How to avoid the most common landlord mistakes with Harry Fine
In this episode we discuss the common mistakes landlords make with Harry Fine – Paralegal and Ontario’s leading expert in landlord-tenant issues. As a landlord, what you don’t know can hurt you, and if your actions contravene the landlord-tenant act you can get in serious trouble. Avoid headaches and potential problems by understanding some of the basics of the landlord tenant act.
HARRY FINE INTERVIEW HIGHLIGHTS
2:30 Tell us about who you are, what you do?
4:05 What are some of the most common mistakes that you see landlords are making?
9:20 Can you expand more on Rent Control part especially on condo investors.
17:05 What are their options to increase rents if they’re way below market value?
20:58 One of the most common mistakes and misconceptions that I hear from landlords.
26:15 Standard government lease.
28:18 My three most recent articles on my blog are about the new leasing process.
29:10 Tenant screening tips.
Andrew la Fleur: What are the most common mistakes that landlords make and how to avoid them. Coming up on today’s episode.
Announcer: Welcome to the True Condos podcast with Andrew la Fleur, the place to get the truth on the Toronto condo market and condo investing in Toronto.
Andrew la Fleur: Hi. Welcome back to the show. Andrew la Fleur here once again. Thank you for listening. Thank you for your support of this podcast. I really appreciate it. Once again, if you don’t mind going on iTunes, leaving a review, letting me know how I’m doing, I really appreciate that. Thank you so much for those of you who have left so many great reviews for the show. I also want to thank everybody who had a chance to come out to our free live event over the weekend, depending on when you’re listening to this, of course, but as of the time of recording this in March of 2018, we just had a great free live event and I talked about the next condo project that I’m investing in and why I’m investing in it. That is Television City in Hamilton. Thank you very much for everybody who came out there. The event was a huge success and a lot of investors were able to also take advantage of that opportunity.
If you’re interested in learning more about Television City, of course, feel free to send me an email, Andrew@truecondos.com, or give me a call anytime, 416-371-2333. I’m happy to tell you more about that project and fill you in if you were not able to come to the live event, but thank you very much for everybody who did make it out. Now, on today’s episode, as I said in the intro, we’re going to be talking about landlord mistakes and there are many common mistakes and misunderstandings. People don’t understand the rules when it comes to landlord-tenant relations, and leases, and everything else. Great guy to talk to is Harry Fine. He’s a paralegal and he’s an expert on all sorts of things related to landlords, and tenants, and leases, and everything else. Without further ado, let’s jump into this episode and here is my conversation with Harry Fine.
Okay. It’s my pleasure to welcome to the show for the first time, Harry Fine. Harry is the President of Harry Fine Paralegal Services. Harry, welcome to the show.
Harry Fine: Thank you Andrew. Thank you for having me here.
Andrew la Fleur: Yeah.
Harry Fine: My pleasure.
Andrew la Fleur: Great to have you and looking forward to chatting with you about landlord and tenant issues. Why don’t you just introduce yourself a little bit, tell us about who you are, what you do, what your experience is in.
Harry Fine: Sure. Back in 2001 as a second career, after we sold our family business, I became an adjudicator at the Landlord-Tenant Board. I was one of the judges that sit there resolving disputes between residential landlords and tenants. As just about all public appointments, they’re term limited, and when I finished I became a paralegal often assisting landlords at small claims court, Human Rights Tribunal, Landlord-Tenant Board. Over time, I started to teach a lot, teaching paralegals in the colleges, teaching investors, teaching real estate offices. While I still have a paralegal practice, I still do that work, I do a lot of teaching. I have a whole bunch of on demand webinars that people find very popular and I do a lot of speaking at events. Tonight I’m in Niagara Falls at a networking event for investors. This week, I think I’ve been to two realtor’s offices doing presentations. That’s sort of my life in the landlord-tenant world.
Andrew la Fleur: That’s great. Yeah, so I wanted to chat with you about obviously landlord-tenant issues. I mean, most of the time as landlords we don’t really need somebody with your services, thank goodness, but there are times when things maybe go sideways, or things happen in life, and with investment properties, and obviously it’s great to have somebody like you as a resource, and somebody to help out when things go wrong, really. Let’s talk about … Maybe start with, what are some of the most common mistakes that you see landlords making time and time again?
Harry Fine: Sure.
