# Help - tenants in arrears



## Dana (Nov 17, 2009)

This is a long one, but I appreciate you taking the time to read it...

We are in Ontario. We have a 3 bedroom house which has been rented to a young family since April 2009. They have been ideal tenants. At the end of February Mrs. Tenant called me to tell me that her bank account had been frozen by the government and her CCTC is being held by the government. Thus, they would be unable to give me the entire March rent payment of $1,100. She gave me $150 in cash and I gave her a receipt. We agreed (verbally) that she would pay the remaining balance by April 1st. Mid-month, she called to inform me that the freeze on her account and CCTC had been cleared up. It was an error on the part of the gov't (she showed me the documentation including an apology letter from the feds) and she would be able to pay the remainder as agreed. 

Mr. Tenant was injured at work at the beginning of March. Although he was not injured enough to interfere with his job duties (he has a physical job) WSIB made him take time off pending a review and doctor's assessment. He can now return to work on 'light duty'. He is expecting some compensation from WSIB, but doesn't know when. 

Fast forward to today, Mrs. Tenant informs me that she has been laid off until April 6th. She will not see another paycheque until the beginning of May. She says that April's rent cheque will clear, but she cannot give me the agreed upon money for the remainder of March. 

What would you do? I am about to fill out an N4 form and give them until the end of April to make up the March arrears. I don't want to be a doormat, but I also do not want to add to their string of unfortunate luck. So far, they have been ideal tenants; rent has always been paid in full and on time. He takes great care of the property inside and out. 

We have always been very fortunate and had great tenants (knock wood) so this is new to us. Any input is greatly appreciated.


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## Berubeland (Sep 6, 2009)

As you know I have worked for landlords for a good long time and done more than my share of evictions. 

Dana you are a nice lady but you are NOT a registered charity. 

There are two possible scenarios here either they are good tenants in unfortunate circumstances which is what it sounds like or they are deadbeats either way it makes no difference whatsoever in the course of action you must take. 

The Landlord & Tenant Board will give them ample time and opportunity to pay you. It's not like you file the N-4, certificate of service for the N-4, the L-1 and the notice of hearing simultaneously. From the time you serve the N-4 they will have about 4 months to pay up. You can even make up a payment plan for up to a year in mediation. 

In my opinion 4 month is long enough for someone who has suffered an unfortunate setback to either get back on their feet or find a different accommodation they can afford according to their new life circumstances. 

There are three ways this plays out,

1- they pay
2 -you pay forever
3- you pay for a while then they leave because they are evicted or just leave because they can't afford it. 

In any case as a professional person in the business of renting out space you have a duty to yourself to serve the N-4 as soon as they owe rent. In fact by leaving it this long you have made a mistake. When I serve an N-4 I try to knock on the door and serve it personally. I tell them "I'm giving you this legal notice, I have to do it, and don't worry if you make the rent payments when you say you are going to make it everything is going to be fine" I don't get mean or call people names or try to make them feel bad in fact I have found that being empathetic is the way to go and increases the chance that they will pay. 

If someone is very upset because they just can't pay I tell them, I have had bills I couldn't pay either, life happens. I let them know about the rent bank, EI etc. and try to refocus them on their next steps which are to either move or find a way to pay. 

I recently had to serve notice on a lady right after her 9 year old daughter died. Because she was on social services when her daughter died they cut her check plus they cut her baby bonus. There is no way a compassionate person can do this type of thing without feeling bad about it. However landlords do provide a very valuable service and my first priority is to keep the building healthy financially so that we can keep providing this valuable service to others. 

I will also say this. When I used to do this kind of work full time at one point I eventually became physically sick. When I went to the Dr. the first thing he told me was quit your job !!! I didn't believe him and I kept going for a good six months after that, I even had surgery. 5 days after I returned to work I was back at the ER. I lasted another month or so before my employer and I decided to part ways for an unrelated reason. Now I'm fine


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## Dana (Nov 17, 2009)

Thanks, Berubeland, this is very helpful. I will serve the N4 tomorrow or Monday (I am not in the same town as them) and I will tell them that I want to work with them while they are having difficulties, not make their life more difficult, but at the same time I have a business to run. I will also give them the phone number for the rent bank. Hopefully it will be resolved with no drama!


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## resmoreca (Mar 4, 2010)

Did you get a full application from them when they moved in (credit check, etc)? These kind of things can turn bad quick, so get as much information on them as possible. Did you go through a formal walk through with them on move in and have them sign off on it?

If they are paid electronically knowing the exact date of payroll is helpful that way you can go and attempt to cash their cheque at their bank immediately on payday before they have a chance to withdraw the money.

I agree proceed with the N4 and hope everything turns out, but be prepared for the worst.


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## OptsyEagle (Nov 29, 2009)

I always look at it this way. If rent is not paid in the month, I ask myself, "did they not pay for anything last month?". The answer, to me usually is, "sure they probably paid for food, hydro, gas in the car, cigarettes if applicable ... and maybe even a new pair of shoes, who knows".

The point is: "Why would they ask me to forgo payment and not ask those other institutions/stores?" ... and the answer is always: because I appear to be the most compassionate of the group. The one that might bend, be sympathetic, etc.

Soooo ... I kind of had to stop being compassionate and sympathetic. I don't like it, but until the world stops taking advantage of "nice guys", I felt I didn't have much choice.

Moral of my story: The one who doesn't get paid, will always be the nicest guy ... and the nicest guy will more often than not, get the shaft.

When I hear a sad story now, I don't even say "aw that's too bad", I just nod and re-iterate the terms of the contract. I don't like it, but if I can't do it, I should get out of the business.


