Earlier this year, Openroom hosted a webinar with Leon Presner, a licensed paralegal and founder of Defend-it Legal Services Professional Corporation. Leon explained to our audience on “What to Do After Receiving a Court Order with Arrears Owing to Me?” This article highlights key information from the webinar to make it easily accessible for you! Subscribe to our newsletter to be informed of upcoming events by Openroom.

Understanding the Landlord and Tenant Board (LTB) and Small Claims Court

If you are a landlord that has had to deal with tenancy issues so bad you were starting to lose money and your mind, you likely know What Happens When You Go to the Ontario Landlord and Tenant Board and how long it takes.

The recent news about the tenant who owes almost $41,000 in rent to her landlord is just one of the many stories landlords go through. Watch the video below from Global News.

This is not an exception to the rule. The 2022-2023 Ontario Tribunals Report shows that the highest number of applications filed by landlords with the Landlord Tribunal Board is for non-payment of rent. You can learn more about non-payment of rent in A Landlord's Guide to the LTB's N4 - Notice to End a Tenancy Early for Non-payment of Rent.

Here’s where it gets tricky. An LTB order does not guarantee you will be paid what you are owed.

Unfortunately, even after you got through the trouble of getting an LTB court order, you still have to do additional work help you.

So, if your tenant is still not paying rent and any other costs (damages for example) owed to you, the landlord, your next step is actually to go to Small Claims Court. Learn how to do this by reading Small Claims Court of Ontario: Basics a Landlord Needs to Know. 

There are key differences between the Ontario Landlord and Tenant Board and the Ontario Small Claims Court.

Now, with a court order from Small Claims Court, you can finally enforce the decision in meaningful ways apart from asking the tenant to pay you what is owed. There are two ways you can recover arrears owing to you - through Garnishment and/or writ of seizure. In this article, we will explore garnishment in a little bit of detail.

Garnishment

Garnishment in Ontario is a legal process that allows creditors to collect debts by seizing a portion of a debtor's finances to repay the creditor. In this case, landlords who are yet to receive rent arrears even after tenants have evicted the unit can seek garnishment to recover amounts owed. There are two kinds of garnishment:

1. Wages: taking the money from the debtor’s wages, up to 20% of each paycheck
2. Bank account:  taking the money from the debtor’s bank account

How it works

The garnishment process  is similar with variations in the types of forms you will complete and file with the court.

It starts with filing for garnishment with the Small Claims Court in Ontario after you have obtained a judgment in the court. There is a series of forms, affidavits, and calculations that have to be meticulously and accurately completed.

Forms related to garnishment in Ontario include but are not limited to the following:

Form 8A: Affidavit of Service

Form 20E: Notice of Garnishment

Form 20E.1:Notice of Renewal of Garnishment

Form 20F: Garnishee's Statement

Form 20H: Notice of Examination

Form 20P:  Affidavit for Enforcement Request

Wage Garnishment

Wage garnishment involves collecting a portion of the tenant's earnings directly from their paycheck, up to 20% of their wages.  This method can be effective for recovering debts over time, especially if the tenant has steady employment. 

What you need

1. A court order from Small Claims Court
2. Notice of garnishment
3. Legal name of the tenant’s employment 
4. Legal address of the tenant’s place of employment 
5. The necessary affidavits, notices and forms as required by the court for the garnishment process.

Once you have served the place of employment, you now have five(5) days to serve your tenant. It is very important to adhere to these timelines to ensure the process of recovering arrears runs smoothly.  Once it is approved, the employer is legally required to withhold a specified amount from the tenant's paycheck and send it to you or the court. 

Bank Garnishment 

Bank garnishment is when amounts owed are recovered directly from the tenants’ bank account. This is a formal process carried out through your legal representative. With a court order and all the necessary forms and affidavits filled correctly, your paralegal or lawyer will communicate with your tenant’s bank. The bank verifies this paperwork and aggregates the tenant’s accounts to pay off what is owed to you.