Andrew la Fleur: Because you end up in these sticky situations and you say, “You know what? Ugh, there’s that landlord, if he had of just done this, he could’ve avoided this whole situation.”
Harry Fine: Sure. On that vein, I disagree with you that all landlords don’t need me or somebody like me, because it doesn’t always start when you’re being sued or you have to sue your tenant. It starts from the tenancy agreement. It starts with tenant selection, with screening, with good lease clauses. For instance, currently in Ontario, as you probably know, the provincial government has mandated a standard form lease that you have to start using, all landlords, starting April 30th. Whether it’s realtors with their forms, so their form 400 that they use, or landlords with their homemade handwritten leases, or whatever they’re using, they can’t use them anymore. It means that they have to use the standard government lease, but the problem is, the standard government lease is terrible.
The standard government lease doesn’t protect landlords. It doesn’t provide solutions for situations that arise. Landlords are not lords of the land. A lot of landlords believe that they can change the rules when they want to change them, that they can add terms, add conditions, that because it’s their house they can do these things, but they really can’t. You have to think about a residential tenancy almost like an easement. You’re granting them limited rights without title to do things they want to do. My suggestion always, and I will answer your direct question, but my suggestion always is to have landlords who are new to the business, or who don’t know the business, spend an hour with someone like myself to get proper lease clauses, proper forms, understand the concept.
Landlords’ biggest mistakes is they don’t know the system. They don’t understand what the Landlord-Tenant Board is or the Residential Tenancies Act and they try to go around it. They try to think that they can somehow avoid the system and you can’t. One of the more specific mistakes landlords make, which frankly is the most serious one, is they don’t understand rent control. They raise rent not in accordance with the act. They’ll raise rent with an email, with a letter, with a phone call, and what they don’t recognize is that under … In law, you can’t contract away your statutory rights. Even if the landlord and tenant agree on a method of entry, a raise in the rent, who will pay for utilities, who will pay for maintenance, who will shovel the snow and cut the grass, if the Residential Tenancies Act deals with it, you can’t agree to something else.
In my teaching, the number of landlords that don’t properly use the Landlord-Tenant Board N1 form, the notice of rent increase, properly served 90 days prior, effective a first day of a rental period, the number’s huge. It’s staggering. What it means is all their rents, and all their increases they’ve ever taken are illegal from the time they did the first illegal one, which means they may think the rent is 2,360 a month, but it’s actually 1,800 a month, and the tenant’s overpaying 500 a month, and probably can sue the landlord for thousands. The biggest single mistake is not understanding rent control. Also, very strict rules about entering into the unit. Most landlords don’t do it properly. To enter into a unit in accordance with the law, there’s really seven things you have to consider. Now, in something like this, I’m never a proponent of changing people’s habit.
If it’s working for you as an investor or a realtor by giving an email and they let you in, that’s fine. Where the tenant says, “I’m not letting you in. You can’t come in. I’m sticking up for my rights.” Then you have to know that in order to enter a unit properly, you have to serve them a written notice of entry. It has to have the date, time, purpose. It has to be between the hours of 8:00 and 8:00 and it has to have a reasonable window on it between the hours of 8:00 and 8:00. If you don’t do that, the tenant has absolutely no obligation to let you in. Those are the types of things that we fix with education, Andrew, before they get into trouble. My job is keeping landlords out of trouble and I do that by meeting them individually for consultations prior to them becoming landlords. I do that with my webinars, my on demand webinars. I do that with my teaching at groups and organizations. There are so many mistakes, I could go on, but I’ll let you lead me where you want to lead me.
Andrew la Fleur: Sure, sure. That’s great. That’s some great tips there. Just to recap what you were saying, some of the biggest mistakes, so people just not knowing the system, not knowing how it works, people who don’t understand rent control, and how to … Specifically, how to issue an increase in rent and making sure that your paperwork is filed properly. Otherwise, it’s not valid. Then you also mentioned actually entering the unit itself. Maybe we’ll back up and if you could expand a little bit on the rent control part, because I think that’s obviously … Especially for condo investors, because up until last year, obviously condo investors, we really didn’t have to worry about rent control, but we did in a way, but it was … The system obviously was different and we were able to increase rents at whatever amount we chose, assuming the condos were built after 1991, which the vast majority of them are. Now, under the new guidelines since the Fair Housing Plan of last year, we’ve got rent control now in condos, so we can-
Harry Fine: We sure do.
