Landlords beware: your tenants’ illegal activities can leave you liable to some stiff penalties.
Canada’s Criminal Code and most provinces’ legal codes contain prescriptions for forfeiture of the proceeds of crime, a way to confiscate any property believed to be the result or instrument of criminal activity.
Examples would include a house containing a marijuana grow-op, or a car purchased with money made from selling the drug.
It’s meant as a measure to make crime unprofitable, keep the money from funding future crime, and possibly compensate victims.
But it doesn’t just impact the people committing the crimes. It can also be a punishing blow for landlords whose tenants are involved in something shady.
In one example, a British Columbia property owner paid a steep price when his tenants were caught running marijuana grow-ops in his rental homes. He had to forfeit two of his three rental properties and an additional $24,000 in collected rent, since the cash was judged as the proceeds of the operation.
In some cases, landlords have faced forfeiture simply because tenants were paying rent with money gained through criminal activity.
What is civil forfeiture?
Civil forfeiture is like a lawsuit against the property owner. Instead of prosecuting them, the Crown is suing them to gain control of whatever assets it suspects are the proceeds of crime.
These cases rest on a “balance of probability,” which means the Crown only has to show that it’s more likely than not that the assets are the proceeds of crime.
Forfeiture can still occur even if charges were dropped, or not laid at all.
Some jurisdictions are exploring ways to redefine civil forfeiture to make it a stronger deterrent. In one Ontario case, the Attorney General aimed to seize a man’s sailboat after he allegedly operated it while drunk. Nobody was injured due to his actions, so the boat wouldn’t be sold to compensate a victim, and it was not obtained through the proceeds of crime. Rather, the idea is just to impose a harsh penalty to make a potential repeat offender think twice.
Despite those broad powers and punishing penalties, the Supreme Court of Canada has upheld civil forfeiture, so a landlord can only do their best to ensure a tenant isn’t breaking the law. Careful screening of prospective tenants and regular property inspections are just a couple of ways you can protect your interests and show you’ve done your due diligence in case your province’s forfeiture office comes knocking.