April 15th 2024
The Residential Tenancies Act. A piece of legislation that sets the guidelines for relations between landlords and tenants. It’s consumer protection legislation and as such it’s very slanted in favour of the tenant. And while that isn’t totally fair, in some ways I can understand it. The units we rent out are homes for our tenants. Whether an apartment or a free-standing building, it’s a major disruption if someone is required to move out and relocate. And that is precisely what happens with no fault evictions when, for example, the property is sold and the new owner requires the property for their own use.
No, one-sided as it is, we as landlords can work with it. The legislation itself isn’t the problem. It’s the implementation. The somewhat cavalier attitude the Landlord/Tenant Board sometimes exhibits and the enormous amount of time it can take to process an application, schedule a hearing and end up with an eviction order.
Consider the case where you have a tenant who is not paying his/her rent. As a landlord you may have tried to work with them over 
time and as a result, they get behind two or three months. They are not making partial rent payments. They aren’t paying anything at all. So, you issue an N-4 notice for non-payment giving them a further 14 days to make payment (1/2 month). And you can’t submit the N-4 to the Board until that 14-day period has come and gone. Add to that, the earliest the hearing will be scheduled is 4 months away, and possibly more like 8 months, by the time you are even anywhere near an eviction, you have lost a year’s rent. That’s expensive. Add to that the fact that now that tenant knows he is being evicted he has certainly stopped caring for the unit and worse yet, may be even deliberately destructive.
What has become of practice more and more is something called ‘cash for keys’, and while I don’t endorse it, I can certainly understand why it is happening.
What happens is this. The landlord looks at the situation and realizes this is going to get very expensive. So, he contacts the delinquent tenant and essentially offers him a cash incentive to move out. And depending on the tenant’s situation it may be a very welcome situation. Let’s suppose market rent is about $1,500 for a comparable unit. So, first and last month’s rent would be $3,000, add to that moving costs and motivational incentive, the landlord might offer the tenant $4,000 to move out. Cash! The tenant walks away from an existing debt and has enough money to rent elsewhere and then some. And for the landlord, facing a 12-month period of no rent, he comes out better off financially and saves himself a lot of headaches.
I say I don’t particularly endorse this ‘cash for keys’ approach. I don’t like the idea of rewarding bad behaviour. But I understand it. Of course, keep in mind that every situation is different. If the tenant isn’t in desperate need for pocket money, he no doubt realizes he can ride this out for months. He may not be motivated. He may be unrealistic. I saw a tenant chat live the other day where one tenant said “I am behind in my rent and the landlord has offered me $2,000 to move out. What should I do?” To which another tenant replied “$2,000? That’s nuts. You should hold out for at least $20,000.” Cash for keys may not be something you would ever consider, but if you do, you’ll want to set out something in writing which the tenant signs and you won’t hand over the money until the tenant has moved his things out and surrendered the keys. And, of course, have a locksmith nearby to change the locks.
‘Cash for keys’. I don’t want to scare you. These situations are not the norm. I’ve been a landlord most of my life and have only had to evict a tenant on one or two occasions. But when it happens, it’s not enjoyable. It underscores the importance of careful tenant selections from the start. But if and when a problem tenant slips through, and it will happen, ‘cash for keys’ might be a solution.