Mother Renting Out Basement For First Time

[Spenny]

Hi there



In the past I have mentioned my Mother has significant debt, and your answers have all been very helpful to her. Now she has decided that she would like to rent out her basement to help pay this down.



I have found a seemingly nice 50 year old widow that would like to rent out my Mother's basement for 690/month. She filled out an application including references. Her income from work is only about 12k/year, plus 500/month pension. Her credit score is about 600, not too great but I guess that is the nature of people who rent instead of buy. She is willing to have her sister co sign the lease.



I like her so I am thinking of making her an offer. I just have a few questions.



1) She mentioned she could provide certified cheques. Is there any benefit to asking for post dated certified cheques for the term of the lease? Can't she just cancel them at any time by paying the fee again?



2) Could someone please link me to a good/standard lease template for this type of situation in Ontario/Hamilton? Are these any good?

http://www.thecanadianlandlordalliance.com/docs/LeaseAgreement.pdf

http://www.remaxcondosplus.com/pdf/Form400.pdf



3) What are the pros and cons of a month to month lease? My only real concern is that if my mother decides she doesn't like having a renter in the basement, it might be hard to get her out. I was thinking a month to month lease could solve this problem.



4) Is it standard to ask for first and last months rent + month's rent deposit for damages? At what point is this paid if she plans to move in on Feb 1 2014?



If anyone could answer any of these questions or has any general comments/advice it would be greatly appreciated!

Many thanks

Justin

 

[invst4profit]

I will do my best to answer.


Fifty years old, poverty income, lousy credit and offering up a guarantor. Next applicant please.



First based on her income she is very high risk, her credit score indicates she does not fulfill her financial responsibilities and it would bet dollars to donuts your mother will be chasing her for rent money every month. To correct a fallacy there is no relationship between being financially irresponsible and renting. I would not let my mother rent to this person as they are not trustworthy. Forget the guarantor. Don't set your mother up to fail start looking again for a quality applicant.


Talk to this applicants previous (not her present) landlord and you will find out the truth.


1) Insisting on post dated rent checks in advance is illegal in Ontario. Also keep in mind a check isn't worth the paper it is written on until you can cash it.

2) http://ontariolandlords.org/forum/ Join the Ontario Landlord forum and you will have access to everything you need in regards to training, leases, credit checks etc.

3) Month to month or a 1 year term are exactly the same in regards to your mother choosing to terminate the lease. Your mother needs to understand that once she rents out her basement she can only stop being a landlord if the tenant chooses to leave. It is not your mother`s decision. A landlord can only evict a tenant for one of the reasons covered under the RTA she can not stop being a landlord once she starts simply because she chooses to.

4) It is a must that tenants pay first and last month rent before you hand over the keys (CASH ONLY). Take a one month deposit at the time of signing the lease (this becomes their first months rent) and collect the last months rent when you hand her the keys. Never accept any excuses for not collecting both in advance. If your tenant can not afford both up front then they can not afford to rent the apartment. Excuses of any kind are a clear indication your mother may not ever see any rent payments. Damage deposits are illegal in Ontario.



Like I said I would not let my mother rent to this person, especially if she is a novice landlord, but if she does rent to her insist this tenant always pays rent in cash and any month she does not pay by the first of the month, regardless of the excuse, have your mother file a L9 on the second of the month. That should put an end to any future late payments. She will probably leave.

 

[housingrental]

Greg: I appreciate you want to protect others but you are regularly posting inaccurate information.



3) Is outright incorrect - it depends on the situation

 

[Spenny]

Greg

Wow thank you so much for this information. I very much appreciate your skeptical
approach, I think that is the correct one to have in this case. So I take it you are suggesting that certified cheques aren't worth the paper they are written on either.



Adam

Many thanks for this comment. Would you be able to expand on specifically what was incorrect about? I ask because this issue in particular has been on my mind.



I read the RTA and it says a Landlord might be able to evict a tenant if they plan to use the basement apartment to house a family member. How likely are these requests granted? Would it help to write that into the lease if we do happen to accept the tenant?

