By Matt Maurer
The biggest worries for most landlords is a bounced rent cheque, an unexpected major repair or damage to the property caused by the tenant. However, all of these concerns pale in comparison to receiving a summons indicating that the landlord has been charged with provincial or criminal offences.
Although there are a variety of offences that a landlord could be charged with, the most likely to occur is a charge under the provincial fire code or related statute. Many landlords might assume that a fire code offence is not a serious concern, but the penalties can be steep.
In Ontario, for example, an individual can be charged up to $50,000 per count
. If the owner is a corporation then the fines can be up to $100,000 against the corporation and
$50,000 against individual officers and directors of the company per count
Although rare, both individuals and officers and directors can be imprisoned for fire code offences. Compounding the severity of the penalties is the fact that, in most cases, multiple infractions are discovered at once. I have seen many cases where the landlord is looking at a cumulative fine of $500,000 or more.
So, what do landlords need to know to protect themselves against these types of charges?
1. How can I protect myself?
First and foremost, landlords should become familiar with what the law requires of them. This will depend on the type of unit they own. A legal rooming house, for example, will have different requirements than a one-bedroom condominium, which will in turn have different requirements than an apartment building. When the property is acquired the landlord should ensure that it is legally compliant.
Additionally, investors should be inspecting the parts of the property that can lead to charges whenever they are at the property for any reason, and at a minimum on a bi-annual basis. It only takes 30 seconds to make sure that hallway doors are properly latching, exits are clear of debris and smoke alarms are properly functioning. Failure to stay on top of the small things can lead to a massive fine which can erase years of profit from the landlord’s bank account.
2. Assume the property will at some point be subject to an inspection
Anything that might put the fire department in the vicinity of the property could lead to an inspection. If there is a fire, big or small, at your property you can safely assume that your property is going to be inspected afterwards. Although one could argue that the chance of a fire is rare, it is still a possibility and an event that is completely outside of the landlord’s control.
Additionally, a fire in the property is not a prerequisite to an inspection. For example, perhaps an accident occurs at the property and something catches the eye of EMS or the fire department while they are on site. A landlord has no way of protecting themselves from being inspected, so the best protection is to operate under the assumption that an inspection could occur at any time, because it can.
3. What to do If you get charged
Contact a lawyer as soon as possible. While this may sound obvious, many landlords will delay contacting counsel either because they are unsure of what to do or, worse yet, think that they can rectify the situation on their own.
Many offences are extremely difficult to defend given their nature. For example, there is almost no defence available for failing to have functioning smoke alarms in the property. In cases where there is no defence, the landlord will need to go into damage control as quickly as possible in order to mitigate the ultimate penalty that they will have to pay.
Most prosecutors (with whom you may ultimately try to arrange a plea) and adjudicators (who have the final say on the nature of the punishment) are looking to see that the problems have been rectified and in a timely fashion. Even though the offence has already been committed, time is of the essence and getting prompt legal advice is imperative.
In addition to rectifying the problems, prosecutors and adjudicators will want to see how diligent the landlord was in maintaining and inspecting the property. As stated above, regular inspections can be a life-saver for the investor. Even in cases where the tenant is directly responsible for the offence (for example, if they remove a smoke alarm, or improperly prop open stairwell doors) fault will still rest on the landlord’s shoulders unless they can demonstrate that the problems occurred even in the face of their diligent inspections and property management.
Most investors pay no mind to the thought of being charged with an offence until after the charges have been laid, by which time most of the damage has been done. While it is understandable to believe that it could never happen to you, the reality is that it certainly could. Given that the consequences are so severe, it is a risk that no prudent investor should take.
Matt Maurer practices commercial litigation at Minden Gross LLP in Toronto. He regularly advises property investors and real estate professionals in all aspects of their businesses and specializes in dispute resolution. He can be contacted at 416-369-4322 or firstname.lastname@example.org
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