Yesterday, Queen's Law joined its faculty partners across the Queen's University campus in announcing a Fall 2020 semester that will be largely remote, and similar announcements are being made at colleges and universities across Canada. Where does that leave students who are now not planning on returning to their campus homes in the fall - and what are their obligations to their leases (and landlords)?
Queen's Legal Aid director Blair Crew has been helping students with lease issues for years, and shares the ins and outs of the lease and the law, covering obligations, responsibilities, and two possible 'escape hatches' for students seeking to exit leases.
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Transcript:
00:00 Matt: Welcome to Fundamentals of Canadian Law. I'm Matt Shepherd, and we're gonna get right into it this week with Blair Crew, the Director of Queen's Legal Aid, talking about students and landlords, and leases, and the COVID-19 pandemic, and what students who are contemplating not returning to their institutions and their apartments in September can think about as vital components of leases and contracts in the law. It's a great conversation with Blair. If you are a Queen student and need help, I encourage you to reach out to Queen's Legal Aid, but maybe listen to this podcast first because it might answer a lot of questions you have before you get in touch with them. We're gonna pick it up with Blair right now. This podcast is produced at Queen's University, which is situated on traditional Anishinaabe and Haudenosaunee Territory. This podcast is brought to you by the Certificate in Law, Canada's only online certificate in law offered by a law school, and you can find out more at takelaw.ca.
01:00 Matt: My current understanding of the situation is, and this is pretty obvious, there's been a pandemic and a lot of students left campus early, like mid-March basically, classes were cancelled and students then started heading home. We actually circulated some pieces on social media closer to the end of March, just reminding people that even though there were certain exemptions in Ontario, a lot of things like eviction notices, they still were obliged to vacate their apartments on time. But now we're at a point where people are thinking about coming back. The University has announced that a significant portion of classes in the upcoming school year are going to be online, and I'm sure a lot of students are thinking about leases and specifically leases they may have signed for next year before they left campus, and now they're wondering if they don't come back, what happens?
01:55 Blair: Yeah, it's going to be a tough situation for students. And I'm aware, for example, that the Dean of the Faculty of Law just today sent out an email basically advising that, even if the faculty has a capacity to do some limited classes in the fall, that the students will have the option of being fully remote, if they want. So I anticipate that this is a question that's going to come up an awful lot. And, unfortunately, the law is not well designed to deal with global pandemics. There are some possible options that a student may have though, and I... One of the things that's interesting about law is that it's built on the backs of novel situations that no one's ever seen before, where lawyers and judges and litigants need to figure out what the solution is going to be to problems we've never seen before. I always think of... Law doesn't work in the world where everything goes fine, you only need lawyers and the law when there's been a problem that needs to be solved. So that's what we're dealing with here.
03:04 Matt: Right. I mean, one of the first words I learned when I took LAW 201 was the word precedent, which is that our law is based on a series of previous rulings and decisions that have been made, and I guess there's no clear precedent for this situation because thankfully pandemics don't happen all that often.
03:22 Blair: Yeah, it's true, and it hasn't even occurred to me yet to dig out the old law books from 1919 and see what sort of responses the law crafted to the Spanish influenza back then. That would be the last parallel that we've got, I don't doubt that some of these issues on a different scale came up back then. With respect to students that have signed leases, one thing that I will point out is there's two fundamental... Just basics first, really, there are two fundamental misunderstandings about the way that tenancies generally work in Ontario. The first of which is, I'm thinking of students, perhaps, that are going into third or fourth year, that are just continuing on a lease that they've already had. One of the misunderstandings there is that the students cannot be forced or required to have renewed their lease for another year. And if they did not do so, it automatically converts to a month-to-month lease that the students can get out of at any time on 60 days' notice. Now, this won't be the majority of the situations that we're thinking about, where someone has just signed a new lease. But I'm sure for a few students that were savvy that have continued on their lease, they may have now gained this right to terminate on 60 days' notice, and that would provide an escape hatch for them.