Andrew la Fleur: [crosstalk 00:09:59] Yeah. Maybe-
Harry Fine: It’s a crazy situation. Any builder, whether it’s a house or condo, built post-November ’91 was exempt from the provincial guideline. That includes-
Andrew la Fleur: [crosstalk 00:10:11] That was a big-
Harry Fine: Condo in Toronto.
Andrew la Fleur: Yeah. Until the past couple years or so when that started becoming a big deal and rents were rising quickly, most people didn’t even know that that was the case. Would you agree?
Harry Fine: I’ll tell you, not only did landlords not know, but tenants did not know. Nobody knew. The reason is, that neither side wanted to publicize it too much, because if the landlords gloated, it would attract the government’s attention. If the tenant’s started saying how unfair it is, then landlords who didn’t know would raise the rent. Everybody was quiet about it.
Andrew la Fleur: Right, yeah.
Harry Fine: Then in April of 2017, retroactive to April 20th, Premier wins Rental Fairness Act, took away that exemption, which had been available to landlords since 1991, or since the Tenant Protection Act in 1998. What a situation. I mean, if condo fees are going up 6, 7, 8%, or if condo assessments are levied against your unit, you end up in a situation where you’re now a negative cash flow and you have no way to raise the rent. Worse than that, if you have extraordinary increases in costs, there is a way outside the regular way of raising the rent annually once a year with the N1 form, there is a way to file an application with the Landlord-Tenant Board for permission to raise the rent by more than the provincial guideline. We call that application an AGI, an Above Guideline Increase.
You could do it for capital expenditures that had a benefit to the premises. You could do it for utility costs that had an extraordinary increase. You could do it for your taxes if you paid them, which you do, that have an extraordinary increase. Premier win as part of the Rental Fairness Act, took away the grounds for utilities, so that a landlord in a condo or a home who’s had extraordinary increase in utilities, perhaps because of government mismanaging of the file, they can no longer file an above guideline application for utilities. Their costs may have gone up, but there’s no way to recover it. When the Premier was asked how that was fair, she said, “Landlords should be careful and buy energy efficient appliances.” Let’s look at the first part of it. Can I make an application [crosstalk 00:12:29] in my condo for an increase over the guideline based on capital expenditures? Well, the process is-
Andrew la Fleur: Right.
Harry Fine: Pretty straightforward. If you have an expenditure in the last 18 months that is for the benefit of the building, not cosmetic, but structural, mechanical, electrical, plumbing, life-safety, environmental, something to assist people with disabilities, all of those were eligible for this above guideline application, technically called an L5 application. People have been doing them for, well decades, really, but in condos they’ve never been able to do them. Because to do an above guideline application in a condo for capital expenditures, you need to be able to pull out individual expenditures for your unit. Things are aggregated in condos. You can’t do that.
Here we have the above guideline application that’s supposed to protect us if we’ve had extraordinary increases, and now utilities are gone, and for condo owners, capital expenditures doesn’t work. I want to give you an amazing example of what could’ve happened based on the April 20th changes. Imagine you were a landlord renting to a new tenant in a condo you bought pre-construction, so the tenant moved in perhaps during the occupancy period, and you say to the tenant, “Look, nothing’s ready. The pool’s not ready, the gym’s not ready, the landscaping’s not ready. One of the elevators is for construction workers. I’m going to give it to you for 1,800 this year, but just so you know, this is a 2,500 a month condo, so next year the law allows me to raise it. I want to be honest with you, next year I’m going to raise it to 2,500.”
You draft a lease for, what did I say? $1,800. The tenant pays $1,800 a month. 10 months later, 11 months later the condo’s in great space, but next year all of a sudden before that happens the Premier retroactively changes the law so that it could only go up 1.8%. Now, you’re stuck forever with a tenant paying, let’s say, 500 a month too little, and you have no control over that. The only way you could raise the rent realistically is when the tenancy turns over. Coupled with that, is the fact that now, and I don’t blame them. I’m not being judgemental against investors.
They want tenant turnover so they can react to this hot market in condos, but tenants don’t want to leave, because tenants now realize in condos if they leave, the rent may go way up. Landlords want them to leave, tenants don’t want to leave, and the landlords, if they left, could raise the rent, but what you see now of course is that landlords are filing all sorts of applications to evict for personal or family use, but frankly Andrew, half these applications are without merit. Half of them are really being filed in bad faith and that’s going to get them in some trouble. It’s a sad-
Andrew la Fleur: Right, right.
