How to Garnish a Tenant's Wages in Ontario After an LTB Order

Introduction & Today’s Topic

Hey everybody, welcome to another episode of the CRESI Ontario Landlord Series podcast, where we talk about different topics to help Ontario landlords understand processes, situations, and options, and how they can move forward in different situations. Today we’re speaking with a guest we’ve had on before, Gibrian Malicki-Sanchez from Malicki Sanchez Law in Mississauga. They’re great with real estate law and cover all facets of estates and wills.

They also handle collection of arrears, rent, or other monies owed by a tenant. So today, we’re going to talk about the process and procedures for collecting our funds after we’ve gone to the board, received our order, and done everything properly beforehand. Now that you’re at this point, with that order in hand, we’ll bring Gibrian in to tell us what happens next and how we go through this.

So welcome back, Gibrian. How are you doing today?

Meet Our Legal Expert Gibrian

It’s great to be back. Thanks for having me, Kevin. I’m very excited to talk about this topic you brought me on to discuss. Sadly, it’s something people are always curious about.

Hopefully they never get into the situation where they have to reach this point, but it’s inevitable that landlords do have to collect rent, whether after an eviction for non-payment, unpaid utilities, or whatever else — a landlord is owed money after a tenancy has been terminated. So, what do we do once we have that order from the LTB?

Why Landlords Need Collection Options

Right, so I do a lot of litigation at my firm at the landlord and tenant level, Small Claims Court level, and higher levels of court as well. I’ve got experience doing everything from beginning to end. We like landlords — I represent both landlords and tenants.

I’m a landlord myself, and we know why landlords invest: to make some money. And landlords also understand the risk of investing, because they’re dealing with other people in a contractual relationship.

So when the other party breaches the contract and ends up owing the landlord money, landlords rely on the justice system to remedy the situation through enforceable orders to collect what’s owed. Today I’m going to talk about what enforcing an order looks like from the perspective of Ontario landlords — specifically Landlord and Tenant Board orders where the tenant owes money, whether for non-payment of rent or property damage. These LTB orders that set out money owed include how much was awarded based on the application, plus the application fee.

plus interest that accrues on the non-payment. The Landlord and Tenant Board doesn’t actually have jurisdiction to enforce monetary orders — it can handle evictions, but jurisdiction to collect on monetary orders falls under Small Claims Court.

From LTB Order to Enforcement: First Steps

That’s why the highest amount a landlord can collect from a tenant is $35,000 — that’s the jurisdictional limit of Small Claims Court. Hopefully no landlords are owed more than that, because they won’t get an enforceable order for anything above that amount. Getting the order at the Landlord and Tenant Board is the first part — it’s the easy part.

Now the heavy lifting begins. The first thing you want to do once you get the LTB order is file it at Small Claims Court with a form called the Certificate of Judgment. That transfers in all the financial information from the LTB order, and they give you back a judgment with a Small Claims Court file number and the important Small Claims Court seal on it. Now you can take that order and enforce it.

Small Claims Court offers four enforcement options. The first is garnishment. The second is writ of seizure and sale of personal property. The third is writ of seizure and sale of land.

And the fourth is writ of delivery. Practically, the only one landlords would use is garnishment, so I’m going to focus on that.

Four Legal Enforcement Options

I actually do have a couple of tenants who are landlords elsewhere — they live in an area they can’t afford, so they rent where they live and own a rental property elsewhere. Technically, if they fell behind, you could pursue selling their other property, but that’s a rare case, where a landlord elsewhere would fall behind on rent to the point where it gets to that.

You’re probably right that the main option we’d use in this type of instance is garnishment. In most situations, tenants aren’t landowners, but there are a number who are.

And that’s great, because it gives you another enforcement option. If you know where their property is, you can file a writ of seizure and sale of land in that jurisdiction — you register an execution against that person in the land registry office. Any time a lawyer does a title search, which they need to do when that person tries to refinance or sell the property, the lender or buyer will require the vendor — the tenant who owns that property — to pay off that execution at the time of registration or sale.

There’s a whole process there we could talk about for 15 minutes on another day, but the most common one is garnishment.

Garnishment Explained: Wages & Bank Accounts

So what is garnishment? It means you serve a notice of garnishment on somebody who owes the debtor money. In this case, the debtor is the tenant who owes you money.

They become the judgment debtor. Most often, that’s the tenant’s employer or bank — those are the two most common people who owe the debtor money, so you can garnish from them.

