Developed by the City of Toronto
An arrears policy explains how the corporation deals with situations in which tenants/members either do not pay or are late paying rent/housing charges.
If you don’t collect rent when it is due, you are increasing the risk that your organization will not be able to meet its financial obligations.
An effective arrears policy helps to mitigate this risk. An arrears policy also helps to ensure that your tenants/members do not incur high amounts of arrears and that they do not lose their housing. Arrears management should encourage early intervention strategies with tenants/members with arrears to help them get their debts under control. An arrears policy should be designed to treat your tenants/members fairly, but it should also ensure that rent is collected when due and that there is no financial loss to the corporation.
Steps
1. Set out in writing what you want your corporation’s arrears policy to do.
- Meet corporate financial obligations.
- Avoid instances of uncollected rent.
- Promote early intervention to prevent tenants/members from accumulating high arrears.
- Prevent tenants/members from losing their housing (eviction is the last resort).
- RGI and market rent tenants/members are treated the same.
2. Determine and document an early intervention strategy focused on preventing tenant/member arrears.
- Have information readily available on the programs for tenants/members who may be having trouble paying their rent including debt counselling services and financial aid.
3. Establish procedures for implementing the arrears policy.
- Post and record housing charge payments
- Note members/tenants with missing or short payments.
- Determine who does this step and when it is done.
- Issue Notice of Late payment for each account in arrears.
- Notice to Meet with Manager/office to discuss payment options
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Set parameters for property management and staff in negotiating payment agreements with tenants/members.
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Determine when this notice should be issued (i.e. 5 business days after rent is due).
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Outline method of delivery.
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Determine who does this step and when it is done.
- Notice for the member to appear before the Board (Co-ops)
- Prepare notice and confirm delivery method.
- Procedure should state that the agreement made between the member and the Board should be recorded in the minutes and finalized in a letter to the member.
- Letter should state that breach of agreement will result in eviction.
- Detail procedures for evictions.
- Detail any appeal procedures available for tenants.
- Set parameters for property management in negotiating payment agreements with tenants and establish reporting method to the Board (Non-profits)
- Determine how often management will report to the Board on the status of current and past arrears and bad debts.
- Detail procedures for evictions.
- Detail any appeal procedures available for tenants.
The Board can ensure that the corporation’s arrears policy and procedures are being followed by:
- Being familiar with the policy and procedures,
- Regularly monitoring arrears by using and aged arrears report.
- Asking staff about outstanding arrears and if they are following the corporation’s arrears policy.
