COVID-19 and Paying Your Rent

What Nova Scotia’s Announced Relief Measures mean for Tenants and Landlords

COVID-19 and Nova Scotia’s state of emergency will continue to cause significant changes to people’s employment and income, and with those changes, to people’s ability to pay their rent. In an effort to help Nova Scotians struggling with job loss or reduced income, the provincial government has announced measures they hope will help tenants through what will no doubt be a very difficult time, notably announcing on March 19, 2020 that tenants can’t be evicted for the next three months for failure to pay rent if their income has been impacted by COVID-19. But what does this measure actually mean for tenants? And beyond that, what does it mean for landlords?

Normal Process

Before diving into the provincial government’s relief measures, it would be helpful to explain what the normal processes are in residential tenancies situations. The Residential Tenancies Act states that if a tenant in a year-to-year, month-to-month, or fixed term lease does not pay their rent on the due date set out in the lease, the landlord can serve the tenant with an eviction notice (also known under the Act as a Notice to Quit) if the rent is not paid in full within 15 days of the due date. The tenant will have a few options if they’re served with a Notice to Quit:

• Pay the rent in full within 15 days of receiving the Notice (so within 30 days of the original due date). If the rent is paid, the Notice to Quit must be withdrawn and the tenant can stay in the unit;
• Dispute the Notice to Quit by filing the proper form with the director of residential tenancies. A hearing will be held by teleconference with the landlord, tenant, and a residential tenancies officer, who will decide whether to allow the eviction or not; or
• Accept the Notice to Quit, and leave the unit.

In all cases, the tenant will still have to pay any unpaid rent to their landlord, even if they leave the unit, unless a residential tenancies officer orders otherwise.

Response to COVID-19

But now the normal processes don’t apply, because these are not normal times. On March 19, 2020 the provincial government announced that no tenant can be evicted if their income has been impacted by COVID-19 for the next three months. But how does this new rule work in practice for both sides of the residential tenancies equation?

Tenants

For tenants, the key takeaway from the government’s announcement is that your income must have been impacted by COVID-19 in order for you to qualify for this eviction protection. If you fail to pay your rent, but your income hasn’t been impacted by COVID-19, then, theoretically at least, you can still be evicted. That being said, Access Nova Scotia, where a landlord must file their Notice to Quit, is not operating at this time so it is not clear how an eviction process could be formally started at the moment.

Another thing to keep in mind is that the government has not announced what happens after the three month period has ended. The government has not suggested that if you are unable to pay your rent, your landlord must forgive any missed rent payments. There is nothing even saying that the landlord has to waive interest fees on late rent payments if you agreed to late penalties in your lease (note that the law states late penalties cannot be more that one percent of your monthly rent, even if your lease says something higher). This means that if you have been unable to pay your rent for those three months due to COVID-19 related circumstances, it appears as though, without any further direction from the provincial government, if you don’t catch up on those payments immediately after the expiration of this timeline, the normal eviction processes will resume, and you will have essentially 30 days to pay four months’ of rent.

Also note that if your lease assigns you responsibility for any utilities, like heat, electricity, or water, the government’s measures regarding evictions do not apply to those payments. The utility you deal with may have its own measures in place, but do not automatically assume that you will be given a three month payment deferral from your utility provider if you’ve lost your job due to COVID-19.

Landlords

These new measures may provide some temporary relief to tenants, but, without rental payments to provide cash flow, some residential landlords may run into serious difficulties in the coming months. Landlords of commercial units have been given assurance by the provincial government that if they choose to defer rent from their commercial tenants for three months because those tenants are unable to open due to the Health Protection Act order, then they can be eligible for up to $15,000 in government payments per tenant if the landlord cannot recover the deferred rent. As of writing, no similar assurance has been provided for residential landlords.

Of course, the main issue for residential landlords facing a slew of tenants not paying rent for (at least) three months is that they themselves will not be able to cover their own expenses, including mortgage payments. Since the usual methods for relief (eviction, order for repayment of rental arrears, and finding a new tenant) are not going to be available for some time, you may have difficulty coming up with the money to pay your expenses on the rental property. There is also no guarantee you will recover any lost rent after the three month period is over.

The federal government has announced it has requested that major banks agree to defer mortgage payments for up to six months, but the banks have stated that this will only be available to those who qualify (the criteria of which seems to be still up in the air), and that interest will be added to missed payments, so you may end up with higher monthly costs that you didn’t expect when you set your monthly rent rate with your tenants. Because if these downsides, this route may be an option of last resort for landlords.

So what can you if you find yourself unable to pay rent or unable to collect rent due to COVID-19? At this point, talkingp to your landlord or tenants about the situation, and coming to an agreement about how the next few months will progress may help smooth out the process. You may also want to consider whether you qualify for any of the interest-free or government-guaranteed loans available to small and medium sized enterprises through the federal government. The provincial government may provide more relief in the coming weeks and months, but at this point nothing is certain.

This article is intended for information purposes only and does not constitute legal advice or a legal opinion. If you require further information or legal advice, Patterson Law would be pleased to discuss the issues addressed in this publication.