The Residential Tenancies Act received Royal Ascension in Ontario on June 22, 2006 and will be proclaimed on January 31, 2007. Read some of the key points of this legislation that will affect the way you use your software package. Points from the ORHT's publication (accessible here) will be supplemented by comments from Rent Magic. By Russell Levy
Provisions contained in the legislation will encourage landlords to maintain their buildings and provide more remedies to tenants who are living in poorly maintained buildings.
With the added strength given to tenants when maintenance is not done and work orders not fulfilled in a timely fashion, it is more important than ever to have a system in place which will allow you to keep track of every work order submitted, and a log of every action taken on a work order.
For many, the data input of this is overwhelming in the best of situations, so you must ensure you have a system that is easy to use and ensures there is no duplicated work. Rent Magic will soon offer the ability to create, view and modify work orders through e-mail, by phone, or on any J2ME enabled device (cell phones, BlackBerries, PocketPCs and Palm Pilots).
Under the legislation, the annual rent increase guideline will be based on the Ontario Consumer Price Index (CPI). The CPI will be the rate of inflation for the year running from June to May. The guideline is announced each August.
The guideline will be more stable and never higher than inflation.
For most, the new legislation should not change the way you do business; it is just a guarantee that the previous, complicated calculation will be directly tied to the economy. As it was during the previous legislation, it is important to ensure that your software system is able to generate increase notices (N1s) for the increase amount. Rent Magic will print up increase notices for your whole building with one click, and even includes your signature to save you even more time.
Under the legislation, if a tenant is purposely causing wilful and/or excessive damage in a rental unit or building, a landlord will have more remedies to deal with this type of tenant. This will cut the eviction process approximately in half.
Remedies will include:
With the shorter period for evictions, it is now more important than ever to ensure that your software system can generate both Notices of Termination (N4, N5) and Eviction Notices (L1, L2). The old system usually took around two months to evict someone, with many artificial delays based on when forms are allowed to be submitted.
With the new legislation, many of those delays have been shortened or removed, and you will need to able to generate these notices in an automated fashion. In Rent Magic, have virtually every field pre-filled, and even includes your signature to save you even more time.
Under the legislation, the interest paid to tenants on last month’s rent deposit will be the same as the Consumer Price Index. This more closely reflects actual interest rates.
Landlords will be able to keep the interest earned on last month’s rent deposits to top up the last month’s rent as required.
Some systems have the interest on LMR to be fixed at 6%, the value from the old legislation; now that this percentage is variable year-to-year, it is essential that you are able to change it. Some systems are not even able to do this calculation automatically!
Rent Magic, on the other hand, adds the interest onto the tenant's account, and has the ability to credit the tenant's account for the difference between their rent and their LMR. It also produces a personalized letter to the tenant explaining exactly what happened, and even includes your signature to save you even more time.
The current maximum rent provision will be removed.
If you are currently using maximum rent calculations, you must ensure that you can disable this feature. Rent Magic, though it had this feature in previous versions, has removed it for its current version with a wizard to help clients adjust current tenant's rents accordingly.
The definition of tenant will be broadened. For example, if a tenant died, the spouse of the tenant will be granted the tenant’s rights.
This doesn't seem much different from the previous legislation; however, it is important to be able to be able to ensure your system allows you to change the name of the tenant, without losing any historical information; to put it mildly, it is not polite to send a letter to someone's deceased spouse!
Under the legislation, landlords will be able to give up to 3 months’ free rent to tenants. Landlords could use this as a way to attract new tenants, while still keeping the original rent in place.
With the legislation of a new way to attract tenants, your software package must be flexible enough to deal with exactly how you would like to create incentives. Rent Magic has the ability to create recurring or non-recurring bonus credits for any amount, so you can apply this credit however you want: you can spread the free rent over twelve months, give the first three months free, or give months 10, 11, and 12 free, or any combination of the above.
Landlords will not be allowed to require automatic debiting of bank accounts to pay rent.
If you currently collect all of your rent through Direct Deposit, you must ensure that your system will now be able to handle receiving payment through cheques and cash. Rent Magic easily handles cheque and cash deposits, as well as the ability to set up tenants for Direct Deposit.
Under the legislation, the rules for mobile homes and land lease communities will be fairer to tenants:
With all of the above changes, it's more important than ever to ensure that you are able to keep track of all of your data in an organized fashion. Rent Magic fully supports clients in the Mobile Home/Land Leasing industry, along with all of the nuances of their business.
Landlords must give new tenants a pamphlet with information on the responsibilities of landlords and tenants, the role of the Board and contact details.
With legislation regarding a landlord's responsibilities on move in, it may be a good time to move to an electronic checklist to ensure the move-in procedure is down properly by your staff, such as collecting any cheques, doing a visual inspection with the tenant, and give the new tenant the above-mentioned pamphlet. Rent Magic, using its J2ME client (for BlackBerries, phones, PocketPCs and Palm Pilots), gives you the ability to create these check lists in the office, and have your on-site staff member fill it out in real time. A copy of this checklist, along with any comments, would be electronically attached to the unit and tenant file for easy access.
Russell Levy, is the President of Rent Magic Software, a Toronto-based software company that develops cost-effective property management solutions that are powerful, yet easy to use. Their website is http://www.rentmagic.ca.