percentage breakdown of my personality traits, a list of every time I’ve tweeted the words “loan” and “pregnant,” and the algorithm’s confidence that I’ll pay my rent consistently.

Tenant Assured co-founder Steve Thornhill maintains that his product is a useful tool for landlords. “If you’re living a normal life, then, frankly, you have nothing to worry about.”

Here’s the thing though…we’re firmly of the opinion that being considered as a candidate for a tenancy based on your social media activity is not good business. This is unnecessarily invasive and most importantly feels weird (at least to us). While it’s true that the tenant is voluntarily providing this information, there is no way for them to view their ratings or dispute something they consider to be incorrect. Credit reports and background checks are regulated under federal law in the U.S. and in Canada and have consumer protections built into them. An algorithm that determines whether you’re worthy of an apartment based on your social media activity is not regulated at all. I mean…who doesn’t have a ridiculous tongue and cheek tweet or Facebook status meant in jest or sarcasm? Can algorithm’s detect sarcasm? We live in the age of autocorrect. It would be an understatement to say that this product will more than likely not produce a useful snapshot of a person’s payment reliability and character. We also question whether this is the right way to have a tenancy started off, even if a tenant voluntarily provides this information.

What do you think? Landlords? Do you have any comments? We’d love to hear them!

Ontario’s Landlord & Tenant Act Has More Holes Than A Block of Swiss Cheese.

I’m pretty sick and tired of hearing the variety of gripes about landlords. Very few people like landlords and it’s easy as pie to pick on them. Too easy. As a matter of fact, I’m going to take it a notch up. I think landlords generally suffer from a grossly misinformed perception from renters and entitled people and are considered a privileged group – receiving more criticism than they generally deserve.

Sure – there are lousy landlords. Lots of them. I particularly have negative reserves of sympathy for predatory or blatantly negligent landlords  who don’t care about the well being of their tenants or who ignore their professional and legal responsibilities and obligations.  If you’re a George Woolsey – I think you need to go to jail.

With all of that said, Nina Willis was charged with fraud this week, and it’s about time. She – along with every other tenant who games the system for their own benefit (especially in tenant friendly provinces like Ontario) – are no different than con men. They should all be charged with fraud and we should have a public registry for people like this. Landlords, like consumers, should be protected. They deserve it.

Take Adam Buttigieg as another example. He has a gamut of fraud convictions and appearances at the Ontario LTB. The Toronto Star did a wonderful exposé on this guy last year. They revealed how tenants can delay eviction by exploiting protections offered through Ontario’s Landlord and Tenant Board, and how privacy rules keep landlords in the dark about bad tenants. It’s about time on that, too.

Nina Willis has been ordered out of at least seven properties since 2005. She’s a professional liar and fraudster. She deserves to go to jail because she knowingly and willfully lied on tenant applications and would exaggerate maintenance complaints as justification for withholding rent. Sometimes she’d even accuse landlords of discrimination or harassment. Whatever to delay the process as long as possible. Once that was done, she would effect her perfected dance of waiting for N4s, then waiting for L1’s and a hearing at the LTB, and then providing checks for the arrears amount during the mediation process, which would bounce. Stalling evictions in the province of Ontario is a relatively easy thing to do. Once she exhausted her options, she’d have already bought herself months of living rent free and would simply move onto the next landlord to do the same thing.

There are bad landlords. That’s a fact. There are also bad tenants. That’s also a fact. The most important fact in the province of Ontario is that if you’re a bad tenant, you can buy time on your landlord’s dime to pay the rent. You can use your landlord as a bank. You can live rent free for months if you really wanted to, and you can do it a number of times without getting caught. I understand the need for privacy, and believe everyone is entitled to it – but if you exploit people – you should be exposed. I’m glad Nina Willis’ is getting the justice she deserves, but it doesn’t change the fact that being a landlord in this province is a tough job and those who do it, suffer from a significant degree of financial exposure courtesy of our friends at Queen’s Park. Good legislation is airtight and adaptive when necessary. Ontario’s laws aren’t there yet, but they should be.