Harry Fine: Sad situation.
Andrew la Fleur: Sad situation, absolutely. Shortsighted legislation, absolutely. We all agree on that. Like you said, the system before was working quite well, where it was kind of a see no evil, hear no evil kind of …
Harry Fine: Yeah.
Andrew la Fleur: Like you said, you described it well, the tenants … Before we could raise rents by whatever we wanted, but 95% of landlords did not abuse that system or even probably 80% of landlords didn’t even raise rents at all, because they didn’t realize that they could.
Harry Fine: That’s true.
Andrew la Fleur: Then obviously, you get a couple of stories in the paper. This is going back to last spring and then the whole thing just blew up into this-
Harry Fine: It was all about Shannon Martin of the CBC.
Andrew la Fleur: Yeah.
Harry Fine: She’s a millennial living downtown and all of a sudden her rent doubled and it went from there.
Andrew la Fleur: Right. Suddenly it became this issue that was effecting thousands of people, when it was in reality, not an issue at all. [crosstalk 00:16:29] Anyways, that’s all in the past. Yeah, so leading … What you were just talking about leads well into sort of the next thing I want to talk about, which is the biggest question I’m getting from people is, “Okay, my condo, I’ve rented it out.” Like you said, “It’s under market value.” Rents are increasing quite a bit, at 10% a year right now. Downtown Toronto, especially. “I’m way under value, Andrew, what can I do? How can I get my rent price up? What are my options?” I’d love to hear your answer. How would you advise a landlord in that situation? What are their options to increase rents if they’re way below market value?
Harry Fine: In a condo, because they can’t do an above guideline application, they’re really stuck with just using the regular rent increase. Now, they do have some options. They can use it for a family member, or they can sell it to a purchaser who wants to move in. If those are done in good faith, then they can get the place back, but the problem is, it’s the family member who has to move in. I, as a paralegal, I can never suggest that people make bad faith applications, but I guess what I can say is if you’re a landlord who wants to evict to get the place back so that they can raise the rent, and you’re going to negotiate with your tenant about moving out, be careful, be strategic. Be careful what you say, messaging is important.
Let me give you an example. I remember dealing with a case a couple of years ago with the Landlord-Tenant Board where the landlord and tenant had had a big fight. The landlord was a crotchety old guy and he wanted to control his tenants and his tenancies and he didn’t realize that people had rights to live once they rented. He was renting to a couple, a professional couple, and he was a lawyer, one of the tenants, the man, the male, and he nicely told the landlord that he was going to have a party from people from work coming over after work one nice summer day barbecuing in the backyard and the landlord told him he couldn’t have parties. Well, that’s ridiculous. The landlord showed up that night determined to ruin his party. He had the lawnmower out, the gas mower and the entire night while the tenant was having the party with his friends from work, he spent hours just having the lawnmower make noise to destroy their enjoyment.
Andrew la Fleur: Wow.
Harry Fine: The next day they had another fight, there were witnesses, and the day after the landlord served a notice to terminate the tenancy based on the intended use of his son moving in. Clearly, he was going to fail in the application, because there was too much of a connection between the fight-
Andrew la Fleur: Right.
Harry Fine: And the application, or the notice.
Andrew la Fleur: Right.
Harry Fine: Tenants should not be your friends. They’re your customers. Tenants shouldn’t know about your life, your business, because the more they know, the more likely it is that it will be difficult for you to serve notices and file applications for family or a landlords’ own use. You need to be strategic. You need to be careful with communications. Even sometimes the realtor you’re using can cause problems, where your realtor might know your intentions are to perhaps fix it up and re-rent it after a few months, and your realtor speaks to the realtor for the prospective purchaser, and they’re too friendly, and they talk too much, and all of a sudden your true intentions become known.
I guess all I’ll say, being careful as a paralegal with professional obligations, is if you’re going to try to evict for landlords’ own use, be strategic. Plan in advance. When there’s a dispute of some sort, it’s better to turn the other cheek so that there’s no evidence that exists between some sort of dispute, and then you’re serving of the notice of termination. Because that’s the only way. There is no mechanism around rent control. The government has thought of everything. Of course-
Andrew la Fleur: Right, right.