04:44 Matt: But that's really only for the students who have been in a place long enough that their first lease has basically expired, and it's transitioned to a month-to-month lease. And sometimes this can happen without people even kind of noticing that it's happened, right? They just keep paying the rent.
05:00 Blair: Yeah, it certainly can. Landlords... Because of the vast number of students in Kingston, landlords are always anxious to try and get that one year commitment. Everyone's trying to avoid that four-month gap where there are far less tenants in Kingston than at any other time. So the trick of landlords is to sometimes get students, even those returning to sign another year-to-year lease, and if they've been provided an incentive to do so, such as, "Sign for another year, and we will not increase your rent," then the courts have found those leases to be binding, notwithstanding that the student could have given 60 days' notice and had the lease automatically convert to a month-to-month.
05:45 Matt: Okay. So I feel like we've got a pretty good step one here, which is, make sure that you actually are in a lease and that you're not converted to a month-to-month situation that you might not be aware of yet.
05:57 Blair: Yes, and that certainly the step that I feel most confident about, that for those rare students that have that right, I can absolutely predict the outcome of that case. The second misunderstanding with the law that I talked about before though comes from that notion of 60 days' termination. Because you simply do not have the right to terminate a lease that you've signed for one year on 60 days, the 60 days only applies to a lease that is converted to month-to-month. So if a student has, for example, signed a new one-year lease, they're just coming out of residence, they signed a new one-year lease going from May 1st to April 30th, anticipating coming back in the fall, those students don't have the right to provide 60 days' notice and get out of that, and it could not be done without the consent of the landlord. And I suspect that few landlords are going to be concerned in to simply allow their non-returning student tenants to not show up in the fall and not pay them any rent for the course of the next 12 months.
07:00 Matt: Possibly a silly question, but does it matter when you sign that lease?
07:06 Blair: I think that in terms of one of the solutions that we're going to talk about shortly, I think that it might make a difference. If you signed the lease back in January or February, when we were just beginning to hear words like "coronavirus" and "COVID-19," then you've got a stronger argument that what happened was completely unforeseen and beyond your contemplation, so that maybe you could be excused from your lease. On the other hand, if you just signed the new lease after the emergency order went in place, I think the landlord has a much stronger basis to argue that this was something that you could have contemplated. You knew that this was one of the possibilities and took the risk of signing a new one-year lease in any event. So it may make a difference. So one of the Hail Mary passes that we're about to talk about.
08:00 Matt: Right. The 60 days thing only applies to people that aren't in a current lease and that are going month-to-month. Even if you signed your lease back in January, or even if you signed your lease yesterday, it's still a signed lease no matter when it was signed, and no matter when it takes effect, you've signed that contract, and the contract is now set in stone.
08:22 Blair: That's right. And to that aspect, it doesn't matter when you signed it. In other words, once you've signed it, you've committed yourself to honor your obligations for the next year, and if you want out at any point before the benefits of that contract were actually to start, you don't have a way out, you've committed yourself to the contractual term, even if you anticipated that you wouldn't start paying rent and receiving the benefits of the tenancy for a further four months, or whatever length of time that was.
08:52 Matt: Right. And I remember, we worked with Queen's Legal Aid a while back on some tenants' rights materials that are available on your website, are clearly not covering this issue because, as you said, COVID was barely on our radar when we worked on that project. But one of the principal elements of that project was just explaining tenants' rights to people, and that's when I learned that I thought our late February, early March launch for this was good. But a lot of Queen's students signed their leases in January or February. And I suspect that's true for a lot of universities across the country, that students are signing leases maybe five or six months out from when the lease is due to start.
09:32 Blair: Yeah, generally speaking, Kingston is a very competitive renters' market, particularly in the downtown student housing area, and as a result, there is an incentive for both landlords and tenants to get students under contract early. So landlords wanna know as early as possible whether they need to look for a new group of four, or five, or six students for the following year. And students, particularly if they've got a nicer place, wanna get in on it, so that they're not searching in the very competitive market when prices tend to go up either right before... Right at the end of April, or still, if you don't have anything in September and you're showing up, looking for it. So for those reasons, we see an awful lot of people that come in and are asking in January, or sometimes even December, about renewing their lease for the following year, and indeed, sometimes wondering what happens if I don't sign the new one-year lease that the landlord has offered. Can we just say, we always see those questions in December and January.
