Introducing Ontario’s New “Standard Lease” Agreement!

Renters, rejoice!

Landlords, ask yourselves how this changes your risk-reward equation.

Some will celebrate this new standardized document as a way to further protect vulnerable tenants from unscrupulous landlords, and others will see it as yet another example of the government meddling where they need not.

Let me try to provide you with as unbiased a view as I can possibly take…

tired man with files

 

 

For a copy of the new Ontario Residential Tenancy Agreement (aka “Standard Lease”), please click HERE.

There’s a lot of info contained within that link, and the associated pages.

But here’s the bulk of what you need to know about the new lease:

 


 

If you sign a lease on or after April 30, 2018, it must be a standard lease.

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.

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 (for example, if the tenant signed a new lease for a one-year term).

Additionally, renters cannot ask for a standard lease if they sign a fixed-term lease before April 30, 2018, and it renewed automatically to a month-to-month tenancy after April 30, 2018.

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, you cannot withhold more than one month’s rent and you must continue paying your rent for the term of your lease, even if your landlord never gives you the standard lease. However, if a standard lease is not provided, special rules allow you to end your fixed-term lease early.

Landlords and renters can choose to use the standard lease before April 30, 2018. However, the rules requiring the standard lease will only be in effect starting on this date.

 


 

That’s taken right from the Ontario Ministry of Housing website.

But what’s actually in the lease itself?

That’s where things get fun!

14-pages, a yellow highlighter, a glass of hot cocoa, and a lonely Saturday night provide some interesting take-aways…

Let me go through the entire agreement, and if you so choose, you can follow along by downloading from the link above.

1. Parties to the Agreement

This is pretty self-explanatory – it’s a section that names the landlord(s) and tenants(s).

The only thing worth nothing here is that the Tenant(s) are all to be listed.

In a typical “Agreement to Lease” on OREA forms, it’s possible to have a person on title, and another “occupant” that is not legally-bound to the transaction.

I always advise my clients to include all occupants on the lease agreeemnt, unless they’re children.

2. Rental Unit

Again, pretty self-explanatory – the residential address, and specification of parking.

The only item to note is this:

RTA01

This is a clause that should be included in any residential Agreement To Lease.

3. Contact Information

This might seem obvious, but it’s not.

In fact, this is a HUGE deal.

I’ve often lamented how many condos in Toronto are owned by overseas investors, and how some poor tenant with a broken dishwasher will n-e-v-e-r get that thing fixed.  All too often, the real estate agent, who is in no way legally permitted to play property-manager, tells the tenant at the onset, “Call me if you have any issues.”  And all too often, the tenant gets screwed.

I would love to see this section filled out properly.

The only issue, is that a further section basically provides the landlord a complete opt-out of any responsibilities:

RTA02

If the landlord does not provide phone and/or email, then we’re right back to where we started.

I can’t tell you how many tenants in Toronto suffer from renting a property from an overseas landlord.  I always tell my clients to check up on the landlord, and make sure they’re local.  I know the rental market is fierce, but some risks aren’t worth taking.

4. Term of Tenancy Agreement

Nothing really of interest here.

5. Rent

Specifying when the rent is paid, the amount of the rent, and how the rent is paid.

My issue is the following:

RTA03

It has always been illegal for landlords to ask for post-dated cheques, but that hasn’t stopped……..every landlord in Toronto from asking for them.

I’ve never understood how the government, past or present, has expected tenants to pay rent in such a way that the landlord has any sort of certainty or security.

If the idea here is, “The tenants will pay, don’t worry.  And if they don’t, then the landlord can chase them through the Landlord & Tenant Board,” then I would never want to be a landlord, and I would question the government’s motive.

Tenants need protection, no doubt about it.  My opinion in Section (3) above clearly conveys my beliefs on that.

But by expecting tenants to pay according to the honour system, we’re simply setting ourselves up for disappointment.

All a tenant need do is provide a deposit for first-and-last month’s rent, then move in, and stop paying.  It would take the landlord a year to get the tenant “legally” evicted, and by then, the landlord’s entire investment is blown.