To complete the process, you fill in a couple of forms — the Affidavit of Enforcement Request and the Notice of Garnishment — and file them at court. Once approved, you serve them on the employer with a garnishee’s statement return. If you serve it on the bank, they’ll pay the money into court, and the court holds it for 30 days before paying it out pro rata to anyone who registered a garnishment at the court, same as you did.

If you serve it on the employer, they’ll garnish the debtor’s salary at a rate of 20% per paycheck. Is there a set limit on how much you can garnish? There you go — one-fifth, 20%.

And another consideration: what if the tenant only has a jointly owned bank account with someone else? Then you can only garnish up to 50% of the amount in it.

Joint Accounts & Collection Strategy

Right, up to half of what’s in their bank account. So you want to do all this without tipping off the debtor so they don’t pull out all their money.

You’ve got to be savvy about it. They’d probably know this is coming anyway. When you’re thinking about wage garnishment, that’s probably going to mean getting 20% of their paycheck until they’re paid off. I spoke to a landlord the other day who said, after evicting somebody following six months of non-paid rent and thousands owed, they’re now collecting $300 a month.

And they’ve been collecting it for months, which I think is great, that they were able to get into that situation. As long as you have your order from the board, the next step is just figuring out how you’re going to get the money back.

When to Hire a Professional

Yeah, so long as you fill in your forms correctly. It’s advisable to get a legal professional experienced in this to complete the forms for you, because they can be a little technical, especially the calculations, and any error gets sent back to you, which can be frustrating. Might as well get it done right the first time, and you save yourself time — we handle all the serving and filing, so you don’t have to worry about it.

It’s all backend work, which is good. It is an expense for landlords, to bring someone on for this rather than trying to go at it themselves, which a lot of landlords try to do to fix a situation where they’re losing money without spending more money.

They keep thinking, “I’ve already lost this much, I don’t want to spend more.” But like in everything, what matters is what you’re going to net. And the worst thing is to lose more money and take longer to get through everything by trying to do it yourself. Professionals are always best to use, and their fees are well worth it, I can assure you.

The Cost-Benefit Analysis of Collection

That’s right. And knowing what the end result looks like really helps at the beginning, because you don’t want to throw good money after bad, and you want to know what kind of person you’re dealing with.

If they’re an employee, that’s helpful. If they make money another way, that can be more challenging — which is why getting all this information upfront in the tenant application is also very helpful. Who’s their employer?

What’s their contact information? Where do they bank? What’s the institution number? What’s their bank account number, so you have this information ready if you need to garnish?

I’d also suggest being careful of fraud — there are some professional tenants out there who will forge these forms or provide false information.

Screening Red Flags & Preventing Fraud

That’s why the screening process at the start matters so much — going through everything to make sure what’s on the application is correct and truthful. It’s an important part of screening tenants.

I had a buddy make me a fake pay stub once saying I work for the Toronto Blue Jays and make $800,000 a year, plus an employer letter. Whenever a tenant asks why I need certain information, I tell them this is why we double-check everything — I don’t actually work for the Blue Jays, but it sure looks like I do. You can be a little tongue-in-cheek with them so they understand what’s going on without it feeling too serious, but serious enough that they know you’ll be checking.

this information. Yes, and using public databases, even checking for any Landlord and Tenant Board judgments against them, will help tip you off if this person is a professional tenant taking advantage of landlords with fake information. There are a few tools out there now for this, which is great — public sites.

I’ll throw in a plug for Front Lobby — that’s the system we use. They’re great; they screen everything, criminal checks, Equifax, everything, so we can see who it is.

We should still be looking into all of this, because once a tenant is in, getting them out if they’re a poor tenant isn’t easy. But back to the topic — collecting our funds and garnishing wages.

“Judgment Proof” Tenants & When to Walk Away

You want to make sure that before you proceed with enforcement, the debtor isn’t judgment proof. Somebody is judgment proof if they don’t have a source of income that could be garnished, or assets or a bank account that can be seized. Otherwise, you go through this entire process and come out with nothing — you can’t take blood from a stone.

If you attempt to garnish a bank account and there’s no money in there, consider whether it’s worthwhile to pursue other options. Another thing you can do, if you’re missing information from a tenant’s application or want updated information, is serve a notice of examination on them, requiring them to appear at court and give testimony under oath. These are all financial questions — do they expect to pay the debt?

What other debts do they owe? What’s their budget like? What are their sources of income, bank and account information? What are all their assets?