10:35 Matt: Right. And just to double back to a conversation we've had on this podcast earlier, and people can look this one up, it's from, I think, 2019. We talked a lot about leases and leasing, but just to touch on one point from that conversation again. Can we be a little clear about who's on the hook? If we have a bunch of roommates, it really matters who's actually signed the lease, whose signature is on that piece of paper is vitally important?
11:04 Blair: Yeah, I've always said that you wanna pick both your arrangements, but also your co-tenants very carefully. The standard arrangement that is seen most frequently, because it provides the strongest possible protection for a landlord, would be to get the group of four or six tenants to all sign one lease document together. And typically they will ask for co-signing signatures of parents of six of the students as well. Now the landlord has 12 possible individuals that they can come after for the entire amount of rent. So that if any one tenant goes, the remaining tenants are still responsible for that rent, and the landlord has their choice of going after any one of the signatories to the lease the entire amount of rent. So from the point of view with picking your co-tenants carefully, you wanna make sure that you are with reliable friends that you know who are going to stick it out through thick and thin, and that you're not going to have two of the six that are going to abandon you and stop paying rent for which you are responsible, when the going gets tough in January or February, and we're all miserable because of the cold weather outside.
12:14 Matt: I don't think we can put too fine a point on this. So just to reiterate, if five people sign a lease, A, B, C, D, and E, all of five people's names and signatures are on that lease. If A, B, and C don't pay, the landlords can still go after D and E for their share, right?
12:33 Blair: That's correct. Or the landlord could simply pick on D or pick on A, any one of them where the landlord figures that there is money to satisfy the amount that is owing. You are what we call joint and severally liable. That means, each of the tenants is responsible for the entire amount of rent, and it goes even farther than just rent. If D were to damage the property, say for example, by starting a fire or putting a hole in the wall after a party, that Kingston Finest didn't shut down, then you could go after any one of the tenants for the damage that any one of the other tenants had caused.
13:13 Matt: Just in passing, the mention of parties and Kingston's Finest, another great podcast that people can find in our archives featuring you, Blair. So if five people have cosigned a lease, they're not dividing the risk five ways. Each of them is liable for entire risk... I don't know if "risk" is the right word, but each of them is liable for the entire lease.
13:34 Blair: Absolutely. You can think of it as the risk or the responsibilities, but also the rights as well. They get an undivided interest in the whole house, and you are assuming potential responsibility for the entire amount. There is another form of tenancy arrangement that some landlords sign as well, which is more flexible for the tenants. That occurs where each of them signs their own lease. But even here, there can be some pitfalls. 'Cause there are two ways that this occurs. One of which is the landlord directly gets each of the five tenants to sign their own lease, the other signatures do not appear on the same document, the tenancies might not even last at the same time. The downside for renters of this is then it's the landlord's decision who your roommates are. But the upside for the tenant is that they are only responsible for their one-fifth share or whatever the apportionment was, as set out in the lease document. This is a form of tenancy called tenancy in common, which is used less frequently, but you still see it sometimes.
14:38 Matt: Okay. So when we were talking about this initially, we raised the subject, and I said, so what can a student do if they realize they're not coming back to Kingston and they wanna get out of a lease? And your basic take on it is, well, a contract is a contract is a contract, but there is this... It's like on the internet, there's one weird trick. And it may not work, but it's the only thing we can think of that might actually apply here.
15:07 Blair: And actually, since we first spoke, I've come up with two tricks.
15:11 Matt: Oh, two weird tricks? Excellent.