I know I’m talking to some people who believe that homes are for living, and not investing, and that people who can afford to own a second property are “rich” and they can go to hell, but for the rational folk out there – what’s the solution to the payment?

6. Services & Utilities

Great section, outlining absolutely every cost that could be associated with the rent.

Far too many Agreement To Lease documents don’t contain extras, which come up in debate later on.

Although this is just silly:

RTA04

This is so babyish.

The term “nanny-state” comes to mind.

7. Rent Discounts

Another good idea.

If one tenant in a multi-plex gets a $100/month discount on the rent to shovel and salt the driveway and sidewalk when it snows, and to take out the garbage bins every week, then this needs to be documented, and not on a hand-shake agreement.

8. Rent Deposit

This should shake things up a bit:

RTA05

First of all, who the hell doesn’t need a deposit?  That was rhetorical, so please save me the explanation.

But more importantly, “This amount cannot be more than one month’s rent or the rent for one rental period.”

Good………………luck!

9. Key Deposit

Another item which is not always included in the Agreement To Lease, but should be.

10. Smoking

Oh boy.

This one is going to get VERY interesting after July 1st!

Call me naive, but I would think the percentage of the population that smoke cigarettes on a regular basis has declined over the years.

But as for marijuana?  We’re going to be one giant puff of smoke come summer.

The lease includes this section:

RTA06

There are oh-so-many jokes here.

“Provide description of smoking rules.”  That’s funny.

But even better – who is “adding additional pages?”

Are drawing diagrams of bongs?

Do we need to draw the elements of Tetrahydrocannabinol?

Jokes aside, I suppose Section (10) in the Standard Lease is more emphatic than a single clause in Schedule A of the Agreement To Lease that says, “Tenant agrees not to smoke in the dwelling.”

11. Tenant’s Insurance

Great, this should be part of the lease.

Again, there’s a checkbox for “There are no insurance requirements,” and I suppose the same landlord that isn’t asking for a deposit is checking that box, but I digress…

12. Changes To Rental Unit

I don’t know why this is included:

“The tenant may install decorative items such as pictures or window coverings.”

To group “pictures” with “window coverings” shows the inexperience of whoever wrote this.

Many condominium corporation’s by-laws prohibit tenants from installing window coverings of a certain colour.  And while the Standard Lease does specify that the tenant “must comply with by-laws of the condo,” this is contradictory.

I also wouldn’t want a tenant drilling holes in my drywall, or removing my window coverings to install their own, unless there’s are of higher quality.

13. Maintenance & Repairs

This is fair, albeit ambiguous.

14. Assignment & Subletting

This is pointless:

RTA07

Now we’re just going to debate the definition of “arbitrarily or unreasonably.”

If I rented to a tenant, and they wanted to sublet, I’d rather break their lease and find a new tenant, provided there’s no loss in rent.

I believe, without question, that the landlord should always have approval of any tenant, in their absolute and sole discretion.  The idea of a sublet makes no sense in this market.

15. Additonal Terms

This gets interesting.

The governemnt is providing examples of illegal terms:

RTA08

Personally, I think the landlords should be allowed to include a “no pets” clause.  If a landlord has hardwood floors that he or she values, why should a tenant legally be permitted to ruin them with a 70-pound dog?

I don’t see any reason why protecting tenants’ rights to pet ownership needs to be government-mandated.

I also have a problem with “additonal occupants.”

Are we permitting a tenant to sign a lease, and then have two other people live in the unit, without the landlord’s knowledge?  Perhaps I take back what I wrote about Section (1).  What’s to stop that tenant from charging a fee?  How many bunk-beds can that tenant fit in the living room?

I encourage my landlord clients to include a clause of “The Landlord & Tenant hereby agree that only the person(s) on title to this Agreement To Lease as Tenants shall be permitted to reside in the unit on a full-time basis.”

Tell me that’s illegal, and I’ll tell you why I don’t like this Standard Lease.

So those are the 15 sections of the Standard Lease, and my accompanything thoughts.

Overall, I’d say that this lease is far more reasonable than I would have expected from our government, and in fact, all they’re really doing is enforcing the existing Landlord & Tenant Act.