Harry Fine: What that does is now of course the government was trying to keep a cap on rents, but now when a landlord gets a unit empty and tries to re-rent it, he thinks to himself, “Oh my goodness, there’s tight rent control. I’ve got to charge an extra 300 a month as a hedge.”
Andrew la Fleur: Right.
Harry Fine: In fact, the government has caused rents to go up.
Andrew la Fleur: Yeah, absolutely. New rents, we’re seeing new rents are soaring, existing rents are under rent control, and it’s this distorted marketplace that, yeah, as a result of this legislation. Tell me about this, you probably hear this all the time as well, one of the most common mistakes and misconceptions that I hear from landlords is they think, “Well, I signed a one year lease, or I signed a two year lease, or whatever it is, and now that one year is up, so I can just tell the tenant to go away, and I don’t want to release the unit to them, and I’ll just rent it to somebody new at a higher price.” It doesn’t work like that, right?
Harry Fine: Sure. The issue of what is term versus what is tenancy is absolutely the single biggest misconception among small investor landlords, and frankly, among many realtors who’ve been trained by OREA initially that doesn’t really teach residential tenancy stuff very well. I get a lot of realtors at my seminars just enlightened and so happy to understand the system. Here’s how it works. In Ontario, under the Residential Tenancies Act, despite what you may put in your lease, if you grant lease term, and you don’t have to, you can have a lease that just starts month-to-month, but if you grant lease term, at the end of the term, usually one year, it automatically reverts to month-to-month, and there’s nothing that you can do about it, and there’s also nothing you have to do. The 12th month is over, if it’s a one year term. It just becomes a periodic tenancy. People say, “The lease ends at the end of August.” Well, the lease doesn’t end on whatever date the term ends, only the term ends. All the rights and obligations of the parties remain intact.
Andrew la Fleur: Everything-
Harry Fine: [crosstalk 00:22:27] In fact, it’s better for the landlord when term ends. Landlords misunderstand term and sometimes it gets them in trouble. During a term, if there is term, you can’t evict for personal use of the landlord, family personal use. You can’t evict during lease term when the purchaser wants to buy it and move in, or the purchaser’s family wants to move in. You can’t evict for demolition, conversion to nonresidential, extensive renovation. You can’t evict for any of the no fault applications during lease term. In fact, you can’t even serve a termination notice based on persistent late payment of rent during term. Only when it’s month-to-month. I say this a lot and people are shocked, but term actually is very disadvantageous for landlords. Term is only good for tenants.
Andrew la Fleur: Right.
Harry Fine: People think that term matters because the tenants on the hook for the rent if they should move out. Well, that’s not what the law says. The law says that if your tenant leaves early during lease term, then you have an obligation as the landlord right away to try to re-rent, and if you’re able to re-rent, you can’t double collect. If you’re not able to re-rent, legitimately, and you tried, and there’s a loss, you can take them to small claims court and try to get a judgment for your loss, but it’s not … Term certainly does not protect you. It only hurts landlords. Should you have term? Sure, have a one year term in your lease, but for goodness sakes no more than one year. I want to say as a special warning to landlords, there’s some clauses, and again, I don’t blame the realtors, but I blame the Ontario Real Estate Association.
There’s a clause that realtors often use from the OREA book of clauses that they put in leases giving the tenant, if the tenancy is in good standing, the right to renew term after the term is up. It says something like, “If the lease is in good stead, then within 60 days of the end of the term, the tenants can give the landlord written notice that they would like to renew term.” Well, that sounds fine, except the way the OREA clause is written, they, the tenant, can exercise that right every single year, because it’s badly written. It should say something like, or on the end of that it should say, “Subject to an increase in rent under the act and there should be no further rights on renewal.” It doesn’t say that and I have seen cases where landlords have lost their condos forever because the tenants simply every year, within the 60 days of the end of the renewed term, gives notice that they want another term.
You can’t evict for landlords’ own use, purchasers’ own use. You can sell it, but nobody would buy it from you, because what you’ve done is you’ve taken a piece of real estate as an asset and turned it into, in effect, an annuity paying very poorly. Because rent control now controls how much cash flow you’ll get out of the thing. I’ve seen those cases [crosstalk 00:25:31] go to the Landlord-Tenant Board and the board says, “No, you can’t evict.” The landlord says, “When?” “Not ever.” I mean, if they didn’t pay rent you could evict. If they trashed the place, you could evict. If they caused a fire, you could evict. The tenant who has no conduct problems can then stay in your lease forever. For goodness sakes, for any realtors that hear this, don’t put that clause in your lease. As you know, the new government standard lease is coming, which doesn’t protect you at all.