15:13 Blair: But both of them are contingent upon some decisions and actions by other people that a tenant cannot count on. So before we get to the one neat trick that you just referred to, there is something else that you can do, which is, there's a... If you will, a little quirk in Ontario tenancy law. What that quirk is, is that when a tenant has stopped paying rent and is in default, of course we want to give the landlords the right to evict the tenant, so they can get the non-paying tenant out of the premises, and then get a new tenant in there that presumably will be better at paying the rent. And Ontario law does say... It went to an appellate court in 2016, that when the landlord chooses to take the actions to start evicting those tenants, so, for example, by giving them a notice to terminate the tenancy for non-payment of rent, in that notice there will be a period specified. It's typically at least, it's gotta be at least 20 days, that the landlord... That the tenant has the right to make good on the rent, and that voids the notice.
16:24 Blair: But in that notice itself, it also gives tenants the options to vacate the premises in accordance with the notice. And the question became, what happens if the tenant leaves? Does that end the whole tenancy from the point of view of the obligation to pay rent? Or does it merely... Is it the student just giving up the right to continue to reside there, or the tenant giving up the right to reside there? And of course, the parties couldn't agree on what that meant, so it ended up going to a court case. It was decided by the small claims court, and ultimately upheld on appeal, that where a tenant vacates in accordance with that notice, within the 20-day period, it ends the obligation to pay rent and ends the tenancy. So the first Hail Mary pass that students have is that, if the landlord, perhaps is unaware of this decision, also is unaware that the Landlord and Tenant Board is not in the COVID crisis currently enforcing any evictions, if the landlord goes ahead and serves that notice to terminate a tenancy for 20 days, the student has the right to get out and end their obligations.
17:32 Matt: Right. The landlord must serve that notice.
17:36 Blair: And that's why I said that this trick depends on the actions of someone else. And to take it full circle back to our concept of four or six tenants on a lease together, that's only going to be effective if it's all four or all six, or however many tenants there are that choose to vacate together. If any one of them stays in the premises beyond the date specified in the notice, then the right to say, "Oh, we did in accordance with your instructions and we vacated, so our liability is ended," would now be gone. So again, it's a situation where you would need to coordinate very carefully with the other tenants, and as you mentioned, it's dependent on the landlord first giving you that notice.
18:17 Matt: Right. Why would the landlord give you that? I'm thinking of a lot of cases here where students just don't wanna show up. It's not a question of them vacating, like, they just aren't gonna move here in the first place, come September or come August. What would prompt a landlord to deliver that notice if the building's just sitting empty, and they're kind of passively collecting, theoretically collecting a debt they can collect on?
18:43 Blair: So it is the first day. Landlords are used to this from what you will of regular times. They rely on the notice because in a city like Kingston, they know that if they get the non-paying tenant out of there sooner, they can get a new paying tenant in on relatively short notice, and in an increasing rental market, they might even get a new tenant in that's prepared to pay even more. So instead of continuing to incur the risk that this tenant who has stopped paying will not pay you for two and then four and then six months... Students, particularly when they're first graduating, are a bad credit risk in terms of the landlords being able to ever actually collect that. So a landlord is faced with the dilemma of, "Do I incur only two months of rent that is owing to me by serving the notice to vacate the tenancy, and then needing to fill the place again on my own, or do I continue to let that liability rack up on this person. Who although I might get a judgment against him or her, will never actually be able to pay me that amount of money". That's why landlords will often go ahead and serve, it's called an N4 notice, will often serve the N4 notice to terminate a tenancy.
20:06 Matt: Okay, so that's thing one. Thing two feels a lot more of John Grisham-y, like it's like that... The scene in the movie where someone's going through old legal tomes and finds this obscure law and says, "Ah-ha, maybe this will work." Which is that?
20:21 Blair: So the second hail-Mary pass, and this one, we're now at the stage where it's most difficult for me to predict the outcome. This takes us back full circle to the fact that the law is going to have to craft novel answers for novel times. But that's the notion of frustration of contract. Basically, the doctrine of frustration says "that where the need for the benefit of any kind of contract has been removed by a completely unforeseen event". Sometimes you'll see the words "force majeure" used, sometimes you'll see the words "act of God" used, but the notion is, where a contract has become impossible to fulfill or impractical to fulfill for some completely unforeseen act of God or force majeure, that sometimes the law will step in and will relieve a party of the obligation to fulfill their side of the contract promise.