Examination

Examination gets you the answers you need. Say you don’t know where your tenant works, where they bank, what their income is or any other information that you and your legal representative believe is important.  You can also call in an examination hearing when the tenant changes jobs or banks and you need this information to continue enforcing the garnishment.  You can also read about this in Small Claims Court of Ontario: Basics a Landlord Needs to Know.

Debt fully paid

If your tenant has paid all amounts due to you, hooray! You have one last piece of paperwork. You, the creditor, must serve a Notice of Termination of Garnishment [Form 20R] on the garnishee (employer or bank) and on the clerk of the court to complete the process.

Report to Credit Bureau

Garnishment didn’t work. The tenant is no longer working at the same company, or may not be working at all anymore. They may have moved and you do not know where they are. In some cases, they may not even have the funds in their bank account to settle the debt. 

In this case, you can report the bad debt through the credit bureaus. Openroom’s Rental Debt Ledger. The ledger not only reports rental debt to Equifax, it also tracks accrued interest and payments to help you file subsequent forms. This is useful in cases such as if you were to pursue the tenant through Small Claims Court after the LTB decision has been made.

To report bad debt to your tenant’s credit report through collections agencies, read A Landlord’s Guide to Understanding Collection Agencies.

Place a Lien on Tenant’s Assets

Placing a lien on a tenant's assets is another tool in your toolbox if you are still unable to recover finances through garnishment. It is one way to get your tenant’s attention to negotiate a payment plan or settle the debt altogether. 

This process involves registering a financing statement under the Personal Property Security Act (PPSA), which creates a lien on the tenant’s personal property. The PPSA provides a provincial database where such liens are recorded, ensuring public notice of the security interest. This process can be facilitated by lawyers or paralegals who specialize in securing liens. 

Here is what Leon Presner, licensed paralegal and founder of Defend-it Legal Services Professional Corporation has to say about it at a webinar with Openroom:

There are certain databases that keep track of your property, vehicles, etc. With an asset search from a skip tracer, you can find out all their vehicles, property, and mark them up with a lien. Following this, I can also post excerpts of the court order on databases including Equifax and TransUnion, and it comes up [on the tenant’s credit report] as a “derogatory”. So when anyone checks their credit, the LTB order is noted along with amounts owed.

And if they try to sell their vehicle [or any other asset], it is also attached to that order. What happens is, they end up calling my office and will negotiate to settle the debt through a payment plan or pay it off to remove the lien on the order.”
-Leon Presner, Founder of Defend-it Legal Services Professional Corporation

Concluding Thoughts

While the Landlord and Tenant Board (LTB) provides a platform for resolving disputes, it lacks enforcement power, necessitating further legal action through Small Claims Court to recover owed amounts. Tools such as garnishment and liens under the Personal Property Security Act (PPSA) offer landlords avenues to secure their financial interests. By understanding these processes and leveraging legal support, you can effectively manage arrears and protect their investments. 

If you have had to go through a garnishment process, we’d love to hear from you. Share your stories with us by emailing Openroom Canada

FAQs

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Leon Presner is a licensed paralegal and founder of Defend-it Legal Services Professional Corporation. He is also a retired member of the Durham Regional Police Service with over 27 years of experience in law enforcement, serving as a Detective Constable.

His legal services include defending, representing, advocating, and providing legal advice for clients in small claims court, employment law, human rights issues, landlord and tenant issues, disciplinary hearings and other provincial and federal tribunal matters, minor criminal matters (summary conviction) and statutes under the Provincial Offences Act (including traffic offences) and immigration law defence.

Leon continued with his policing experience and became a licensed Private Investigator. Defend-it Legal Services is also licensed Private Investigative Agency. PI Services includes process serving of court/legal documents, skip tracing, open-source Internet intelligence search techniques (OSINT), computer and internal investigations by his licenced Private Investigators.

Leon also has federal licencing and is authorized by the RCMP to conduct civil fingerprinting and background search services to the public as a CCRTIS Fingerprinting and Background Screening Officer.

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