The problem, of course, is that so many “illegal” clauses have been used by such a high-percentage of landlords, for so long, that it seems as though these are new rules.

The fact that a landlord can’t ask for post-dated cheques is mind-boggling to me, but I won’t belabour that point.  I’d say that about 95% of tenants renting condominiums in Toronto submit post-dated cheques, and the rest pay by direct deposit.

The section about deposits is an issue, since many tenants are offering 6-12 month’s rent up front in order to be competitive, and any tenancy advocate will point out that it’s actually illegal for a landlord to accept that, even if offered!

And the pets thing.  Yeah, I don’t get it.

But as I said, this Standard Lease is merely enforcing the existing LTA, and seeking to discourage landlords from including illegal clauses.  The stage has also been set for a tenant, who identifies an illegal clause, to take action.

I wonder if the Liberal government will now create 1,000 new jobs for “Lease Enforcement Officers,” or something of that nature.

Because the Standard Lease is great and all, but unless they’re keeping a huge database of them somewhere, I don’t know how they plan to oversee this whole thing…

25 Comments

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  1. O says:

    After many years of reading various local real estate blogs, I think I can sum up the mindset of everyone playing the rental game in Toronto:

    Renter: Hey landlord, AKA Mr/Mrs Blood Sucking parasite who offers nothing of value to anyone…renting out an apartment is a BUSINESS and if you don’t have the stomach for dealing with people like me, DONT. BE. A. LANDLORD.

    Responsible Landlord: Got to make sure I don’t end up with someone difficult so high rents, tight screening process.

    Irresponsible landlord: Not making enough money/don’t care, let the place fall apart

    Former Landlord: Tried it, but renters.

    People like me: I have extra space, would like to make a little extra $$, but will not risk having a bad renter

    Government: First we will need $$$ for a commission, then a few studies to study the studies, then a few rounds of debate, then let’s hire more people and raise taxes to fix this problem, check back in a few years.

    Frustrated Renter: Why are there no apartments?

    and of course:

    Real Estate Agents; Renting? Are you, high?

    1. BJA says:

      Why is the only “responsible” subset of people in your simplistic analysis landlords? You seem to assume everyone will agree with you that all renters, political leaders and RE agents are “irresponsible” (at best). You are wrong in thinking this.

      1. O says:

        “Why is the only “responsible” subset of people in your simplistic analysis landlords?”

        You must have missed the part of my post where I say:

        Irresponsible landlord: Not making enough money/don’t care, let the place fall apart

        But I do agree with you so let me add:

        Good Renter: Why are there no apartments?

        It has been said that complexity is the first refuge of the intellectual scoundrel….drown the morons in data and sophistry….Hey look at all these big words and numbers…I have to be right!

        Sometimes things really are simple. Basic logic tells me that not enough people want to be landlords to meet the demand. My opinion, is that is due to govt over-regulation and bad renters.

        1. BJA says:

          Point(s) taken. And I do broadly agree with your thesis, although I feel that bad renters, or at least the potential for such, is a stronger disincentive, generally speaking, than government (over-)regulation. And if this is indeed the case, a solution would appear to be harder to come by than if government intervention were the primary culprit.

  2. Rachelle says:

    Nothing has changed, you still can’t contract outside the law. Your pet example is wrong David because damage caused by pets is still damage and I’ve actually managed a property where the tenant sued the owner for their $500 pet deposit back, and they got it back, and then I went and filed a case at the LTB for damages, because of their dog scratching the floors and they had to replace the carpet, and prepay the amount required to sand and repair the floors. So owners should be performing regular inspections and getting tenants to pay for their damages…pet and otherwise.

    1. Sevyn says:

      But Rachelle you’re also wrong. I’m a landlord and I cannot charge a deposit for damages. That’s actually against the rules and a tenant can agree to pay it. If I don’t want pets in my house I should be able to say HELL NO. I’m tired of disgusting tenants who do whatever they want because this law protects them. There’s more bad renters than good renters and these stupid clauses are making it easier for them to get away with murder!! I’ll still be making up my own rules. For those that don’t like it – don’t rent from me- very simple!

