Rent Repayment Agreements can Pose Risks to Tenants

Re-posted from ON THE RADAR, a publication of Community Legal Education Ontario (CLEO)

The COVID-19 pandemic has caused many tenants to fall behind in their rent. For some, the best choice might be to work out an agreement with their landlord so they have time to pay back what they owe.

This month’s On the Radar describes some key things about repayment agreements. Before signing one, it’s important for a tenant to know where they are in the eviction process.

Before the landlord applies to the Landlord and Tenant Board

To start the eviction process, the landlord must first give the tenant an N4: Notice to End your Tenancy Early for Non-payment of Rent. This notice gives details about what the tenant owes and when they must pay.

When a tenant first falls behind with the rent, the landlord might ask them to agree to a payment schedule. This could be before or after the landlord gives them an N4 notice.

Usually, a landlord will not let a tenant off without paying back all the rent they owe. They’ll just offer the tenant more time to pay it.

In return for the extra time, the landlord agrees that if the tenant makes the payments in full and on time, they won’t take the next step. This next step is filing an eviction application with the Landlord and Tenant Board (LTB).

If tenants have money problems because of the COVID-19 emergency, it might help to talk to their landlord about this. But a tenant does not have to sign a repayment agreement if:

  • they don’t think it’s reasonable, or
  • they’re not sure they can make all the payments.

Tenants can’t be evicted just for refusing to sign an agreement that their landlord wants them to sign.

If the tenant does not sign an agreement and the landlord decides to apply to the LTB for an eviction order, the tenant will still have a chance to avoid eviction by:

  • paying the rent plus the landlord’s LTB filing fee,
  • working out a repayment agreement, or
  • asking the LTB to give them more time to pay.

Signing other documents

Some landlords might also ask the tenant to sign another document agreeing to move out. The landlord will say that they won’t enforce it, as long as the tenant keeps up with their payments.

This document might be an N9: Tenant’s Notice to End the Tenancy or an N11: Agreement to End the Tenancy.

Tenants should never sign anything like this, unless they want to move out.

After the landlord applies to the LTB to evict the tenant

Later, the landlord might apply to the LTB. The tenant should receive:

The landlord, the tenant, or an LTB mediator might suggest a repayment agreement after the landlord files the L1 application.

Signing an agreement at this stage can have serious risks that tenants need to know about.

Risks for tenants

These agreements can include a part that says if the tenant misses a payment, their landlord can get an eviction order from the LTB without giving them a notice or a hearing.

Landlords usually want to include this. But tenants don’t have to agree.

If this part is not in the agreement, the LTB can still make an eviction order if a tenant misses a payment. But they can do this only after both the tenant and landlord have a chance to tell their side at a hearing.

If the landlord insists on including this part, the tenant should not sign unless they’re certain they can make all of the payments. If they’re even one day late or one dollar short, the landlord can get an eviction order from the LTB without a hearing.

The LTB has a form for repayment agreements but landlords and tenants do not have to use it.

If a tenant is thinking about signing a repayment agreement with their landlord, they can use this form instead. CLEO and the Advocacy Centre for Tenants Ontario (ACTO) developed this alternative form, with help from a number of community legal clinics. It’s meant to make it easier for tenants to understand what they’re agreeing to.

The right to a hearing

If the tenant does not sign a repayment agreement at all, they still have the right to have a hearing with the LTB.

At the hearing, they can tell the LTB their side and ask for time to pay off the rent. If their money problems were caused by the COVID-19 pandemic, the tenant can ask the LTB to take that into account.

Even if the LTB makes an eviction order after holding a hearing, the tenant gets one more chance to stop the eviction by paying:

  • all the rent they owe, and
  • the filing fees the landlord paid to the LTB.

Getting legal help

It’s important for tenants to get advice from a lawyer or their local community legal clinic, before they sign any repayment agreement.

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