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Cash for Keys: Avoiding the Landlord and Tenant Board of Ontario



Landlord and Tenant Board Failure

Issues persist in Canada's rental market due to prolonged delays in resolving disputes between landlords and tenants, as highlighted by one expert, David Fleming.

Fleming noted a rising trend termed as "cash for keys" deals, where tenants negotiate for monetary compensation in exchange for vacating the property and surrendering their keys.


Renters facing potential eviction leverage the backlog of cases at the Ontario Landlord and Tenant Board in these negotiations, using the wait times, which can range from eight to 12 months for a hearing, as bargaining chips to secure cash settlements, Fleming explained.


The situation forces landlords into a dilemma: whether to wait for the board's decision or opt for buying out the tenant. Particularly in Toronto, Fleming observed a prevalent pattern of landlords opting for the latter.


A report from Ontario's ombudsperson in May 2023 underscored the severity of the backlog, reaching 38,000 cases, with hearings averaging seven to eight months, and sometimes extending up to two years to be scheduled.


Complications arise, especially when landlords intend to sell their properties, as buyers may issue notices to vacate, further exacerbating the situation.

In one instance in Ottawa, a landlord encountered a challenging scenario while attempting to sell his property, offering tenants $10,000 and a moving truck to vacate, yet they remained resistant.


Cash-for-keys arrangements started becoming more prevalent in 2023, according to Daniel Vyner, principal broker at DV Capital, primarily in rent-controlled condos, where investors struggle due to insufficient monthly rent payments, exacerbated by rising interest rates.


While Fleming's observations primarily pertain to Ontario, similar cash-for-keys scenarios are observed elsewhere in Canada. Sherwin Flight, a housing advocate in St. John's, highlighted variations in Newfoundland, where such deals typically arise from termination disputes or changes in property ownership.


In British Columbia, housing court backlogs and rent price increases contribute to tenants resisting eviction, often leading to homelessness and protracted legal battles.

However, Fleming emphasized the importance of adhering to eviction rules despite challenges, suggesting that landlords must exercise diligence in tenant selection to navigate such complexities effectively.

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