  3. Rear-view Mirror says:

    Many, many years ago an astute journalist characterized Ontario government initiatives as ‘turning [private] rental properties into a public utility’. Despite the underlying truth, I’m still a tiny landlord (central Toronto) who attributes relative success largely to luck, and partially to tenant screening, but the latter has it’s limitations. If flakes were not well-dressed, charming and nicely documented, Bernie Madoff would have run a hot-dog cart or not much more. My investigative / predictive talents are limited; the real issue is what happens if things go sour , and many writers in many spaces have described that particular circle of Hell.

    A richer vein of grief for those involved in or considering rentals, is federal taxation. In any situation where the equity situation is large or total, rental income is personal income and one does not need to be rich to see the consequences. If I need or want another 50 cents from the tenants, I must charge them a dollar to get it, on that factor alone.

    So, for tenants struggling with accommodation issues, would suggest it ain’t all us vs them. The hypocrisy and ignorance of the political authorities who claim to be “concerned” is manifest. David’s fine post above on a matter of general interest finds the standardization of private contracts doesn’t in fact change much on the street. Yet political figures and supporting policy wonks in the provincial administration will undoubtedly characterize all this as another Great Leap Forward. How the innate intelligence of the general population cannot make the trip to Queen’s Park is a mystery beyond this writer.

    My own territory, central Toronto, has an interesting history that bears on this point. The simple housing say 1945, was flexible in the sense that it could and was be adapted to changing social conditions, flats, rooming houses and so on. Curious that all – and I repeat all – of these same buildings are now only considered and bought as single-family residences, albeit at historically high costs. Rental, sharing, roomers are a black hole for most, is at least in part due to the Ontario governments takeover of what – at the end of the day – is an essentially personal transaction for the small landlord. The vilification of the Kulaks during the reorganiztion of the Soviet Union – who might have two more cows than their neighbours – comes to mind.

    Rhetorical flourishes behind, I assert the ‘housing crisis’ is state induced. In the face of a very large country, sophisticated contruction talent everywhere and reliable financial instituitons – why are we here?

  4. Natalia says:

    >> I’ve never understood how the government, past or present, has expected tenants to pay rent in such a way that the landlord has any sort of certainty or security.

    Pretty much the same way, I never understood why some landlords (business owners) expect that someone will guarantee certainty and/or security for the payments they expect for their services (rent). Being landlord is not an entitlement, it’s a business, that has been entered at will and at own risk. It’s beyond me to understand people expecting to get their pay off and not have to put any work in it and avoid all risk.

    As a tenant, I’ll always pass on postdated checks and automated payment (when it’s initiated by the landlord, the email transfer initiated by the tenant is fine). It is the last thing that I need, to worry about the landlord mixing up, intentionally or in error depositing all checks at once or charging my account for amounts that I do not expect at their will.

    Rent payment and any other payment for any other services are ALWAYS based on the honor system. There is always a risk of non-payment, which should be mitigated through tenant screening and establishing a human contact with your tenant, working out a solution in case of payment issues. I know, not every tenant is honest and possible to deal with, but this is a cost of doing business. Besides, I don’t know how exactly post-dated checks or automatic payment help you if there are no funds in the account? You can try to deposit/charge all day long if the tenant’s account has 0 balance or altogether closed. So that practice gives no security to the landlord and opens up the whole set of possible issues for a tenant.

    1. Craijiji says:

      I don’t think you know how post-dated cheques work.

      1. Sarah says:

        LOL-ing.

      2. Natalia says:

        Actually, I do know.

        Banks stopped looking at the date on the check many years ago. If a postdated check is deposited to the bank early, it will clear (provided there are funds in the account).

        That did happen to me (not with rent payment) more than 10 years ago and I was also surprised.
        It is what it is.

    2. Sevyn says:

      I agree Natalia. I don’t see how posted cheques help. I heard it may help because the tenant doesn’t want to occur any fees but I really don’t see how it’s any better than an email money transfer. I get my payment via EMT or cash and it works for me. People hardly even use cheques today.

