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Arrears Calculations

Accurate arrears calculations are essential for N4 notices and LTB applications. OntarioLandlord automatically tracks and calculates arrears based on your lease terms and recorded payments.

How Arrears Are Calculated​

Basic Formula​

Arrears = Total Rent Owed - Total Payments Received

Detailed Calculation​

For each rental period:

  1. Rent Charged - Based on lease monthly rent
  2. Payments Credited - Payments received
  3. Running Balance - Cumulative total

Example​

PeriodRent OwedPaidBalance
December$2,000$2,000$0
January$2,000$500$1,500
February$2,000$0$3,500

Current Arrears: $3,500

Rent Charging Rules​

When Rent Is Charged​

Rent is charged on the due date specified in the lease:

  • If due date is "1st" → charged on the 1st of each month
  • If due date is "15th" → charged on the 15th

Pro-Rated Rent​

For partial months (move-in/out):

  • First month may be prorated
  • System can calculate partial amounts
  • Or enter as recorded in lease

Payment Allocation​

Default Allocation​

Payments are applied to oldest outstanding balance first:

  1. Oldest period's arrears
  2. Then next oldest
  3. And so on

Example​

Tenant owes:

  • January: $2,000
  • February: $2,000
  • Total: $4,000

Payment received: $3,000

Applied as:

  • January: $2,000 (fully paid)
  • February: $1,000 (partial)
  • Remaining arrears: $1,000

Understanding the Rent Ledger​

The rent ledger shows all transactions:

DateDescriptionChargesCreditsBalance
Jan 1Rent - January$2,000-$2,000
Jan 15Payment-$2,000$0
Feb 1Rent - February$2,000-$2,000
Feb 1Rent - March$2,000-$4,000

Arrears for N4 Notices​

When generating an N4:

  1. System calculates current arrears
  2. Shows breakdown by period
  3. Includes any partial payments
  4. Calculates as of notice date

Arrears Must Be Accurate​

warning

N4 notices must state accurate arrears. Overstating or understating can cause issues at the LTB.

What to Include​

  • All unpaid rent
  • Any NSF fees (if applicable and in lease)
  • Do NOT include damage deposits or last month's rent

Partial Payments​

How They're Handled​

Partial payments reduce arrears:

  1. Full rent owed: $2,000
  2. Partial payment: $500
  3. Remaining arrears: $1,500

Impact on N4​

  • N4 remains valid for remaining amount
  • Termination date doesn't change
  • Tenant must pay ALL arrears to void

Changes After N4 Served​

Payment Received​

If tenant pays after N4 served:

  1. Record the payment
  2. If full arrears paid before termination date → N4 voided
  3. If partial → N4 still valid for remaining amount

New Rent Becomes Due​

If a new month's rent becomes due:

  • Add to arrears total
  • Include in evidence for LTB
  • Original N4 termination date unchanged

Verifying Calculations​

Before Serving N4​

  1. Go to the rent ledger
  2. Verify all payments recorded
  3. Confirm rent amounts correct
  4. Note current arrears

Before LTB Hearing​

  1. Update with any recent payments
  2. Generate fresh evidence bundle
  3. Be prepared to explain ledger

Common Issues​

Missing Payments​

If tenant claims payment wasn't recorded:

  1. Check all sources (bank, manual entries)
  2. Ask for proof of payment
  3. Update if payment was missed

Disputed Amounts​

If tenant disputes amount:

  1. Review lease for rent amount
  2. Check payment records
  3. Identify discrepancy
  4. Correct if error found

Rent Changes​

If rent changed mid-lease:

  • N1 rent increase recorded with date
  • System calculates at correct rate per period
  • Historical records preserved

Best Practices​

  1. Record payments promptly - Keeps arrears current
  2. Verify before notices - Double-check amounts
  3. Keep evidence - Save proof of payments
  4. Update regularly - Review monthly at minimum

Next Steps​