Questions? Comments? I’d love to hear them!

What Is Up With Mayors and Mayor Hopefuls Piping Up About Landlords?

I don’t get it. Naheed Nenshi told Calgary’s landlords to be “ethical” last week and not gouge tenants. Ok fine. Now -Toronto mayoral hopeful Olivia Chow is on the campaign trail saying she’s going to introduce stiffer measures for bum landlords who don’t maintain their properties. Some of the things that bother her are broken light fixtures, peeling paint, and bedbugs.  It bothers her so much that she wants to create a city task force of sorts, that would issue display grades – much like they do for restaurants – on rental properties. Yeah because landlords in Ontario don’t have it tough enough already. Can anyone sense my sarcasm?

While negligent and reckless landlords should unreservedly be penalized and dealt with, I think it’s important to remember that Ontario (Ms. Chow is running for mayor of Toronto) is a province with legislation that is very tenant friendly. While the system isn’t perfect – it’s the one we have. Tenants have as many applications to make to the Ontario LTB as landlords do. They have remedies. The Ontario act is also very clear in terms of what landlords are required to do and what they’re required to provide. Every province – and as indicated this month on the blog, even every state  – is different. Toronto, and the greater province of Ontario, does not need yet another layer of bureaucracy or a grading system.

There are bad landlords. George Woolsey comes to mind. They’re not fair, they don’t follow the law, and they have little to no concern about your well being. Flop houses and housing environments that are hazardous and not suitable for residence need to be handled. Everyone is entitled to live in a habitable and safe environment – BUT – I don’t think this warrants an election plan from a mayoral hopeful. Just like Naheed NenshiOlivia Chow is suggesting that something needs to be done on a municipal level about this in Toronto.

Like with most things, there is always good and bad, but it’s important to remember that there are also bad tenants. I don’t think Ms. Chow is labelling all landlords as “bad”, but I think she’s proposing something on the election stump that has the capacity to indirectly just make it harder for the majority of landlords in Ontario that are reasonable, responsible, and solid. The only good laws are the ones that are balanced and strike harmony between all of the interests in the mix. As much as I strongly dislike some of the aspects of Ontario’s act, on it’s face, it’s generally balanced. It is however the epitome of a “second, third, fourth, fifth, and sixth chance” kind of legislation and isn’t necessarily fair for landlords in many cases. It’s pretty easy to game the system and exploit a situation in the nation’s most populous province. Making money or even breaking even isn’t exactly easy here.

Mayors should be less concerned about trying to admonish landlords. That’s not their job…and there has to be an easier way to address properties not fit for habitation – if it’s in fact enough of a problem in Toronto that an elementary grading system needs to be introduced –  than making our job harder than it already is.

Questions? Comments? We wanna hear ’em!

 

Arkansas: Bad For Tenants…But Is It Good For Landlords?

The U.S. state of Arkansas was recently featured in an excellent Vice News piece on what tenants in Bill Clinton’s home pasture deal with when they rent. The piece – entitled “Arkansas” The Worst Place To Rent In America” – was a fascinating look into a place where the lack of laws regulating the rental market work backwards. As founders of a software that serves landlords – not really tenants – and as landlords ourselves, we’d be lying if we said we didn’t sympathize more with the plight of property owners renting out to tenants. As we’ve said before, it’s a thankless job most of the time. With that said, we’re also advocates of healthy and productive relationships between landlords and tenants. Relationships that are fair, follow the law in whatever province, state, or district you happen to be in, and that include methods and approaches that are reasonable and equitable.