 

[Sherilynn]

1) There is no such thing as a post-dated, certified cheque. When a cheque is certified, the money is "withdrawn" from that person's account and held in cyberspace until the payee cashes the cheque. So the only way to certify a cheque is to have it cashable that day.



3) Is this a basement suite or is there a shared kitchen (or other amenities)? If it is not a fully self-contained suite, then the RTA may not apply. Then it could be even more difficult to get rid of an unwanted occupant.

 

[Spenny]

Sherilynn

Many thanks for your help.

1) Yes I understand. It was an idea that I had as a sort of compromise between paying the whole year up front and paying monthly cheques. I thought she could have all the cheques for the year certified, held in cyberspace, until they are cashed at the beginning of each month, until the end of the year.



2) Well the basement has a private entrance and would not be coming upstairs for any reason. The basement has everything except a fully functioning kitchen. It has a bar sink, mini fridge, and the tenant would supply microwave, toaster oven, hot plates. How can I determine if it is considered a fully contained suite by the RTA standards? If it doesn't meet the standard why might this make it more difficult?

 

[invst4profit]

[quote user=housingrental]Greg: I appreciate you want to protect others but you are regularly posting inaccurate information.



3) Is outright incorrect - it depends on the situation







Prove me wrong Adam.



A landlord can ask a tenant to leave however if they refuse your only option is to evict.

A landlord may only evict for the reasons listed in the RTA.



Additionally for any of the justifiable reasons to evict all are very difficult to prove and in the majority of cases the landlords application will be denied allowing the tenant a second chance to correct their behavior. In this case the landlord would be forced to lie if she simply did not want to be a landlord any longer



A Landlord can not simply chose to no longer be a landlord.

If you think you know better than I do then prove it and don't be so weak as to simply fall back on "personal use" as in this case that would be a lie. Quote the section of the RTA or take from the LTB web site the policy that allows a landlord to terminate a lease without just cause.



Spenny you will need to contact your local building department to find out the requirements for a legal suite.

However this could be a easy out for your mother to stop renting in the future. If she were to make the suite safe to live in but not necessarily "legal" in the future someone (perhaps you) could report it to the inspector, have it deemed illegal, and at that point your mother could then evict.

Better yet your mother could share her kitchen with the tenant and the tenant would not legally fall under the RTA, Your mother could evict with as little as 24 hours notice and the tenant would have no legal rights. This would be the best option considering how riskey this applicant is or any applicant for that matter. The individual would be a roommate and as such place all the power in the hands of your mother.

 

[Rickson9]

http://youtu.be/CF7OnW4XDck

 

[housingrental]

Sure Greg to answer your questions a few things immediately come to mind where this might come into play:



Persistent late payment

Owner wanting to take occupancy of suite (mother, relative, sale and property becomes fully occupied)

Material renovations

Damages to renter if the unit becomes unlivable (regular flooding as one example)



I have listed seven reasons above without much thought.

There might be more.



I have wrote in prior threads to you similar content - I wish you the best, and hope you wish the best on those you post to, but you should be more limited in the content you are providing. You are regularly posting factually incorrect information that could harm people.



Please be mindful that someone might inappropriately rely on a posters information and take action based on it.

 

[invst4profit]

Wrong Adam. You have listed 7 reasons found in the RTA which are justifiable reasons for evicting. None of which apply to this situation. I stated a landlord could not simply decide she did not want to be a landlord any longer and terminate a lease.

She could only evict for reasons within the RTA which you have now quoted. My point was, if you had taken the time to read, a landlord may not simply decide to stop being a landlord and evict for that reason alone.

Obviously you did not take the time to properly read and understand my statement before you declared I was "incorrect".

My original statement, point #3, is 100% correct and I believe an apology is in order.


Or you can try again to find a way, aside from the tenant voluntarily leaving, for a landlord to simply stop being a landlord when the tenant has done nothing wrong.



Trust me Adam I have thoroughly studied the RTA and the LTB and both know and understand it better than you ever will. I know my business inside and out and make a point of not being wrong. You assume I have posted factually incorrect information but have never offered up proof of your statements. I know, you assume, big mistake.

