Owning a rental property is not just about collecting the rent on time. It is also about making sure that your property is being properly maintained. If you are not careful, you can face expensive repair bills.
A case that wound through the courts for almost a decade shows what can happen. In 2005, Mostafa Said owned a home in Maple Ridge, B.C. He wanted to take his family to his native Egypt for a year and so hired Meadow Ridge Classic Realty to be his property manager. Meadow Ridge would find a tenant and manage the property while he was away. Meadow Ridge did find a tenant who trashed the house during her one year stay. When Said returned he sued Meadow Ridge for his damages.
Said could not afford a lawyer, so he sued in small claims court, where he claimed the maximum of $25,000 as his damages. The decision was rendered just a few weeks ago and B.C. small claims court judge T.S. Woods awarded Said the maximum $25,000.
The management contract said that Meadow Ridge would only be responsible for “gross negligence.” Woods found that as a result of the failure of the property manager to properly qualify the tenant, recognize red flags and inspect the property on a regular basis, they were grossly negligent in their conduct.
The judge pointed out that had the property manager Googled the tenant’s name, they would have discovered a story about her in 2004. It indicated she had a criminal record, involving drug offences and three children had been taken away by authorities in B.C. after a fourth child was mauled to death by dogs.
In addition, the application form was incomplete, with no information about her employers, banking information or credit cards. No questions were asked as to how she could afford the $1,495 monthly rental when her previous rent had been $700.
The property manager didn’t take any pictures at the beginning of the tenancy to prove what condition the property was in at that time and despite the fact that the first rent cheque bounced, no additional measures were taken to watch the property more carefully. Instead, the tenant, two other adults and three children, described by the judge as “her entourage”, were permitted into the property. In addition, she rented out rooms to transients during her tenancy, all without permission, and placed locks on some of the doors to create additional units in the home.
Under Ontario law, a landlord is permitted to get into the rental unit by giving 24 hours notice to make repairs, show the property to potential buyers and view the state of repair. This does not mean the landlord can come every day or once a week. But an occasional inspection to determine if everything is in a good shape is acceptable.
When you hire a property manager, ask how often they will attend to inspect your property as part of their management duties. Also ask what checks they do to properly qualify any potential tenants. Use Google to see if their social media information is consistent with their tenancy application. Also make sure you document the condition of the unit when the tenant moves in so you can prove any damages that may occur during the tenancy.
By doing careful screening in advance and conducting regular visits to your property, you will avoid any unpleasant surprises when your tenant leaves.
Mark Weisleder is a Toronto real estate lawyer. Contact him at firstname.lastname@example.org