Navigating Legal Consequences When Suing a Tenant in Canada
As a landlord in Canada, it's not uncommon to find yourself in a situation where you need to take legal action against a tenant, typically due to non-payment of rent. This article explores the legal implications and consequences of such actions, particularly when the tenant has no financial assets.
Understanding Legal Actions and Judgments
When a tenant fails to pay rent, the standard procedure for a landlord is to initiate an eviction process. Despite winning the lawsuit, the challenge lies in recovering the financial dues. In many cases, if the tenant has no money, the landlord may opt for wage garnishment. This can be a lengthy process, often taking years, but is more often than not successful in eventually recovering the owed amount.
The Judgment and Its Impact
After a lawsuit, if the tenant does not pay, they may file for bankruptcy or obtain a legal judgment. The court may award a judgment to the landlord, allowing them to hold it until the tenant acquires any monetary assets in the future. Alternatively, the judgment can be sold to a collections company, which then attempts to collect the amount owed for years afterward.
Implications for Landlords
Landlords are typically advised against taking legal action against tenants with no assets. Since the attorney representing the landlord would recognize the lack of a significant payout, the case is often declined. However, various factors may influence the court's decision, including the type of judgment and the location of the landlord or tenant.
Legal Ramifications
The court may place a lien on the tenant's property, such as their house or car, to recover the money owed. In some jurisdictions, even state-disbursed benefits like Supplemental Security Income (SSI) or Social Security Disability (SSD) can be garnished, provided they are not protected by federal law.
In cases where the tenant does not appear in court, the landlord can obtain a default judgment. This judgment can result in the garnishment of any future earnings or property, allowing the landlord to settle the awarded amount.
Key Advice for Landlords
Rule #1 in law school: Don't sue a strawman. This means if a tenant has no money or assets, pursuing legal action is often a waste of time and resources. Even if a judgment is won, it may be difficult to collect from someone without means to pay.
When a lawsuit does proceed, the court will order restitution through a repayment plan. This decision is made public, leading to negative entries in the tenant's credit reports. In some cases, the court may permit wage garnishment after essential living expenses are secured, but this is uncommon in private vs government debt disputes.
Conclusion
Landlords in Canada must be aware of the financial and legal implications of taking legal action against tenants. Understanding the process and potential outcomes can help prevent unnecessary legal conflicts and ensure more productive tenant-landlord relationships.