Cash for keys: Some tenants who face eviction demand thousands from landlords amid tribunal delays
Pema Zela says she considered bankruptcy after her tenant refused to leave the home she owns.
When Zela and her husband needed to move back into the home in Toronto’s east end, she says the tenant told them he would not leave even though his lease was up, stopped paying rent and soon tried to “make a deal” with them, asking for $50,000 to vacate the property.
“It was unimaginable to me when he first said ‘No,’ he won’t leave. I thought: ‘This is my house. How can someone do this?'” Zela said.
“I had a pain in my stomach,” she said.
“When he asked me for money I thought: ‘How dare you?”
The situation Zela and her husband found themselves in is called cash for keys and it’s legal, with a tenant seeking or a landlord offering money for a tenant to leave peacefully and at an agreed-upon time.
But paralegals and landlords say some tenants are taking advantage of long delays at the Ontario Landlord and Tenant Board, which resolves disputes between landlords and tenants, and are asking for higher cash-for-keys demands than ever before.
Pema Zela is a small landlord who said she can’t believe the long delays at the Landlord and Tenant Board have been allowed to happen in Canada.
In 2020, Zela and her husband decided to rent out the house and live with family members in order to save money while Zela finished a master’s program.
They rented out the three-bedroom house for $2,100 a month on a two-year lease.
In early 2022, they needed to move back because her program was finished and they could no longer live with family. Zela said they waited until the lease was up and gave the required 60 days’ notice for the tenant to vacate.
‘Just trying to survive’
“It’s just so wrong this could happen and it has felt like there is no accountability. We are hard-working people just trying to survive,” Zela said.
After the tenant refused to vacate, Zela filed with the Landlord and Tenant Board seeking an order of eviction. That was in June 2022, but Zela soon found out she could be waiting up to a year to get a hearing.
In the meantime, she says, her tenant stopped paying rent and utilities. While he has since moved out, and she didn’t end up paying the amount he requested, she said he now owes her more than $40,000.
The tenant declined to comment.
Geordie Dent, a tenant advocate and executive director of the Federation of Metro Tenants’ Association in Toronto, said there are “absolutely” more tenants using delays at the Landlord and Tenant Board as leverage to get better cash deals.
But he also said that rents have never been higher in Toronto, so if a tenant is forced to move, they should be fairly compensated considering today’s rental market.
Average rents went up across the country another 11 per cent in 2023, with Toronto remaining one of the most expensive cities in the country. According to Rentals.ca, the average one-bedroom apartment costs $2,594 a month.
As a tenant, Dent has also found himself through no choice of his own having to vacate where he was living.
“I was asked to leave the property and it was hell. It is always hell when you get evicted. The uncertainty of not knowing what’s going to happen, it was disheartening, it was stressful and it was expensive.”
Dent said he had only lived in his unit for one year before his landlord said he needed to move in.
“All me and most tenants are looking for is stability, to build roots and then being told you have to move is extremely difficult. I had to pay more rent, there are a lot of costs associated with moving.”
Dent said there are rights that come with the rent tenants pay.
“A lot of these people, myself included, are paying tens of thousands of dollars for a place to live. When you pay that money, it doesn’t just go into the ether.”
Mortgage costs mounted
Zela, however, said the situation she found herself in caused her to consider bankruptcy or even sell the home as the costs of carrying the mortgage from her home without rent mounted and her family was forced to rent an apartment of their own while waiting for a hearing.
“There was nowhere to go to find justice. I felt isolated, but I also could not believe this could happen in Canada,” she said.
No one can say for sure how many cash-for-keys deals happen because they are settled outside a tribunal.
But some paralegals say their business is booming, with demands for the deals skyrocketing in the past several years, with asks ranging from two months’ rent and moving costs to tens of thousands of dollars.
Paralegals at Stonegate Legal Services told CBC News that cash-for-keys demands have increased substantially in recent years.
Bita Di Lisi, a paralegal at Stonegate Legal Services in Toronto who works exclusively with landlords in Ontario, said that in 2020, her firm dealt with about 400 cash-for-keys deals. In 2023, it handled more than 1,000.
“We have some tenants who ask for over $100,000. Some tenants are asking for the landlord to buy a plot of land for them,” Di Lisi said.
“We have other tenants who are asking for the landlord to purchase a property for them.”
Other paralegals said they are also seeing an increase in demands and much higher asks from tenants than ever before.
“It’s very unfortunate that the [Landlord and Tenant] board can’t do what it is supposed to do in a timely manner and so often people feel like they have no choice but to pay,” Di Lisi said.