Realtors, I’m sure have learned through their brokerages, or through my training, that the form 400 has changed and that is no longer your lease. You need to use the standard government lease after you’ve accepted the tenant, or your client’s accepted the tenant, using the form 400 as an offer form. The standard government lease doesn’t protect you against anything. I have been swamped at my website for people looking to see my standard clauses, which they use to protect them, because fortunately the new standard government lease that you have to use starting April 30th, allows you to put in your own clauses as long as they’re not illegal clauses. My documents protect the landlord every which way, so that when disputes arise, they can be resolved according to the agreement, rather than the adjudicator not really knowing what to do.
I strongly suggest that when you use these new government lease agreement, which you can use today, but you must use starting with any leases you sign after April 30th, get a proper set of clauses that are tailored to your situation. By that, I mean, my clauses, if somebody was in a condo, would talk about condo rules, and elevator booking, and obligations to use the amenities in accordance with the rules. If on the other hand you are renting a duplex, where the tenant share the backyard and the laundry room, my lease clauses would protect you and the tenants would understand which of their spaces are exclusive use spaces, versus spaces they have to share, and their obligations to keep them clean. Different ways of paying for utilities in my clauses or a clause and any well written addendum will protect the landlord, because so many landlord-tenant disputes arise out of utilities, so be careful. The government form is a skeleton, nothing more than that.
Andrew la Fleur: Right, right. Yeah, I know they’ll certainly be some fall out and some back and forth as realtors, and investors, and everybody’s figuring out this new lease, and the holes that are in it. Obviously, you’ve found a lot of them and you’re plugging them yourself for your clients. That’s great.
Harry Fine: Sure. I also, for those who are interested, on my blog, my three most recent articles I think on my blog are about the new leasing process, so you can find out all about the new standard lease, but if you’re a realtor and want to find out about sort of how it fits together, I’ve done a post critiquing the form 400, as well as the new government lease. If you want to get up to date, you can certainly take a look at my blog. If you go to my website, HFineParalegal.ca, you’ll find a link to Blogger, and from there if you like the stuff, if you want to keep up to date on landlord-tenant law, you’ll follow my blog, and follow my Twitter and things like that.
Andrew la Fleur: Yeah, absolutely. We’ll definitely include a link to your site on the show notes for this episode. Do you have any tenant … I’m curious if you have any … Based on your experience, and having gone through all this, and meeting a lot of tenants who call them bad apples or whatever, is there … Do you have tenant screening tips? Any sort of ninja tricks that you would recommend? You know what? Before you get [crosstalk 00:29:17] a tenant in there, these are the two or three questions, or things you always want to look for, or warning signs that you might be dealing with a serial offender.
Harry Fine: Hmm? [inaudible 00:29:31] I was thinking the same term. On my website there’s eight webinars, on demand webinars. One of them is Starting a Tenancy. That talks a lot about the human rights code, screening. Also, by the way, that first webinar gives you access to that lease addendum, so if somebody’s interested in starting the tenancy, don’t buy the form’s package, just look at the webinar on starting the tenancy. You’re going to hear tips about screening if you watch that two hour webinar, such as how to deal with the pet issue. You’re allowed to refuse a tenant based on pets, but unless you have a condo that has a no pet rule, or no pet clause in the declaration, you can’t evict just because they have a pet. Rather than say, “No pets,” ask them if they have a pet. Check their Facebook feed. Talk their employers. Sometimes employers know if they have a pet. Show them if you’re having an interview or a showing at the house, show them pictures of your pet and suggest, “Boy, I bet your … Have you ever seen a dog this cute?”
Andrew la Fleur: That’s entrapment.
Harry Fine: [crosstalk 00:30:38] say, “No pets.”
Andrew la Fleur: Yeah.
Harry Fine: Yeah, you try to trap them.
Andrew la Fleur: Right.
