Toronto Income Property Newsletter – April 2014

Well it looks like spring is finally here. It might seem like an April Fools’ joke, but we’re supposed to get several days in a row of nice warm weather. It’s about time. The Toronto real estate market could use a jolt of spring time air as we need more people to list their homes to quell some of this heightened demand. Everyone is finally coming around to the notion that we are not in a bubble and that these prices can sustain themselves due to the continued low interest rates. There have been a lot of multiple and bully offers over this first quarter, so I’d like to see the situation level off a little. I do believe that these warmer temperatures will help.

I’d like to wish everyone all the best for a Happy Easter long weekend.

– P.A.

A Quick Guide to the Ontario Residential Tenancies Act

The relationship between a landlord and tenant is governed in Ontario by the Residential Tenancies Act. This applies to only residential dwellings and not to commercial leases. The rental unit is usually an apartment, a house, or a room in a rooming or boarding house. The Act also applies to care homes, retirement homes, and sites in a mobile home park. The Act does not apply if the tenant shares a kitchen or bathroom with the landlord. Here are some relevant statutes of the Tenancies Act which all landlords should be familiar with:

The Landlord and Tenant Board (the Board) exists to resolve disputes between tenants and landlords. Either a landlord or a tenant can apply to the Board to mediate a dispute. The Board also provides landlords and tenants with information about the rights and responsibilities they have under the Act. In Toronto, the Board is located at 79 St. Clair Avenue Ease, just east of Yonge Street.

The landlord and tenant may sign a lease when a new tenancy is entered into, or they can have an oral agreement. The lease should not contain any clauses that contravene the Act. When a new tenancy is entered into, the landlord and tenant decide how much the rent will be for a rental unit and which services will be included in the rent (for example, parking, cable, heat, electricity). In most cases, the rent cannot be increased until at least 12 months after the tenant moved in.

The landlord can collect a rent deposit from a new tenant on or before the start of a new tenancy. Where the tenant pays rent by the month, the deposit cannot be more than one month’s rent; where the tenant pays rent by the week, the deposit cannot be more than one week’s rent. The rent deposit can only be used as the rent payment for the last month or week before the tenant moves out. It cannot be used for anything else, such as repairing damage to the rental unit.

The landlord is permitted to increase the rent each year only by the prescribed amount allowed by the province. The landlord must give at least 90 days notice in writing of any rent increase. The proper forms for this notice (Form N1, N2 or N3) are available from the Board.

The landlord has to keep the rental property in a good state of repair. A landlord must obey all health, safety, housing and maintenance standards, as set out in any provincial laws or municipal bylaws. The suite must also conform to Ontario Fire Code. A tenant can apply to the Board if the landlord is not meeting their maintenance obligations. If the Board agrees that the landlord is not meeting their maintenance obligations, there are a number of remedies the Board can order. For example, the Board can order that the tenant does not have to pay some or all of the rent until the landlord does the repairs or that the landlord cannot increase the rent for the rental unit until any serious maintenance problems are fixed. The landlord cannot shut off or interfere with the supply of heat, electricity or water to a tenant’s rental unit:

A landlord can enter a tenant’s rental unit without written notice if:

• there is an emergency such as a fire,
• the tenant agrees to let the landlord in,
• the rental agreement requires the landlord to clean the unit – unless the agreement allows different hours for cleaning,
• the landlord or tenant has given a notice of termination, or they have an agreement to end the tenancy, and the landlord wants to show the unit to a potential new tenant (in this case, although notice is not required, the landlord must try to tell the tenant before entering for this reason).

A landlord can enter the rental unit between 8 a.m. and 8 p.m., and only if they have given the tenant 24 hours written notice:

• to make repairs or do work in the unit,
• to carry out an inspection, where reasonable, in order to determine whether repairs are needed,
• to allow a potential mortgagee or insurer of the complex to view the unit,
• to allow a potential purchaser to view the rental unit (note: the Act also allows a registered real estate agent or broker to enter for this purpose if they have written authorization from the landlord),
• to allow an engineer, architect or other similar professional to make an inspection for a proposed conversion under the Condominium Act; or

The notice must include the reason why the landlord wants to enter the rental unit and must state what time, between 8 a.m. and 8 p.m., the landlord will enter the unit. If the landlord gives the tenant the correct notice, the landlord can enter even if the tenant is not at home.

The end of a lease does not mean a tenant has to move out. A new lease can be made or the landlord and tenant can agree to renew the lease for another fixed term period. Where the tenant stays on as a monthly or weekly tenant, all the rules of the former lease will still apply to the landlord and tenant. But the landlord can increase the rent each year by the amount allowed under the Act.

A tenant and landlord can agree to end a tenancy early. The parties can make an oral agreement to end the tenancy, but it is best to have a written agreement. A notice of termination does not have to be given by either the landlord or the tenant if there is an agreement to end the tenancy.

A landlord can end a tenancy only for the reasons allowed by the Act. The first step is for the landlord to give the tenant notice in writing that they want the tenant to move out. The proper forms a landlord must use for giving a notice to end the tenancy are available from the Board. If the tenant does not move out after receiving the notice, the landlord can ask the Board to end the tenancy by filing an application. The Board will decide if the tenancy should end after holding a hearing. Both the landlord and the tenant can come to the hearing and explain their side to a Member of the Board.

The Act allows a landlord to give a tenant notice if the tenant, the tenant’s guest or someone else who lives in the rental unit either does something they should not do, or does not do something they should. For example:

• not paying the rent in full,
• persistently paying the rent late,
• causing damage to the rental property,
• illegal activity,
• affecting the safety of others,
• disturbing the enjoyment of other tenants or the landlord,
• allowing too many people to live in the rental unit (“overcrowding”),

There are some other reasons for eviction that are not related to what the tenant has done or not done. For example:

• the landlord wants the rental unit for their own use or for the use of an immediate family member or a caregiver,
• the landlord has agreed to sell the property and the purchaser wants all or part of the property for their own use or for the use of an immediate family member or a caregiver,
• the landlord plans major repairs or renovations that require a building permit and vacant possession,
• the landlord plans to demolish the rental property,in a care home that is occupied for the sole reason of receiving therapy or rehabilitation, the tenant’s rehabilitation or therapy program has ended,

For more information on the Residential Tenancies Act, you can visit the Board’s website at LTB.gov.on.ca or call them at 416-645-8080.