# Tenant's Penalty



## Celia (Jul 30, 2011)

Currently have a tenant who signed for a year contract but after 7 months of renting, he wanted to be out of the house for personal reason, can I impose penalties like 1 months rent? Is it legal? 
Now have decided to hire a property manager, any specific qualities that I need to look for? fees? Referral will be appreciated.


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

He can be out of the house but the only way he is absolved of his rent payments is if he finds someone to sublet. What does the lease say about sublets? He cannot just have a "personal issue" and stop paying. But of course the onus is on you to go after him.


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## lewin (Jan 10, 2011)

What Royal said -- the tenant is on the hook for the entirety of the lease but in some places the landlord is also obligated to mitigate the tenant's loss (i.e., re-rent ASAP).

When does the person want to leave? If you think the person will be a pain in the *** about paying, it might be more prudent to take August's rent guaranteed in exchange for cancelling the rest of the lease, and just hope you find somebody for September. It's not a penalty, it's a mutually agreed upon compensation for releasing them from the lease.


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## Berubeland (Sep 6, 2009)

Where are you inquiring from? The laws are different in every province.


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## marina628 (Dec 14, 2010)

Speaking from experience I would rather work with the tenant than have to pursue legal action.I would tell him if he keeps the place in tip top shape and accommodate viewing time for potential tenants you will let him out of the lease as soon as you have a new tenant.This way it is also in his interest to help rent the place.


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## FrugalTrader (Oct 13, 2008)

I'm with Marina. I would tell the tenant that you'll waive any penalties IF he/she leaves the apartment in good shape.


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## Celia (Jul 30, 2011)

Hi All, Thanks! I guess have to let the tenant's go without penalty and hope for a better one next time..crossed my finger.... 
The property is in Ontario...


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## nathan79 (Feb 21, 2011)

Call me cynical, but I don't think it would matter if you imposed a penalty - the tenant would likely just abandon the premises without paying, and it probably wouldn't be worth the hassle of going after them, which would consume more time and money than you would gain from the penalty in the first place. At least that's what would happen in BC, because tenants practically get away with murder here.


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## Berubeland (Sep 6, 2009)

Ontario is my playground so I can tell you that the tenant is responsible for the term of their lease.

You as the landlord are responsible for mitigating your losses. Double rent charges are a strict no no according to the law. 

It depends on why the tenant is leaving...lets say the rent is not affordable for them. They are unlikely to have the money to pay you a "lease breaking fee" and you're best bet is to see them off and count your blessings. Same applies in cases where the tenant couple splits up or they lose their job. 

However in cases where the tenant is well off and has to break a lease for instance they have been transferred to a job in another province. In such cases the tenant may choose to pay a lump sum to eliminate their liability. The landlord can accept or not as they choose. 

The tenant is also responsible for the cost of advertising and helping you to rerent the place. They are helping you to rent the place. 

Once the tenant is no longer your tenant, you have to go to Small Claims to collect your money. 

In all these circumstances you have to ask yourself is this tenant collectible?


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## chaudi (Sep 10, 2009)

If they are leaving for maintenance issues and that is usually the case, you'll be lucky they don't take legal action against you.
Tenants can be awarded up to $10,000 in Ontario for rent abatement and relocation costs.


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## Berubeland (Sep 6, 2009)

Chaudi? 

What about the op's post makes you believe that the tenants are in any way leaving for maintenance issues? 

Furthermore judgments for maintenance claims against landlords tend to be a lot less than people think. A while back I personally looked through years of judgments and the highest abatement I found was $2600 for a house in which the landlord was not following city orders to repair serious electrical issues and a large amount of outstanding maintenance. The work was also ordered done for over a year before the $2600 order was made.


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## marina628 (Dec 14, 2010)

Rachelle I think that will be exceeded this year,my friends daughter is suing her landlord .Without going in to much detail to protect her privacy her boyfriend went into seisures at her apartment and when police and fire resposnded they called in city health and bi law . They found some serious forms of spores never mind the fact it was illegally wired and many other violations just nasty.They did not put the connection together but after 2 years in this apartment both of them developed serious respiratory conditions . Landlord offered them a years rent to drop it but there are 4 other units in this building with similar issues.


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## jamesbe (May 8, 2010)

I don't understand why most landlords seem to be "slum lords"?

Do they never want to sell the place after? I keep my place like I would want it to be if I lived there.

Replaced the flooring upstairs this year, downstairs going in next month (I bought the place 2 years ago and the carpet was 20+ years old!). 

ROI for the small amount of investment is huge! I get better renters as a result and I was able to increase my asking rent by 20%!


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## nathan79 (Feb 21, 2011)

I think it's more often the tenants trash the property and then blame the landlord for not doing anything. When a tenant moves out of my place, I always spend several days of my time cleaning and making repairs. Some tenants are better than others, but none have left the place even close to clean as when I rented it to them.


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

This is one area I struggle with. What I've noticed after the movers take away the furniture is that the place is dirtier than I thought. At that point I do not have the time to clean the place because I have to go and move to the new place which in some cases was thousands of miles away, or as little as an hour away. Rarely have my moves been local, in which case I could easily return with various cleaning products, time, crappy clothes etc to be able to do a proper job. One place said if I didn't have time to clean, they would do it for $100. So I wrote them a cheque for $100 on the spot, which I didn't mind.

I'm not talking about major damage here, I'm just talking about overall cleanliness that is exposed after all my items have been taken away by movers.


