Court Weighs In On Property Manager’s Rights

by | May 26, 2014 | Tenant Screening

A recent appellate decision upheld a ruling that a property manager holding himself out as a legal representative is not allowed to appear before the courts or tribunals in Ontario.

The case clarifies new licensing rules allowing paralegals to represent landlords in legal disputes. The  Law Society of British Columbia recently approved in principle recommendations that would allow a similar paralegal licensing scheme there.

tenant screeningWhile the scope of this case is narrow, in its decision, the Court of Appeal for Ontario discusses the propriety of property managers appearing as “landlords” before tribunals within the province.

The man in question operated a business where he provided property management services to property owners for a flat monthly fee. Those services included appearances before the Landlord and Tenant Board. Ontario’s Law Society Act was amended to provide for the regulation of paralegals to practice law; however, the man has not obtained licensing as a paralegal.

After receiving two complaints, one for advertising his legal services, and another from a lawyer representing who represents tenants, the man was investigated for the unauthorized practice of law. He argued that he was not a representative, but rather the landlord, and therefore entitled to appear on his own behalf. At one point, the LTB Member found that the manager did not fall within the definition of “landlord” under the Residential Tenancies Act. There was no appeal of that decision.

The man continued to appear before the LTB, taking the position that he is a “landlord” under the Residential Tenancies Act, and therefore not required to undergo licensing as a paralegal. The Law Society took note of these appearances, and brought an application seeking a permanent order prohibiting what it held as the unauthorized practice of law.

The Superior Court granted the Law Society’s request, and ordered that the man could not represent others without first obtaining licensing. The order also prohibited the man from appearing on his own behalf as a property manager. The fact that the man was advertising legal services for a fee to third parties carried significant weight in that decision.

While the Court of Appeal upheld the injunction, it did determine that the order was too broad. It carved out an exception for the man to appear if he is the owner of the property, but stopped short of allowing him to appear if he is the property manager.

However, in a dissenting opinion, one Justice disagrees with that outcome, suggesting instead that the RTA contemplates situations where a property manager could be considered a party to the proceedings, and therefore entitled to appear without representation.

In those cases, the Justice refers to the RTA and finds the definition of “landlord” encompasses “other persons” who have rights to collect rent or offer occupancy to tenants. “I would conclude that the appellant has the statutory right to appear in person before the Board in cases in which the statute recognizes him as a “party”, whether he owns the subject property or not. I see in the statute no language that permits a differentiation between a landlord who is an “owner” and a person who otherwise meets the statute’s definition of “landlord” in terms of the right to appear before the Board. I would reword the injunction to permit the appellant to appear before the Board in cases in which the Board finds that he is a “landlord” within the meaning of the Residential Tenancies Act.”

The dissenting Justice continues to explain that in some cases, the property manager could be construed as the “lessor” on the lease.  A  tenant may have no idea who the legal owner of the property is because he or she deals solely with the property manager.  In such cases, the property manager is a “landlord” in the proceeding, according to the Justice’s reasoning.

The dissenting opinion also points to previous cases showing that it is not unusual for the LTB to make an order against a “landlord” who is a property manager. In cases where the property manager is the only “landlord” named in the proceeding, the order can be enforced only against the property manager and not the unknown owner who is not a party to the proceeding. In cases where both the owner and the property manager are named as “landlords”, it seems to be a common practice of the LTB to make orders against both.

The majority decision has been touted as a victory for paralegals, who are by law allowed to represent landlords in the province. While the licensing rules were designed to lower costs for landlords who face legal disputes with tenants, whether landlords spend their own time or employ paralegals, there is really no good way to hold down costs of legal disputes but to avoid them in the first place.

The best landlord strategy is to be picky about which tenants you choose to do business with. Careful tenant screening  policies can save weeks or months of litigation and the resulting costs, which may include long periods with no rent coming in.

It’s also wise to work closely with tenants throughout the lease term in order to solve problems as they arise and avoid hard feelings and miscommunication that can lead to legal disputes.

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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