Harry Fine: No smoking clauses, particularly no smoking marijuana clauses, but no smoking clauses can be enforced in a lease, because the RTA doesn’t prohibit that as they do for pets, but it’s got to be in the lease. Always remember, landlords aren’t the lord of the land, so use proper smoking clauses, as in my addendum, in your lease. Call the employer. Call the landlord and then the previous landlord where they’ve lived. Too often people just take the application and believe those numbers are true. If you’re talking to the employer, it’s too easy for them to download a graphic from their website, do a phony letter, etc. Check the phone number of the employer, ask for the HR Department. Of course, you’ll have to have an application that has consent language that allows you to do these checks, whether it’s a credit check or an employment check.
Use a proper application that gives you consent from the tenant or prospective tenant to do these checks. Talk to the employer, see if they’re there or see what they make. Ask the tenant for a copy of their T4, or notice of assessment, or pay slips. Do a credit check and for goodness sakes, don’t take the credit report that the tenant gives you. Photoshop is just too easy. You need to conduct credit checks on the ones that you think might go forward, might be good for you. If you’re talking to the landlord that they’re currently living in, or previous landlord, look up the phone number for the rental office by driving down by the building. Don’t just take the word for it that the person who’s number they give you was actually their landlord. The current landlord is often so happy to get rid of them, they’ll tell you good things. It’s even better to talk to a previous landlord.
You’ve got to be a detective. You’ve got to be very suspicious. I believe in interviews with tenants. A great time is if you have a showing on a Sunday afternoon and you list the place at half hour intervals and give out your application form to those who are interested. See what their car looks like. Walk with them to their car. If the backyard is like a junk yard, then so will your property. See if there’s alcohol on their breath at 10:00 in the morning. See if there’s cigarette smoke on their breath when they say no smoking. You’ve got to … In fact, one of the best tricks that a lot of small landlords, small investors do when they are sort of settling on two or three people that they might want to rent to, is they have an interview where they come to see them in the place where they currently live. You get a photocopy of their driver’s license to make sure you’ve got the proper ID, so you can sue them.
The driver’s license has the address. You set up an appointment. You double-check it’s the address on the driver’s license and if their house has walls full of holes, then of course you say, “Goodbye,” and you move onto the next one. For goodness sakes, check the internet. Use different spellings of their name. Let Google be your friend. I have found so many bad tenancies that I’ve helped and that later, or during the process, I’ve checked online and I’ve found motorcycle gang membership, convicted criminals. Oh my goodness, how about the serial offenders? You can find them and they’ve been on … I won’t name any names, just because I want to keep you out of trouble Andrew, but-
Andrew la Fleur: Right.
Harry Fine: There’ve been so many articles in [crosstalk 00:34:04]-
Andrew la Fleur: Yeah, exactly.
Harry Fine: CBC, about the serial offenders who have actually, some of them, been charged criminally. Who rents to them next time when they’re finally evicted after a year of paying rent, and after having to spend thousands to go to the superior court, hiring a lawyer, and the landlord finally gets rid of them, who’s the guy that rents to them next time? Well, they’re sloppy and you can’t be. This is probably the single biggest investment the investor has other than their own home and they have to take their time and do it right. Learn about the law, because it’s highly complicated.
It’s not logical. We have a highly regulated statutory system for residential tenancies in Ontario. It is political, it is complicated, and you need good advice. I’ll challenge you on what you said right from the beginning, “We don’t need you till we’re in trouble.” I think you do. It’s a funny business, Andrew. It’s a business where in many cases the clients, sorry the customer, knows more than the business owner. I don’t see that in any other business, but I see it in the landlording business, because for some people it’s run like a hobby. You can run a hobby like a business, but you can’t run a business like a hobby. That’s where I [crosstalk 00:35:23].
Andrew la Fleur: That’s great advice, Harry. Thank you so much for your time today. I really appreciate your insights and if people want to get ahold of you, again, where’s the best place for people to do that?
Harry Fine: Best place is to find me online, HFineParalegal.ca, and you’ll get to my website with all my contact information. I hope they’ll follow me on Twitter. I give lots of good information. Of course, you can do that from that same link I just [crosstalk 00:35:48].
Andrew la Fleur: Great. Thank you so much, Harry. We’ll include links to all this in the show notes for this episode, as we always do, TrueCondos.com/podcast. Harry, thank you so much and hopefully we’ll have you on the show again soon.
Harry Fine: Been my pleasure, thanks Andrew.
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