  5. Natrx says:

    The purpose of the post-dated checks IIMO is not to pay in advance, but to avoid the hassle of collecting from the tenant and depositing payment every month. E transfer costs money (yes, even that small amount adds up over the years for someone) and can lead to late payments by the tenant. Whereas getting the checks puts the onus on the landlord to make sure the money is deposited.

    1. Geoff says:

      Blockchain and smart contracts could be the future of rent payments.

      1. Rachelle says:

        Please explain this comment, because I’m trying to figure out how it can be applied and for the life of me I can’t figure it out.

    2. Craijiji says:

      If a $1/month e-transfer charge is going to add up to the point that it will cause late rent payments, perhaps that person should look at renting a cheaper place.

      1. Sarah says:

        Sorry for my lack of contributing comments but … Craijiji your’re making me laugh out loud in my office..

        1. Sevyn says:

          If you deposit a cheque and there is not enough money in the cheque-writer’s account to cover the cheque, the cheque will be returned to your bank as NSF or non-sufficient funds. If your bank had given you immediate access to the funds, it will then remove the funds from your account. If you were the cheque-writer, very often your financial institution will charge an NSF fee. You can avoid these fees by ensuring there is enough money in your account to cover the cheques that you write.

      2. Libertarian says:

        I agree with you that the tenant should find a cheaper place to rent if he/she can’t afford $1, but even if I could afford, I wouldn’t pay that fee. The landlord is the rich one, the landlord should cover the fee. Otherwise, accept some other form of payment.

        Having said that, as Geoff wrote, technology is changing all the time, so eventually there won’t be any fees. But until that day happens, I wouldn’t spend more money than necessary, even $1.

  6. Libertarian says:

    “I encourage my landlord clients to include a clause of “The Landlord & Tenant hereby agree that only the person(s) on title to this Agreement To Lease as Tenants shall be permitted to reside in the unit on a full-time basis.””

    How does AirBnB come into play on something like this?

    If a tenant rents a 3-bedroom unit (either condo or house), uses one room for his/her self and rents out the other two units on AirBnB, is the landlord okay with this? Technically, the other 2 people aren’t there on a “full-time basis”.

    And with the new AirBnB rules probably coming into effect soon, would the unit then have to be registered with the city? Would the landlord be responsible for that or the tenant?

  7. Ben says:

    You should read the standard lease in Quebec…. mandatory for a landlord to disclose the lowest rent paid during the preceding 12 months period and a tenant that has agreed to pay a higher rent can apply to the Regie to have the rent fixed, within 10 days after signing the lease.

  8. Marina says:

    This is pointless.

    If you are the owner of a high-end condo and are getting high-end tenants, I would guess they will give you a deposit anyway. And pay by direct deposit. And have no pets because they work too much. I know I’m generalizing, but good luck policing that – the landlord will keep going, and the tenants will want the high end condo so they will keep doing what they are doing.

    On the low end, where things are done under the table half the time, nothing changes again.

    And in the middle, you are encouraging landlords to charge higher rents upfront to hedge their risk. I really don’t see how this is supposed to help people who are having a hard time getting housing in this market.

  9. OMAR KHAN says:

    Does anyone under 30 NOT pay via e-transfer? I don’t know why the government put it in there, it really doesn’t need to be.

    The subletting portion really is a non-GTA clause or student clause. This will help younger renters in university towns and in secondary markets like Hamilton or Ottawa where rental competition is not as fierce.

    Dave, I think you are looking at this from a very Toronto – centric way.

    Just to note: Are rent discounts not illegal? One previously could not lower rent for someone to shovel the snow. If the agreement was 1000 for a place, and 900 if they shoveled snow the tenant could pay the 900 and and never shovel and landlord could not do much. You needed a full separate agreement for snow shoveling. Is this no longer true? You can do it all on the lease agreement now?

    http://ontariolandlordandtenantlaw.blogspot.ca/2012/10/i-dont-want-to-shovel-snow.html

    1. C'mon! says:

      Not all renters are under 30. I have two sets of tenants (married couples) who are “downsizers” in their seventies.

    2. Craijiji says:

      “Dave, I think you are looking at this from a very Toronto – centric way.”

      You realize this site is called TORONTOrealtyblog, right?

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