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## marina628 (Dec 14, 2010)

I have friends and other family members who have tried to rent investment properties .I think the first mistake they made is having a low down payment and second is being cheap with doing work on their homes.We have long term tenants in one house and we actually went to them and asked if we can get the house painted for them as it has not had a paint job in 4 years since the builder painted it.These are original tenants and they Went out and bought the paint and painted the house themselves .They did not want us to give them any money but it is a fairly big job with 2300 sq ft finished space.We tore up one of the rent checks($1350) and didn't cash it as we would have paid at least $2000 to get it done.
Any of my friends I know would have said thanks and maybe given them a $50.00 gift card.These same tenants have introduced us to another couple who rents on the street and pays $1600 a month for same house as ours.They are asking us to buy another house and rent to them on the street because our tenants tell them how great we are to them .We give them gift cards /baskets for all the big days through the year .I run our RE as a business and we have never had any issues ever with any property.But I think part of our success is we never got in over our heads and I treat them as I would want to be treated .We have never had a tenant leave us yet *knock on wood*


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## Quotealex (Aug 1, 2010)

jamesbe said:


> I don't understand why most landlords seem to be "slum lords"?


 When you have a cashflow that barely cover the mortgage, taxes and insurance combined with a provincial rental board that keeps recommending rent increases at less than 50% of the inflation rate year after year, it is not too hard to understand why someone would turn into a "slum lord"


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## Cal (Jun 17, 2009)

Work with the tenant as much as possible.

If you can get a suitable tenant in another month or two, then great, the current tenant would only have to pay for that time period, as they are legally responsible with your signed lease for the first 12 months.

But I would start looking for a new tenant.


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## Celia (Jul 30, 2011)

I don't think there's issue with the house, its very well maintained and very reasonable rental in the area.
hi Marina628, i wish i have the same luck, maybe it's how you chose your tenants?
Presently, looking for very reliable property management company? Any referrals?


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## marina628 (Dec 14, 2010)

One thing I look for is good credit ,stable jobs and people that don't move around much.I do it all myself and have found a couple tenants on kijiji and others have been referred directly to us ,friend of a friend etc.


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## Celia (Jul 30, 2011)

Thanks Marina.

Part of the reason why I need referrals for property management is that I will be transferring to another city anytime soon. (7 hours drive to/from house rental location). or might as well sell the house ?


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## marina628 (Dec 14, 2010)

Celia ,
When is the mortgage up on this property?If it were me I would rent the house and collect a year of post dated cheques with plans to go back to check on the house personally every 3-4 months.Do you have a friend or family who can be emergency contact for the house ?How often in the past have you needed to go to the house to fix anything or to resolve tenant issues?This will be indication on how frequent you need to be there. I have one house we have visited once in 2 years for a leaky tap .We drive by every 3-4 months if we are around that area but that is about it.


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## Celia (Jul 30, 2011)

Hi Marina, It has a very nice rate, variable open,got it in 2009( Prime less .80)If I sell there`s no penalty but then have to pay the broker`s commission.This is my first rental and so far no problem at all. 
Cash flow positìve but at this stage I need a tenants for long term say 5-10 yrs if possible since I will be away from the property location,unfortunately, I have a busy friends, families and desperately need a reliable property management company, Any idea about their fees


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## MrPolarZero (Aug 13, 2011)

He can be out of the house but still needs to pay the rent. He can't just stop paying, he signed a contract.


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## Elbyron (Apr 3, 2009)

That's an amazing rate for an open variable mortgage, usually only seen on closed ones! I can't help you with a management company, but I do have a suggestion for your next lease agreement: if you add a section that lays out a reasonable fee for early termination, then you might have an easier time if it ever comes up again. Most provinces require that fees be a reasonable amount as required to compensate you for some cost. In this case, it's the time and money spent finding a replacement renter. I figure it costs me, on average, about $240 based on the amount of hours I put in and the cost of one or two credit checks. If I'm going with 1-year leases, it could potentially cost me that much each year anyway, so the fee I charge is based on how many months remaining. It costs my renters $20 for each full or partial month left in their lease if they want to leave early. It compensates me fairly, and it's not really that expensive for them. I don't let them off the hook for the lease though - they still have to continue paying rent until I find a suitable replacement tenant. 

In Alberta, landlords are allowed to collect a security deposit of up to 1 months rent at the beginning of the lease. Unlike the "last-month's rent" system in Ontario, this deposit is NOT intended to pay for rent, but rather covers any damages and unpaid fees, and possibly back-owed rent that is still outstanding at the end of tenancy. So if the tenant terminates early and doesn't want to pay the early-termination fee, it just comes out of the deposit.


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## Celia (Jul 30, 2011)

Thanks fro the advise, I have been busy with the early transfer to another city.Having an ealry term fee in a contract is a good idea, I will keep that in mind for the next one. 
By thew way: I have found three property management company butcan't decide,need to know who have a good or bad experiences to the following:

http://www.thepropertycollective.com/
http://landlordrescue.ca/
http://www.torontorentingguide.com/

THanks


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## marina628 (Dec 14, 2010)

Landlord rescue is Rachelle , she is a very active member here.


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## arie (Mar 13, 2011)

*rental*

breubeland is dead on with his advice

in most cases if you can get a lump sum settlement from the tenant its better than later chasing him or her in small claims court 

tha law is that the tenant is responsible for the lease term subject to the landlord mitigating his loses ; how this plays out in the real world is that deals get made 

last thing you want is a tenant that refuses to leave because you are in a fight and does not pay any more rent


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## Celia (Jul 30, 2011)

thank you guys...got a PM and was advised to hire the Property Collective. They are more reliable and communicate very well with the owner. And tenant's contract is very detailed.


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