Ontario’s New Standard Lease – Use it or lose it.
As you may have heard, as part of its reform of the Residential Tenancy Laws, the Government of Ontario has passed a law requiring all leases to be on a Standard Form Lease Agreement (“Standard Lease”). Fortunately, the requirement is not retroactive and does not automatically invalidate OREA or other Lease forms, but there are consequences to be aware of. This issue of Title Tips will explain what this means to you and go over some other changes to Residential Tenancy Laws that you should be aware of.
First, The Law:
As of April 30, 2018, by law, all leases must be on the new Standard Lease.
What this means to landlords:
It does not apply retroactively to Existing Leases.
Renters cannot ask for a Standard Lease if they signed a lease before April 30, 2018, unless they and their landlord negotiate a new lease agreement with new terms on or after this date.
Additionally, renters cannot ask for a Standard Lease if they sign a fixed-term lease before April 30, 2018, and it renews automatically to a month-to-month tenancy after April 30, 2018. So, if the lease was signed before April 30, 2018 and just comes up for renewal as a month-to-month tenancy you do not need to sign the new form. However, any clauses in the existing lease which are not enforceable will not be valid and can be challenged.
Using OREA/TREB or your own form does not automatically make the lease invalid.
While the law requires that all leases be on the new standard lease form, it does not mean that any new leases not on the new Standard Lease form are invalid. You can still use the OREA or other forms you have been using.
However, you need to know the following:
If you sign a lease on or after April 30, 2018 that does not use the Standard Lease, renters can ask the landlord for one in writing. The landlord must provide one within 21 days.
If a landlord fails to provide the Standard Lease within 21 days after a renter has asked for it in writing, the renter may withhold one month’s rent.
If the landlord fails to provide the Standard Lease within 30 days after the renter has begun withholding rent, the renter does not have to repay the one month’s rent. Please note, the tenant cannot withhold more than one month’s rent and the tenant must continue paying a landlord rent for the term of the lease, even if the landlord never gives the tenant the standard lease.
If a Standard Lease is not provided, special rules allow a tenant to end the fixed-term lease early.
If the landlord does not provide the Standard Lease within 21 days after the renter has made a written request, the renter may give 60 days’ notice to terminate a yearly or fixed-term tenancy early.
If the landlord provides a renter with the Standard Lease after the renter has asked for it, but a new term is added that the tenant does not agree with, the renter may give the landlord 60 days’ notice to terminate a yearly or fixed-term tenancy early.
In both cases, the effective date for termination must be the last day of a rental period (for example, the end of a month).
Can You Change the Standard Lease?
While you cannot change the preprinted and required elements of the Standard Lease, section 15 allows you to add clauses that are legal and enforceable. These must be in plain language and clear. Here are some of the important clauses that are still permissible:
You can still add this because of the health risks of secondhand smoke. Here is an example clause:
The tenant agrees to ensure that no tenant, visitor, resident, or guest, will smoke tobacco cigarettes, marijuana, cigars, electronic cigarettes, or any similar products that generate smoke or vapours within the leased premises. The tenant agrees that this shall apply to all balconies, patios, common areas and the area outside the premises within 9 m of the doorways, air intakes, or working Windows.
Marijuana/Grow Op. Prohibition:
The tenant shall ensure that there is no growing of marijuana, cannabis, or similar plant in any part of the leased premises.
Agreement to make changes to the unit before the tenant moves in:
You can still add clauses that cover off any work the landlord will do before the tenant moves in.
Rules for the use of common spaces or amenities:
You can still set out these rules in detail.
What you can’t do:
Examples of items commonly in OREA leases but are actually illegal:
- Requiring rent to be paid by post dated cheque. However, the tenant can provide these if the tenant agrees;
- Requiring a deposit over and above Last Month’s Rent and Refundable Key deposit;
- Refundable key deposits greater than the actual/direct cost;
- No pets;
- No kids;
- No guests, roommates or additional occupants;
- High NSF fees;
- Interest on rent arrears;
- Administration fee for utility arrears;
- Repairs that are the landlord’s responsibility;
- Advertise for a certain type of tenant.
Tenant confirms and acknowledges that he/she has elected to pay the rent by post dated cheques.
Tenant confirms and acknowledges that the landlord has not asked for pre paid rent up front, but that the tenant has requested and elaectd to pay xxx amount up front.
Important Changes made to Landlord/Tenant law in the last year.
Over the last few months, the Government has made a number of changes to the Residential Tenancies Act which regulates the relationship between Landlord and Tenant.
Selling a Tenanted Property
If you are selling a tenanted property the landlord can terminate the tenancy provided it has gone to a month-to-month term and is not within the fixed term of the lease and the new buyer is moving in to the property. No compensation is due, unlike a landlord/family member simply moving in to the unit.
We would suggest the following clause in these circumstances:
The buyer agrees and understands that it is a legal requirement of terminating the existing tenancy on the property that the buyer or an immediate family member of the buyer shall move into the property on closing. The buyer agrees and acknowledges that this is the buyer’s intent and obligation with respect to this property. The seller agrees to provide the applicable 60 days’ notice required to the tenant and use form N12 under the residential tenancies act to do this on behalf of the buyer. The buyer shall provide any documentation or other information that the seller may require to establish that the buyer or a member of the buyer’s immediate family will be moving into the property on closing and shall remain in the property for at least one year after closing. The buyer understands and agrees that this is an essential term of the buyer receiving vacant possession of the property and the buyer agrees that in the event that the buyer does not comply with this term the buyer will be required to pay any damages or costs suffered by the seller as a result. The buyer and seller also agree and understand that the tenant may dispute the notice given under this clause. In this event the buyer and seller agree that the closing date of this transaction may be extended for a period of 45 days in order to facilitate the eviction of the tenant. While the eviction of the tenant will remain the responsibility of the seller, the buyer agrees to provide such further information or documentation as may be required to terminate the tenancy and will actively participate in the process if required. In the event that the tenants cannot ultimately be evicted such that vacant possession can be given to the buyer on any such extended closing date, the buyer or seller may elect to terminate the transaction or complete the transaction in their mutual discretion.
Landlord or a family member moving in
From September 1, 2017 onwards, when a landlord evicts a tenant/terminates a lease to use the unit for themselves or for a family member, they now:
- Have to intend to live in the unit for at least one year after termination; and
- Have to provide the tenant with one month’s rent as compensation. Alternatively, the landlord may offer another rental unit that the tenant accepts.NOTE – only individual landlords can give notice of termination for this reason, not corporations. Additionally, if the landlord ends up advertising, re-rents, demolishes or converts the unit within a year, they could face a government fine of up to $25,000 AND be required to pay the tenant any increase in rent the tenant has incurred at another property for one year after eviction from the property, reasonable out of pocket moving costs, storage costs, etc!
The Landlord and Tenant Board will accept ANY relevant evidence from the tenant, including online listings, “for rent/sale” signs and observations of the unit. An aggravated tenant will find it very simple to find evidence against the landlord.
Terminating a lease
A landlord may use an N5 to terminate a tenancy early for:
- Undue damage;
- Interfering with reasonable enjoyment and/or lawful rights (noise, smell etc); and