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## Dana (Nov 17, 2009)

resmoreca said:


> Did you get a full application from them when they moved in (credit check, etc)? These kind of things can turn bad quick, so get as much information on them as possible. Did you go through a formal walk through with them on move in and have them sign off on it?
> 
> If they are paid electronically knowing the exact date of payroll is helpful that way you can go and attempt to cash their cheque at their bank immediately on payday before they have a chance to withdraw the money.
> 
> I agree proceed with the N4 and hope everything turns out, but be prepared for the worst.


We do have a full application for them as well as credit check. They have signed off on the condition of the house when they started the tenancy. I do happen to know Mrs. Tenant's pay schedule, and I have not destroyed the March rent cheque (even though she asked me to) so I can camp out at her bank branch on payday if I need to. Hopefully it won't come to that.


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## Dana (Nov 17, 2009)

OptsyEagle said:


> I always look at it this way. If rent is not paid in the month, I ask myself, "did they not pay for anything last month?". The answer, to me usually is, "sure they probably paid for food, hydro, gas in the car, cigarettes if applicable ... and maybe even a new pair of shoes, who knows".
> 
> The point is: "Why would they ask me to forgo payment and not ask those other institutions/stores?" ... and the answer is always: because I appear to be the most compassionate of the group. The one that might bend, be sympathetic, etc.


You bring up a good point, when I went to see them earlier this week, Mrs. Tenant was outside having a smoke - so there's enough money for cigarettes! Mr. and Mrs. Tenant have both mentioned to me that they are behind by at least a month on their utilities. 

I deposited their April Rent cheque today, so hopefully she is true to her word and it will clear.


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## DavidJD (Sep 27, 2009)

They have to move out.

Trust me.


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## the-royal-mail (Dec 11, 2009)

The rent is due on the 1st of every month. As everyone here knows by my repeated posts on the matter, you must save a pile of cash in the form of 6-12 months living expenses for your rainy day fund. This is to protect you from exactly the kind of hardships described initially. 

It's not up to the landlord to be compassionate due to your financial incompetence.

The last time (and every time before that) I was in dire straits, I continued to pay ALL of my obligations, every month, on time. The money for this came from my rainy day fund. When that was exhausted, I moved onto credit sources to continue paying these expenses.

If people are not responsible enough to apply these basic financial principles, it should not be incumbent upon landlords and other creditors to bear the brunt of their mismanagement.

In this particular case, from the original post I'm seeing effort on their part but again, the injury of Mr. Tenant shouldn't have any effect on you. Rent is such a basic life expense, that needs to be paid FIRST.

What a mess. And I know it could be much worse. It's why I don't feel that buying property to try and make money renting it out is worthwhile. What a hassle.


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## DavidJD (Sep 27, 2009)

It is really important not to let situations like this slip by. I have found that this behaviour is very common. RARELY will you come across someone who has a legitimate excuse. One tenant told me she did not have the rent becuase she had left her card in the bank machine and someone came in behind her and cleaned out her bank account. She even made an elaborate strory about meeting with the bank to review the tape. The bank basically explained that she could not have taken her cash without taking her card first so it was impossible for someone to have accessed her account after she left the machine. When she was to pay the second part of rent her adult son had an accident and needed emergency dental surgery which used up her cash...you get the BS.

My point is that if a tenant is in a situation that means they cannot pay the rent, they are really at risk of not paying the rent every month and just barely getting by. It is unbelievable how hard they work at making a really elaborate (and well documented) story about how they had some really bad luck.

They gotta leave before the amount they owe exceeds the damage deposit.


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## Dana (Nov 17, 2009)

DavidJD said:


> They gotta leave before the amount they owe exceeds the damage deposit.


There is no damage deposit. In Ontario it is illegal to ask for a damage/security deposit. First and Last months' rent is all I am allowed to take from them.


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## Berubeland (Sep 6, 2009)

Dana - how are you making out? Everything work out or are you still chipping away at it?


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## Dana (Nov 17, 2009)

Berubeland said:


> Dana - how are you making out? Everything work out or are you still chipping away at it?


As of April 20th, Mr. and Mrs. Tenant are paid up and current with their rent. I am so relieved it has all worked out. They were very apologetic for the situation. After Mrs. Tenant returned to work from her layoff, she was offered a promotion and will be earning $2-3 more per hour, so hopefully they are on the road to financial recovery and we won't have a repeat of this situation. 

Thanks for asking, Berubeland


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## Taxsaver (Jun 7, 2009)

Dana said:


> As of April 20th, Mr. and Mrs. Tenant are paid up and current with their rent. I am so relieved it has all worked out. They were very apologetic for the situation. After Mrs. Tenant returned to work from her layoff, she was offered a promotion and will be earning $2-3 more per hour, so hopefully they are on the road to financial recovery and we won't have a repeat of this situation.
> 
> Thanks for asking, Berubeland


Great ending! Asking for help was beneficial, was not it? And free of charge! Who says there is no free lunch???


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## Wishful_Aspirations (Apr 3, 2010)

Taxsaver said:


> Great ending! Asking for help was beneficial, was not it? And free of charge! Who says there is no free lunch???



No doubt that this is a great site.
I just hope mine ends with a similar outcome!

If it does, I'll buy everyone a round of Tim's


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## 412driver (Apr 30, 2010)

DavidJD said:


> They have to move out.
> 
> Trust me.



Agreed. They are "tenants", not friends (no matter how well you both get along). Business is business. Try telling your bank: "Sorry, can't make the mortgage this month" and see what happens.....


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