It’s also good to get their driver’s license number, because when a tenant moves out, it can be hard to locate them to serve documents. But with a driver’s license number, if they update their license, their new address updates too, and a skip tracer can be hired to pull public information to find people.

That’s one tool I use to locate people who’ve disappeared, and I’ve found them and started serving them and proceeding with the process. Once you serve somebody and they don’t attend an examination hearing, they could be found in contempt of a court order. If that continues and the court finds them in contempt, the court can issue a warrant of committal.

That means if the police pull that person over and run them through their system, they’ll see there’s a warrant to arrest them, and they’ll bring them to court, where they’ll be examined. Nobody wants to be looking over their shoulder or unable to sleep, worried one false move means they’ll be arrested.

Self-Employed Tenants: Special Challenges

Before we get into the next one, self-employed tenants — that would be hard to garnish a wage from since they don’t have an employer paying them. Are we looking at their annual income instead? How would that work?

That’s tough, because you can garnish anybody who owes the debtor money. When we’re talking about a contractor or someone self-employed doing business with other people, you have to serve whoever owes them money through the contract. It really depends on what the self-employed person does and who you’d be serving.

You don’t have a judgment against the corporation, but if they’re incorporated, that helps, because someone like me who works in general practice has access to corporate searches. I can see where the registered head office is and who the directors are.

That helps locate them. I can also do real estate searches to see if they own other properties. Again, it depends on the kind of work they do — how piecemeal is the job?

Are they doing quick one-off jobs, like a plumber, or bigger projects? It becomes challenging because you need that information from them, which you can get at one of those examination hearings I mentioned.

Otherwise, you might want to hire a private investigator to try to track them down, but that gets costly. So if you’re trying to collect from someone self-employed, know it’s a lot more challenging than from someone who’s employed.

For sure — a lot of landlords already look more closely at self-employed applicants and want to see more records, because they’re unsure about actual income. And most self-employed people try to show as little income as possible on paper.

ODSP Recipients: What Landlords Should Know

Also consider people on ODSP — you can’t garnish that. You might want to work with them differently.

You might think it’s a guaranteed payment from the government — I’m not saying to filter them out at all. I’m just saying, down the road, if you want to enforce, you’re probably not going to proceed against them.

It’d be hard to collect for sure — like you said, you can’t get blood from a stone. What people may not know about ODSP is that even though a check can go directly from the government to you as the landlord or property manager, it has to be the person on ODSP who tells their worker to direct it that way — for example, instead of the full $2,000, send $1,800 to CRESI Property Management to cover rent, and send the remaining $200 to the tenant.

At any point, if that tenant tells their worker to change it back and send the full $2,000 to them instead, there’s nothing we can do about it. Then we have to start collecting from the tenant directly, and if they don’t pay, we’re in a bit of a tough spot.

Summary & Conclusion

So what did we talk about today? We talked about the life cycle of enforcement after you get the order from the Landlord and Tenant Board — how you file it with Small Claims Court so you can proceed, and we dove into garnishment and where you can get that money from.

We also talked about strategies you can use when bringing in a tenant, gathering key information at the application stage, and then deciding whether to proceed with enforcement or cut your losses. Sound good, Kevin? Yeah, as always, it’s a decision people have to make — spend more money to try to collect, or walk away and write it off as a business loss.

If you can get it back, why not go get it back? But understanding who your tenant is and their ability to repay is the most important thing to weigh here. Landlords, if you have any questions about this, you can reach out to us and we’ll connect you with Gibrian, or you can go right to their firm.

They’re located in Mississauga at Malicki Sanchez Law, and we’ll have their information listed below so anyone watching this or our other podcasts can connect with them. I hope that made sense to people, and that you learned something and understand what happens if you ever get into this situation.

Using somebody like Gibrian to make sure you’re collecting properly, and being guided, advised, and consulted throughout this process once you get to that point, is the best thing you can do. Thanks so much for joining us, Gibrian — I appreciate your wisdom, and we’ll talk to you soon. Thanks so much, Kevin.

Have a good one, bye for now, everybody. Thanks for helping get the information out there to Ontario landlords. Keep on joining us — we’ll see you next time.

Please remember, while we are professionals, this podcast is for informational and entertainment purposes only. The advice shared may not apply to your unique situation. Always seek personalized advice from a qualified professional before making any investment decisions.

Hey everybody, thanks so much for joining us this week. I hope you enjoyed the episode. If you’re finding it informative and useful, make sure to like, subscribe, share with a friend so that we can keep getting the information out there to Ontario landlords, and keep on joining us. We’ll see you next time.