21:19 Blair: So in this case, it's a hail-Mary pass that students might be able to see say, "I signed this lease back in January anticipating that I would be in school for all of 2020-21. And then in March, with an emergency order came along, it told us we had to socially distance. Sometimes in May, all of a sudden we found out that our courses were going to be remote. I made the decision that I wouldn't return." That student may be able to argue as a defense once they're sued by a landlord that this effectively the contract was frustrated, that they couldn't gain the benefit of it, and therefore because of this unforeseen act of God that we call COVID-19, they should be relieved of the obligation to perform under the contract.
22:08 Matt: So clearly this hasn't been tested yet in courts? At least not...
22:12 Blair: No, I haven't seen any case yet where it's already gotten to the stage where in this particular pandemic somebody is looking at it. Typically when you're thinking of acts of God, it's what relieves a landlord from performance, for example, if the house burns down before the tenants ever show up. Theoretically the tenants could turn around and sue, saying, "Look, you promised to provide us a place to live, and I have incurred many more costs to find a new place at this late date." That's the kind of thing the landlord can say, "Look, there was a force majeure. Nobody anticipated it was going to happen. We should be relieved from performance." So too do students maybe have an argument here to say, "This was simply unforeseen." Now, and really what the courts are deciding when they decide this, is who should bear the liability or the risk or the lost income from an event that neither party foresaw at the time that they entered the contract, where the event was one of large significance and imposed by external forces that neither party could control.
23:18 Matt: Right. I think in tenancy law, there is a tendency to see... It's easy to find bad actors on both sides. It's not hard to go out there and find stories of terrible tenants, not hard to go out there and find stories of terrible landlords, and you tend to think of it as kind of an A versus B. But this is really... No one's the bad guy here, no one asked for a pandemic. So the courts are gonna have to decide who's left holding the ball.
23:43 Blair: Right, and it's much like people that are unfortunately losing their income right now, is that there is a loss to society and someone needs to bear that somewhere. So tenants are certainly going to say, "Why should I be required to come down to Kingston, and to fulfill and pay for a 12-month lease that I might not set foot in the house on a single day during my entire tenancy?" On the other hand, landlords can say, "We didn't anticipate this either. You signed a lease, we guaranteed the place for you. Well, why should we be the one to bear the loss of this?"
24:17 Blair: And so the courts are ultimately gonna be forced to make a societal choice on this. And again, I say this is a hail-Mary pass because it's only going to come up as a defense, almost as an excuse for, "Can you tell me why it is that you didn't pay your rent, and why it is that you felt you didn't need to perform your contractual obligations by paying the rent that you agreed to pay?" There is a slight chance that a court might see that a student just had no chance to defend against this, if you will, and excuse performance of the contract. But thereby all the courts will be doing is passing that loss onto the landlords. So it's very difficult to predict how such a case... And I'm confident that there will be several in every city in Ontario and across Canada and much of the world, is going to see decisions like this coming up as soon as the matters can be litigated, which of course cannot happen as long as the courts remain closed.
25:13 Matt: Right, and so it's kind of a parenthetical inside a parenthetical, because justice does not always move swiftly, and this is the sort of thing where I can only imagine there's gonna be... This is gonna be a huge decision, because let's loop back to the beginning of the conversation in precedent. As soon as there's a decision that the courts can turn to, it's gonna become the decision for everyone everywhere, unless the higher court decides that's not the decision that they're gonna go with. So this is...
