Applicable legislation

The Municipal Act, 2001 is provincial legislation in Ontario that confers upon municipalities the power to handle matters within their jurisdiction and allows them to function more efficiently. Section 398(2) of the Act provides municipalities the authority to add tenants' unpaid utility bill debts to a landowner's property tax. The section refers to "fees and charges imposed by the municipality upper-tier municipality or local board …" and is most commonly used in reference to unpaid hydro bills, but may also extend to other services for which the municipality collects fees.

While some municipalities have enacted by laws or in the case of the City of Toronto, the City of Toronto Act, 2006, explicitly stating the city's intention to add tenants' unpaid hydro bills onto landowner's property taxes, the authority for this is received from the Municipal Act, 2001 and not the by-law itself. Furthermore, not all municipalities have such by-laws in place, nor do they all engage in this practice. The city of Ajax, Oshawa, Clarington and Whitby in Durham Region do not have any such by law. However it is important to remember that the Municipal Act, 2001 does not require municipalities to enact any such by-law in order to carry out such a process.

While some municipalities have enacted by laws or in the case of the City of Toronto, the City of Toronto Act, 2006, explicitly stating the city's intention to add tenants' unpaid hydro bills onto landowner's property taxes, the authority for this is received from the Municipal Act, 2001 and not the by-law itself. Furthermore, not all municipalities have such by-laws in place, nor do they all engage in this practice. The city of Ajax, Oshawa, Clarington and Whitby in Durham Region do not have any such by law. However it is important to remember that the Municipal Act, 2001 does not require municipalities to enact any such by-law in order to carry out such a process.

What options are not available to Landlords?

While many landlords may be tempted to start collecting extra deposits from their perspective tenants to cover any unpaid hdyro bills, landlords must be cognizant of section 105(1) of the Residential Tenancies Act, which states that Landlords are not allowed to collect deposits for anything other than rent, in accordance with the Act.

What options are available to Landlords?

Possible options for landlords to safeguard against losses incurred for tenants unpaid bills:

1. Including utilities costs in the rental price

Once again, landlords need to be cognizant of provisions in the Residential Tenancies Act relating to Rent Increases. Rent increases for existing lease agreements are regulated by Part VII of the Residential Tenancies Act. A change of this nature is often better suited to new lease agreements.

2. Stringent credit checks

Performing more stringent credit checks on prospective clients and requesting information to verify employment, income or references may help prevent possible future losses. However, it is important to be mindful of tenants' privacy rights when requesting information to ensure you are compliant with the provisions of the Personal Information Protection and Electronic Data Act (PIPEDA).