What you need to know about the mandatory Standard Lease Agreement

chinneck  -  Feb 28, 2018  -  No Comments

By Taylor Knight, Paralegal, with contributions by Brianne Smith, Law Clerk

All landlords and tenants in Ontario should be aware that as of April 30, 2018, a new standard-form residential lease must be used for almost all new residential leases.

 

Who Is Affected.

The standard lease will be required for all residential tenancies that are regulated under the Residential Tenancies Act, 2006 (the “RTA”). This includes tenancies in detached homes, semi-detached homes, apartments (including basement apartments) and condominiums. Tenancies that are exempted under the RTA, including care homes, mobile homes, and transitional housing programs, do not require the new standard lease. The Ontario government currently plans to introduce standard leases designed specifically for these exemptions at a later date.

 

When It Comes Into Effect.

Leases entered into on or after April 30th, 2018, must use the standard lease. Leases entered into before this date are still valid and enforceable so long as the terms are consistent with the RTA.

While it is not necessary to use the standard lease before April 30th, 2018, it is recommended that it be used.

 

Consequences of Failing to Use the Standard Lease.

If a lease is entered into after April 30th, 2018, but does not use the standard lease, the tenant may ask the landlord for one in writing, which must be provided within 21 days. If a landlord fails to provide the standard lease within that time frame, the tenant may withhold one month’s rent. If the landlord does not provide the requested standard lease within 30 days of the date the rent was withheld, the tenant may keep the withheld funds. It is important to note that the tenant can only withhold one month’s rent and the tenant must continue to pay rent for the term of the lease but the fixed-term lease may be ended early on a 60 day notice if no standard lease is provided. For more information, please refer to the Ontario Ministry of Housing Link below.

 

What It Contains.

The standard lease contains fields for mandatory information such as:

  • Legal names;
  • Address for service for landlord;
  • Tenancy term;
  • Rent amount;
  • Services and utilities included; and
  • Rent deposit.

It will be available in both English and French, and the Ministry plans to introduce guidebooks available in multiple languages—this is important in large, diverse cities such as Toronto and London.

The standard lease also allows for additional terms to be attached as a schedule to the lease—for example, rules for common amenities such as laundry facilities or changes to be made to the unit prior to commencement of the tenancy. However, these additional terms cannot take away a right or responsibility under the RTA. If an additional term conflicts with the RTA, that term is void and unenforceable. The standard lease gives some examples of common unenforceable terms such as forbidding pets, guest restrictions, or deposits not permitted under the RTA. Both landlords and tenants still must exercise caution when using the additional terms to ensure that they are in accordance with the RTA.

Finally, the standard lease contains general information on tenant and landlord rights throughout the lease and in the appendix. The appendix in particular highlights and summarizes important parts of the RTA that commonly affect tenancies. For example, the appendix gives information on how and when a tenancy can be terminated, when a landlord may enter the unit, and maintenance obligations. While the appendix cannot take the place of professional legal advice, it allows tenants and landlords to have a general understanding of the RTA and their obligations and rights under it.

 

Why It Is Important.

Until now, landlords and tenants were not required to use any particular form of lease. Landlords either created their own leases or relied on leases found online that were created by other landlords or tenants. As a result, many leases contained terms that were illegal and misconceptions were widely circulated, even amongst educated parties. For example, many leases contain clauses that forbid pets; however, the RTA states that leases cannot forbid pets and such clauses are void and unenforceable. This is not to say that landlords were always purposefully taking advantage of tenants—often, the landlords were unaware of the illegality of certain terms and did not seek legal advice while drafting their leases. As such, many tenants and landlords often were unaware of the illegality of these terms until it was too late.

Landlords and tenants were often forced to go to the Landlord and Tenant Board to resolve issues that could have been avoided with a more comprehensive or better-worded lease. The standard lease uses simple and straightforward language that both landlords and tenants are able to understand, and makes certain information that was often omitted (such as a proper address for service for the landlord) mandatory.

The standard lease is a win not only for tenants, but also landlords who will see benefits as well. The benefits to tenants are clear—they are provided with more information than ever before, their rights are clearly outlined, and they are receiving more protection through standardized lease terms. Landlords are also protected from the consequences of a weak or illegal lease and they are no longer responsible for attempting to create a lease themselves. The Landlord and Tenant Board recognizes that there is a power imbalance in the landlord/tenant relationship and often interprets the terms of the lease in favour of the non-drafting party (often the tenant)—with the standard lease, the power imbalance is lessened, as both the landlord and the tenant are given the same information.

One of the goals of the standard lease is to reduce the number of disputes that reach the Landlord and Tenant Board. The standard lease clarifies the rights and responsibilities of both parties and gives detailed information that can prevent common misconceptions about the RTA from being the cause of a dispute. This will save costs on legal representation for disputes that would not have happened if a standard lease was used. While the standard lease cannot take the place of professional legal advice, it allows landlords to dedicate more time and resources towards legitimate disputes that go beyond the contents of a lease.

The introduction of a standard lease will also make real estate transactions involving tenancies easier for all parties, as it will be less likely that the leases will include illegal or unclear terms. These issues can complicate real estate transactions—leading to higher legal fees, the cancelling of a transaction, or even litigation. A standard lease will not solve all of the issues faced when dealing with rental properties, but it will hopefully lessen hurdles faced on both sides on the transaction.

 

Disclaimer: While every effort has been made to ensure the accuracy of this article, it is not intended to provide legal advice. Individual situations will differ and should be discussed with a lawyer or paralegal. For specific technical and/or legal advice, please contact Chinneck Law.

 

For More Information.

 Ministry of Housing: http://www.mah.gov.on.ca/Page18704.aspx

Landlord and Tenant Board: http://www.sjto.gov.on.ca/ltb/

Residential Tenancies Act: https://www.ontario.ca/laws/statute/06r17

Standard Lease Download: http://www.forms.ssb.gov.on.ca/mbs/ssb/forms/ssbforms.nsf/FormDetail?OpenForm&ACT=RDR&TAB=PROFILE&SRCH=&ENV=WWE&TIT=2229E&NO=047-2229E

PDF copy of article – What you need to know about the mandatory Standard Lease Agreement

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