25:43 Blair: That's correct. One of the things about frustration is that it's so fact-specific to the circumstances of the crisis, but also to the circumstances of the party. And it has occurred to me, for example, that typically frustration doesn't relieve a party where it's merely a question in delay of need for the contract. So, for example, if by next December this was all fairly nicely cleared up, and we think we could go back to something that look more like normal life, and therefore all the students were welcomed back with open arms to courses that were fully in-person again. A landlord's gonna be in a much better spot to say, "No, it's not truly frustration of contract, it's you didn't need the benefit for a short while, but you do now." So for that reason, I'm not even sure that we've got the tools yet to begin to guess how it might turn out. An awful lot of it is going to depend on what is the decision of faculties, to what extent is there going to be a mix of online and in-person courses in the fall, and most importantly, how long does this situation last for?
26:54 Matt: So this may not be a domino effect where one court decides on one case and it affect... It might be more of a city, sort of an institution to institution kind of decision process.
27:05 Blair: Yeah. And again, there's an awful lot of discretion to the judges even within the Precedential Stare Decisis System. There are some areas and this is an equitable remedy and they are far more discretionary than a judge. Where judges do have an ability to say, you know what, despite the fact that my colleague decided it this way, I'm not going to apply it this time because the facts here are a little bit different. The first student signed their lease in January, whereas the other one did so in March, and the first student was graduating in December whereas the second one needed the place in 2021 when in-person teaching resumed. So all of that to say, there is a large incentive, somebody has to bear this loss, and there is a large incentive for tenants, for students that feel that they won't be returning, to try and sit down now, and see if they can work it out with the landlord.
28:02 Blair: There is the possibility that there could be a compromise result, where, for example, both parties bear part of the loss and both walk away disgruntled, but not bearing the full amount of the loss. I'm also cognizant of what the Premier said yesterday with respect to commercial tendencies, where he referred to the commercial landlord, says "greedy landlords". And suggested to them that they better be prepared to be flexible or there could be a legislative solution to this. And students do represent a very engaged voting population that will continue to favor one party or the other for most of the rest of their lives. So it may very well be if there's too much litigation of this and too much of the student suffering that it might be that ultimately the government provides a legislative solution or perhaps even some kind of relief package to landlords or tenants something like the federal government has done for commercial leases on a federal basis.
29:02 Matt: What I'm hearing as the key takeaway here is while there are some fun ideas to kick around in terms of ways this might play out for students that don't return, and want to get out of their lease, ultimately the safest solution is to think about it, plan ahead and try to negotiate with your landlord, instead of trying to kind of wait it out and see what happens in the courts.
29:25 Blair: We know that the vast majority of legal disputes do end up resolving through settlement, and the primary feature of that is that the side know, each side knows exactly the risk that it's doing. The backlog of the courts when they do open again is going to be extensive and there's gonna be many disputes like this. So even from a student's point of view, they may be able to resist the landlord's demand for payment for a period of time, but nobody wants a lawsuit that could easily be in the tens of thousands of dollars hanging over their head for the next couple of years, and particularly where students are moving on from their time at Queens and starting their careers elsewhere. It's a bad time of life to be distracted. So there are both financial and practical upsides to trying to find some sort of solution to work it out.
30:20 Matt: Right. And I think this is as good a point to any to mention, this is not legal advice, and we are not representing anyone who's listening to this in any legal capacity. This is a conversation for entertainment purposes but it is absolutely not us offering actual legal advice to anyone who happens to be listening to this.
30:39 Blair: Yeah, I'm always concerned when I come and talk to you that somebody's going to interpret it that way. So I'm happy that you always throw out that reminder. Queen's Legal Aid is of course happy to sit down with any individual student and sort of assess what their situation is, but there is so much that is unknown here. The only thing I can say for certain is that there is risk on both sides and nobody could rely on anything that we said today is an absolute assurance of what the outcome is going to be, 'cause quite frankly I'm not sure at this stage.
31:11 Matt: Right. Well, thank you very much, Blair.
31:13 Blair: No, you're very welcome. I always enjoy it.
31:17 Matt: Thanks to Blair Crew. You can find out more about Queens Legal Aid at queenslawclinics.ca, the website of the Queen's Law Clinics in Kingston, Ontario. And you can find out more about the Certificate in Law, which sponsors this podcast at takelaw.ca. Our theme music is by Megan Hamilton. Thanks for listening.