The thought of ending up with a bad tenant stops many would-be landlords and real estate investors in their tracks. With more laws in favour of tenants, and a potential tenant bill of rights on the way, a little hesitation is understandable. 

What if the worst happens and your tenant is consistently late with rent or even damages your property? In this post, we’ll explore your options to resolve the situation in the best way possible. 

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Know What Not to Do

Your first step is to understand what you cannot do, no matter how many headaches your tenant is causing you. As much as you might be tempted to change the locks while they are out, certain actions can get you into trouble with the LTB (Landlord and Tenant Board). 

Unfortunately, your list of non-options is long:

  • You cannot evict your tenant even when they are at-fault without first applying to the LTB.
  • You can’t change the locks unless legally authorized or can prove that the tenant has abandoned the unit.
  • Harassing the tenant or interfering with their enjoyment of the unit is also forbidden.
  • You can’t cut off necessary services like heat or hydro. 
  • You cannot refuse to repair or maintain the property in the hopes that they will move out. 
  • It goes without saying that you can’t confiscate your tenant’s belongings, no matter how behind they are on their rent.
  • Any repayment agreement also has to have the approval of the LTB.

Curious about the difference between the differences between investing in real estate and a primary residence? The posts below will give you a foundation:

Your Rights After the Fact

Now that you know what you cannot do, let’s take a look at some more reasonable options that you do have. On paper, Ontario landlords have the right to receive rent payments on time and for the tenant to take reasonable care of the home. 

If either or both of those things don’t happen, you’ll have to apply to the LTB to resolve the situation. This is where dealing with a bad tenant gets tricky. It’s not just that the law skews in their favour, but the board can be slow to hear your case. In the meantime, your own expenses accumulate as your tenant enjoys a free (but hopefully short-lived) ride. 

You might try negotiating with your tenant directly. This tactic obviously won’t work with someone who is willfully malicious. Fortunately, that is rarely the case. A tenant who is behind on rent may be in distress themselves or habitually disorganized. 

If your tenant is reasonable, you might be able to come up with a compromise that works for both of you. Whatever you arrange, just be sure that you are on the right side of the Residential Tenancies Act.

Can You Sell a Property With a Tenant?

If the situation worsens, you could decide you’ve had enough and sell the property. However, this option also comes with its share of challenges. Most buyers want the house for their own purposes and seek to move in as soon as the closing date arrives.

A tenant in the property changes everything. The new owner will have to honour the original terms and wait for the lease to expire before they can terminate the rental agreement. As a result, your home may take longer to sell or you may have to sell it at a lower price. 

Offering your existing tenant “cash for keys” can give them an incentive to leave voluntarily. This option can give you peace of mind by avoiding the tension of an eviction while allowing you to prepare the home for the market. However, it can also be expensive, depending on the tenant and their willingness to vacate.

If you decide selling the house is an option, the posts below can help:

Prevention: The Best Remedy

Your options for dealing with a problem tenant may seem slim. However, the best remedy is always to prevent a bad situation to begin with. A good tenant who takes care of the property, pays their rent on time, and keeps peace with the neighbours makes owning an investment property well worthwhile. 

Extensive background checks are critical to weed out the good tenants from the bad. However, accessing and interpreting the data is becoming more challenging for smaller real estate investors or landlords with one or two properties. Luckily, professional guidance is easier to obtain than you may realize.

Landlords are often surprised to learn that many real estate agents do much more than help people buy and sell houses. We often work closely with investors, big and small. One of our primary tasks is to dive deep into a tenant’s background and history of behaviour.

A current real estate agent will have tools and resources at their disposal that the average layperson cannot access. We don’t just know where to look to find the information required to choose a good tenant, but also know how to read between the lines.

What someone’s history does not say can matter just as much as what ends up in the report. Extra due diligence can mean the difference between finding a tenant who causes nothing but problems or establishing a long-term agreement with someone who cares as much for your property as you do. 

Do you want help finding the right tenant to avoid all of these headaches in the first place? Reach out today to damir@damirstrk.com or call 416-884-7925 to start a conversation.