‘Excruciating’ wait times at tribunal
In the spring of 2023, the office of Ontario’s ombudsman published a report that described wait times at the Landlord and Tenant Board as “excruciating” and called for an overhaul of the board. The report noted a backlog of more than 38,000 cases. Ninety per cent of those were for landlords waiting for a hearing.
This situation is another example of fallout happening within Canada’s housing crisis. Some tenant advocates say this shift in power is long overdue.
Geordie Dent said small landlords are taking a risk when they buy property to rent, and added that he thinks tenants deserve more rights.
“Landlords have been using their rights, they’ve had a good deal for decades. Through the entire rental crisis that we’re going through, landlords have been, you know, opening the caviar and popping the champagne,” Dent said.
“Tenants are just using this newfound power. They have to just get a few crumbs from landlords that are doing very well.”
Dent said the tenants’ association is sometimes a first stop for tenants who are being evicted and the No. 1 issue he hears about are “own use” evictions, when landlords say they want to move back in or have a family member live there.
But he believes these claims are often used to evict tenants in order to raise rents.
According to data from the Landlord and Tenant Board, “own use” or N12 applications were up 77 per cent as of October 2023, based on a comparison of the first nine months of 2022 and 2023.
“If you look at the overall market today, landlords never had it better. It is a golden age of profit, increased equities in their home, tax cuts and tax credits,” Dent said.
Landlord Norma Da Silva also found herself in a cash-for-keys situation. She says her tenant requested a “huge” amount to leave the loft she had been renting to him in Toronto’s Queen West neighbourhood.
It was a second property for Da Silva, a teacher, and she says she needed to sell it because rising interest rates meant she could no longer afford to cover its costs.
She received an offer to buy the loft, and says she gave the tenant 60 days’ notice. She also offered him a sum of money to leave. In Ontario, a landlord must pay one month’s rent. She would not disclose financial details, but says her initial offer was more than one month’s rent.
‘I felt like it was a nightmare’
As the closing date drew nearer, she said, her tenant told he would not leave unless she paid him a higher amount — one she says she could not pay — and the sale could not close on time.
“I felt like it was a nightmare. Every aspect of my life started to unravel,” Da Silva said.
Da Silva did not want to disclose her tenant’s name or information due to the terms of the settlement and advice from her paralegal.
Da Silva said she anxiously awaited a hearing with the Landlord and Tenant Board, but ultimately chose to settle in a cash-for-keys deal with her tenant. She was not willing to disclose the terms of the settlement.
“It was just shocking to know this is happening, the inability of the Landlord and Tenant Board to tackle this and to get on schedule,” Da Silva said.
“It feels like the Wild West.”
Experts say delays are happening at landlord and tenant boards across the country and are a contributing factor to the spike in cash-for-keys deals.
“We started noticing it [the trend] in Quebec first, but now you can see it of course in British Columbia and Ontario also,” said David Wachsmuth, the Canadian research chair in urban governance at McGill University in Montreal.
Canada is experiencing a rise in ‘cash-for-keys’ deals between tenants and landlords. The National’s Angela Hennessy breaks down what these are, why it’s happening and what those involved are saying.
But those delays, as well as the overall increased cost of living, are negatively impacting landlords and tenants.
Wachsmuth said as rents continue to skyrocket across the country, tenants should be asking for more money.
“You are going to see more tenants are going to say: ‘Hey, if I’m going to leave and find a more expensive place, I’m going to make sure I can get every penny I can get’ and they realize they have more leverage than ever before,” he said.
Delays expected to go down, board says
CBC reached out to the Landlord and Tenant Board for comment, and it said some application wait times have started to decrease and it is confident wait times will continue to go down in the coming year.
“To support backlog reduction, 35 full-time and 27 part-time adjudicators have been appointed to LTB since May 2023. As of Jan. 1, 2024, the LTB has 70 full-time and 58 part-time adjudicators,” they said.
Some small landlords say they’re facing outrageous demands from tenants to hand back the keys. CBC’s Ioanna Roumeliotis breaks down what’s behind the rise in ‘cash for keys’ deals and why advocates say it’s time tenants got the upper hand.
After requesting a hearing in June 2022 using an N12 application for “own use,” Zela says she got a hearing at the Landlord and Tenant Board in March 2023, but that her hearing was adjourned until October, 2023.
In the meantime — at the suggestion of her paralegal — she says she had also put through a second application at the board for non-payment of rent. She says that was in November 2022, and that she received a hearing date for application in May 2023. Nearly four months later — in September 2023 — she says the LTB issued a voidable eviction order and the tenant has now moved out.
But Zela says the former tenant owes tens of thousands of dollars and she isn’t sure she will ever see the money.
“I feel the system is out of order because if our system worked, it would not give people like him room to play the game. And because they know there’s no accountability, they can get away with it.”
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