Court Clears the Way for Landlord Licensing Fees, Fines

by | Nov 7, 2011 | Rental Property Management Tips

Landlords Fail to Overturn Controversial Rental Regulation

Landlords in London, Ontario were dealt a blow recently when a Superior Court there handed down a ruling upholding a rental licensing bylaw they say was a veiled attempt to limit student rentals, unnecessarily drives up their costs, and places them at a disadvantage in evicting tenants.

This decision could prompt more cities to implement landlord licensing rules.

The London bylaw, passed in 2009, requires landlords in smaller rentals to register with the city, and to submit to a building inspection. Until building code violations and other conditions listed by the Licence Manager are resolved, the property cannot be used as a rental.

Violations of the rules can result in fines ranging from $25,000 to $100,000.

Last fall, landlords filed a lawsuit against the city, which the court deemed “a direct frontal attack on the underlying validity and legality of the by-law.”

The law has met with significant opposition from landlords, including the London Property Management Association, which filed the lawsuit. They challenged it in part because they say the city ignored the “overwhelming majority of public input and submissions opposed to the Licensing By-Law and the contents of the two petitions containing over 9,000 signatures of tenants opposed” to it as well.

Two landlords submitted affidavits to the court detailing their efforts to obtain licences. They were told to either shut down or remove units when the Licence Manager asserted it was an illegal use. Both of these landlords have hired legal counsel and provided evidence to disprove the contention that the use of the properties is illegal.

According to the Association, the city of London has not refused any licences, but instead has placed 842 of 2,617 applications into “indefinite abeyance” since the law can into effect on March 1, 2010.

Another contention is that the rules violate the Human Rights Code. In fact, the Ontario Human Rights Commission has been outspoken about similar measures in other cities which seek to address student housing problems. For instance, in a letter to the Mayor of the City of North Bay, the Human Rights Minister suggests that city rules which include occupancy restrictions or “bedroom caps”, designed to discourage overcrowding in student rentals, also adversely affect families, particularly those with small children.

Although the city of London did not specifically direct its rules towards student housing but rather to “health and safety”, the law does provide the authority to “ensure that the residential rental premises do not create a nuisance to the surrounding properties and neighbourhood and to protect the residential amenity, character and stability of residential areas.” Landlords say this shows an ulterior motive–clamping down on student rentals, and claim the city acted in bad faith. Therefore, the Justice dedicated  a considerable amount of time discussing whether students are, as a group, protected from discrimination.

The Justice, referring to previous cases in the Province, determined that the status of student is not a physical characteristic, nor is it continuous enough to be considered for protection in its own right. However, the status of student may affect marital status, age or receipt of government assistance, and therefore, city bylaws will need to take into account the impact of such rental legislation of the group of students as a whole.

Here, however, the bylaw passed is city-wide, and applies to a “type of legal dwelling” as opposed to regulating a group of persons. For that reason, the Justice determined that the London rules are not discriminatory.

The Justice left open the question of who will pay for the costs of the litigation.

Meanwhile, the London Property Management Association has filed an appeal.

This post is provided by Tenant Verification Service, Inc., helping landlords reduce the risks of renting with fraud prevention tools that include Tenant Screening, Tenant Background Checks, (U.S. and Canada), as well as Criminal Background Checks, and Eviction Reports (U.S. only).

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Disclaimer: The information provided in this post in not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.

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