Here’s a few key things in Arkansas. It’s the only state in the entire country that has no “implied warranty of habitability”. In english, that means landlords have no legal obligation to repair or maintain their properties – unless there was a written or oral agreement to fix something. It’s also the only state where you can be fined and jailed if you don’t pay your rent on time. Seriously. Here it is. To real estate investors – this could be perceived as an ideal place to invest your money. The existing law favours landlords heavily, and repossessing property there is fairly easy to do when tenants don’t pay rent. On the other side of the debate, a 3rd of Arkansas’ almost 3 million residents are renters, and a high percentage of those renters have serious concerns and issues with the properties they rent. Most renters are agreeing to take their units “as is”. By law – tenants are required to pay their rent no matter what – even if landlords don’t repair or maintain their buildings and units. Taking into account that Arkansas is the second poorest state in the U.S., and that 18% of the population live below the poverty line, this creates a situation where in arrears renters get swept up into the criminal justice system.

As a tenant, if you don’t pay your rent – even if your roof has holes in it and your windows are broken, not paying gives you 10 days to vacate. If you don’t – you could go to jail. Don’t bother contesting the order to vacate, because in the vast majority of cases, tenants don’t get the opportunity. The legal process for getting in front of a judge is convoluted by the black and white insistence of whether the money is owed, and if it is, for whatever reason that might be, you’re more likely to see the inside of a jail cell than a judge. The state’s unique “failure to vacate” law sees tenants charged as criminals purely on their landlords’ say-so, without any independent investigation by prosecutors. That’s why 90% of tenants who receive an order to vacate decide to just leave. It’s simply a criminal issue immediately. To boot – Arkansas is one of only 10 states that don’t prohibit retaliatory eviction. For the uninitiated – retaliatory eviction is when the landlord doesn’t like something you’ve done..like the reporting of a health or building code violation…and wants you out of the unit. So, in short – if you’re landlord doesn’t like your face, you can be evicted. If you make a complaint, you can be evicted. If your landlord simply wants you out of the unit, and you’ve been paying on time – they can rip up a good check or make themselves conveniently unavailable to accept cash from you on whatever agreed upon date, and you’d technically be evictable.

The Non-Legislative Commission on the Study of Landlord-Tenant Laws, created in 2011 by the state legislature, released a report on Dec. 31st, 2013 that recommended 15 tenant-landlord law reforms. Lynn Foster, professor at the William H. Bowen School of Law at the University of Arkansas at Little Rock and a member of the study commission, said, “If you’re on a month to month lease, maybe it says the landlord makes repairs, maybe it doesn’t — but if you report something to code, the first thing the landlord is going to do is try and evict you. That’s why it’s imperative that if we adopt a warranty of habitability, we also adopt a statute prohibiting retaliatory eviction.”

Human Rights Watch, an organization that follows rights violations worldwide, issued a report in 2013 called “Pay the Rent or Face Arrest: Abusive Impacts of Arkansas’s Draconian Evictions Law.”

This is all a far cry from some of the provinces and states that have laws that in some cases favour tenants. Good laws achieve as much of a possible balance possible between the obligations of providing habitable and functional dwelling to people paying for them while also protecting the landlord’s rights and property. The lack of this in Arkansas has police being involved with evicting people for not paying their rent – an almost ridiculous waste of that resource – and people who don’t pay their rent for whatever reason in many cases entering the criminal justice system.

What do you think? Are you an Arkansas landlord? Are you an Arkansas tenant? Share your thoughts with us.

Home Insurance Industry Kicks Montreal Landlord To The Curb After Repair

Montreal property owner Sari Buksner is in the midst of a nightmare of sorts, courtesy of her insurance company, and she’s yet to wake up from it.

Back in 2012, one of her tenants alerted her to a leak dripping from the second floor to the first. Her insurance firm saw the problem was a valve linking to her water heater on the second floor. They also proactively noticed a completely separate leak, near the toilet of her third floor. The estimate on the repair work for both claims originally came in at a little under 20K.