 

[housingrental]

Greg I recommend you re-read your post and mine.

My post was accurate.

There can be different options for a rental provider if there is a fixed term lease in place.



I have listed seven situations where your point 3) was inaccurate.

To elaborate on one of them if you are not understanding is that if his mother decides she does not want to be a landlord as you have phrased it, she can take occupancy of the rented unit faster if a fixed term tenancy is not in place.

 

[invst4profit]

And how would you suggest she do that? Take possession I mean if she no longer wants to rent out her basement and the tenant has no desire to leave. Make the assumption the tenant has paid their rent on time and caused no major problems to justify an eviction. Basically an average tenant.

The implications of having a month to month or fixed term only impact the tenant`s responsibilities to the landlord if they chose to terminate. A landlord must evict a tenant if the tenant refuses to leave voluntarily and as such the speed of eviction is not dependant on the type of lease.



Fixed term, month to month whatever you chose.

Mom simply no longer wants to be a landlord.



http://www.ltb.gov.on.ca/en/Key_Information/170036.html



This link lists the ways a landlord may terminate a tenancy, how would you suggest the POs mothers simply stops being a landlord as my original post was in response to.

 

[Rickson9]

[quote user=invst4profit]



http://www.ltb.gov.on.ca/en/Key_Information/170036.html







Just read the page that this links to. From the perspective of a landlord, it sounds terrible.

 

[housingrental]

She can stop being a landlord by providing proper notice for occupancy

If the person does not move out, she will be able to get them out through the LTB

The point you have wrote in 3) is factually inaccurate. There are potential differences when having a fixed term lease.

 

[Spenny]

Hi Adam thanks that last comment is very interesting to me. Could you provide any more information/direction/sources of the potential differences between a fixed lease and a month to month lease in this sense?

 

[housingrental]

The link that Greg has posted to the LTB website is a good start to read through

I normally recommend year long leases

For your mother's situation it might be better to do a written short term contract only and go from there

 

[invst4profit]

For your mother's situation it might be better to do a written short term contract only and go from there



Not even close to an answer to your question. You can keep pushing but you won't get one.

Unfortunately he often makes statements he can not back up with facts. I don't believe he actually has any first

hand experience in regards to the RTA nor has he ever attended a LTB hearing.



At some point in a thread I usually just give up and let him believe he has successfully made his point as in this case.

 

[housingrental]

Hi Greg

I wish you the best.

You do not need to insult me because I have concerns about the content you posted.

I directly answered his question.

I have experience on a daily basis working with the RTA and I have been to the LTB many times.





[quote user=invst4profit]For your mother's situation it might be better to do a written short term contract only and go from there



Not even close to an answer to your question. You can keep pushing but you won't get one.

Unfortunately he often makes statements he can not back up with facts. I don't believe he actually has any first

hand experience in regards to the RTA nor has he ever attended a LTB hearing.



At some point in a thread I usually just give up and let him believe he has successfully made his point as in this case.

 

[invst4profit]

Could you provide any more information/direction/sources of the potential differences between a fixed lease and a month to month lease in this sense?



Would you care to elaborate on how you answered the above question with:





For your mother's situation it might be better to do a written short term contract only and go from there




The problem we have Adam is that you do not back up your statements with facts. You tend to simply announce the fact that someone is wrong and then often make statements that are not supporting your opinion. In this instance you can not quote any part of the RTA that states a landlord may simply announce they are tired of being a landlord and actually legally force a tenant to leave. You have not yet supported your statement that my statement is false and refuse to concede I am right.

Fortunately only about 10% of tenants would actually fight a landlord in that situation but the fact remains a landlord can only terminate a lease by "EVICTING" a tenant when that tenant chooses not to leave. Additionally a landlord is only permitted to evict based on the reasons listed in the RTA and on the LTB web site.

There is no listed reason to evict for "tired of being a landlord".



Additionally based on your past displays of your lack of knowledge of the RTA I still believe you have never been to a LTB hearing.