According to the original CBC News piece, Buksner said she settled with a contractor recommended by the insurance company after the first one she found declined the job, indicating it was beyond their capabilities. Once she started with the recommended contractor from the insurance company, the work began, and unexpectedly continued for months. Some of the reasons for this included a lack of proper insulation for the new pipes, which froze, creating an even bigger issue than the initial leaks. A rip up was required, and a complete re-do of the work – as in new pipes, gyproc, drywall, painting, etc. etc. The initial $20K that was speculated turned into a little under $87,000 in construction/renovation costs. On top of this – the insurance company paid her $58,155.00 in lost rental income while the work was taking place. The total payout to Buksner was about $145,000. Whoa.

After the work was done, her insurance company decided not to renew her policy – something that insurance companies have the right to do.

So far, she has only found a willing insurer in the substandard market, and that policy would cost her around $11,000, roughly $4,000 more than what she was last paying, per year. Adding insult to injury, she’d be required to pay the whole thing up front and wouldn’t receive water damage protection. Jesus.

Thoughts? Comments? From personal experience, water damage claims aren’t exactly a cakewalk. Here’s another kicker – water damage claims are on the rise in Canada.

 

 

Yukon’s Landlords Get A Break

Landlords in Yukon got a break recently with a decision by the government to cancel a 13 million dollar affordable rental housing program in what is already a highly crowded rental market.

Terry Bergen of the Yukon Real Estate Association says there are currently at least 4,000 rental suites in Whitehorse. In a city that has less than 28,000 people as of the 2013 census, that’s a helluva lot of rental units. Like a lot.

Check out the story on CBC here. You can also learn a bit of the backstory here.

Landlord Sues Grow Op Operators For Destroying The Place!

A landlord in Calgary is suing former tenants for $105,000 after police discovered a grow-op in the rental property in 2011, which caused extensive damage to the house. David Gin and Michelle Chen were charged, but only Chen was convicted, sentenced, and ordered to pay restitution to landlord Steve Habbi.

“I came home from work and saw basically a police raid in action,” Habbi said. “People in bio suits and bullet-proof vests and guns and things like this, which was really surprising to me … How do people who seem so friendly to your face run something like that?”

Here’s a shocker. Habbi had checked the pair’s references when they first moved in and those all checked out, including Gin’s job as a tax auditor with the Canada Revenue Agency.

200 potted cannabis plants were removed from the property – each with an estimated street value of about $1250 each. If you do the math – that’s $250 grand. The couple had about 100 U.V. lamps in basement bedrooms. The system was set up so that it was being vented inside the house, which expedites the cultivation of mold.

Chen and Gin were charged with possession of a controlled substance for the purpose of trafficking, production of a controlled substance, theft of water and electricity and mischief. More than a year later, in November 2013, Chen pleaded guilty to production of a controlled substance and charges against Gin were withdrawn.

Chen was given an 18-month conditional sentence to be served in the community under strict conditions and was also ordered to pay $10,000 in restitution. When Habbi argued the damages he incurred were well above the restitution amount, he says the Crown told him to sue the couple.

The case is ongoing, and Gin and Chen have yet to file a statement of defense. Steve Habbi has some advice for other landlords, though…

“Mandate in your lease that you will be doing physical home inspections on the interior of the property,” he said. “Your only hope is to deter them from coming into your property.”

Couldn’t agree more, Steve!

6th Time’s a Charm For Deadbeat Tenants!

Susan and Chris Perret have been served with an eviction notice again — the sixth time in two years and only one day after the CBC first broke the story on these two.

Cara Falconer said she rented to the Perrets in Maple Ridge without a reference because she believed them when they told her their previous landlord had stolen their money and left town. Falconer is already out $1,500 after the cheque for April bounced.

The couple gave Falconer a $750 cash damage deposit and $400 cash for a pet damage deposit, as well as three cheques for three months’ rent for the top storey of a house at the north end of 236th Street. But the Falconers are not counting on the rent cheques clearing for the next two months. That’s probably a safe assumption.