There are a myriad of reasons why a buyer may purchase a residential property. While some might want the property for personal use, others may choose to use it as an investment property, renting it to tenants for extra income. In the latter case, understanding landlord responsibilities before making the purchase is paramount for all parties to ensure not only a harmonious living experience, but also to ensure that particular legal requirements are addressed. This blog will outline landlord responsibilities and will serve as a primer on landlord and tenant law in Ontario.
The Residential Tenancies Act (also referred to as the “RTA”) is the primary legislation that governs the relationship between landlords and tenants in Ontario. The Residential Tenancies Act includes provisions regarding the protections afforded to tenants against unjust evictions and arbitrary rent increases, while establishing guidelines for landlords to ensure property upkeep and timely repairs. It also outlines key regulations pertaining to lease agreements. The following sections outline the key components of the Residential Tenancies Act, but if the landlord is ever in doubt of their rights and responsibilities, the legislation should be examined.
One of the most significant changes to the Residential Tenancies Act is requiring landlords and tenants to use the standard lease, as found in the Central Forms Repository. The standard lease applies to single and semi-detached houses, apartment buildings, condominiums, and secondary units. However, it does not apply to tenancies with special rules, such as care homes, mobile home parks, and social housing.
There are consequences for landlords if the standard form lease is not used. For example, if the tenant requests (in writing) a standard lease, and the landlord fails to provide one, the tenant may withhold one month’s rent or give 60 days’ notice to terminate the tenancy early. Further, if the landlord continues to ignore the tenant’s request for an additional 30 days after the tenant has begun withholding rent, the tenant will not be required to repay the withheld rent. The landlord should provide the standard form for tenancy to avoid these consequences.
Once the tenancy has begun, the landlord cannot enter the unit except under special circumstances. The landlord is only permitted to enter where advanced notice is provided to the tenant 24 hours in advance and specifies the reason, day, and time of entry. The reason for entry must also comply with the Residential Tenancies Act, which includes repair or replacement, potential mortgagee or insurer viewing, professional inspection, inspection for habitation standards, and other reasons permitted by the lease agreement. The landlord can enter without written notice, but only in an emergency or if the tenant permits their entry.
Every landlord must be familiar with their access rights and restrictions to avoid infringement of the Residential Tenancies Act.
The landlord has important restrictions when it comes to remedies for the tenant’s non-payment of rent, or for repossessing the property. Typically, the landlord must begin proceedings with the Landlord and Tenant Board (also referred to as the “LTB”) to terminate the tenancy or recover the rental arrears. To do so, the landlord must provide the tenant with a notice to terminate a tenancy early for non-payment of rent, and after 14 days without repayment of rent, the landlord can bring an application to the Landlord and Tenant Board. The landlord cannot unilaterally seize the tenant’s goods as a remedy for non-payment.
The landlord is similarly restricted from terminating the tenancy and repossessing the unit. Even where the fixed-term tenancy ends, it converts to a month-to-month tenancy per the Residential Tenancies Act if the landlord has no right to repossess after the tenancy ends. The landlord can only repossess the unit under the “fault” and “non-fault” grounds under the Residential Tenancies Act. These include:
- The tenant has caused damage to the building;
- The landlord wants to personally occupy the property or for their spouse, child, or caregiver to occupy the property;
- The premises will be occupied by a person who will provide “care services” to the landlord.
Even where the landlord is entitled to repossess the unit, important procedural requirements must be met. Specifically, the Residential Tenancies Act includes notice periods for these grounds of termination. The landlord must consult the Residential Tenancies Act to confirm the applicable notice period when terminating a tenancy for the above reasons.
The landlord is entitled to set the price or the rent at the outset of the tenancy, but there are particular restrictions regarding rental increases. The landlord is restricted from increasing rent more than once every 12 months and must provide at least 90 days’ notice when doing so. The Ministry of Housing sets the guideline for the amount that rent can be increased (typically around 2.5% per annum).
Despite this general restriction, the landlord can increase by above-guideline amounts if the landlord brings an application or if the tenant agrees to the above-guideline increase in return for a new service or expenditure. The landlord must consult the Residential Tenancies Act for the requirements for bringing such an application, and general restrictions when it comes to rent.
If you are buying a property that is subject to a tenancy, or you intend to rent the property rather than retain it for personal use, the real estate lawyers at Bader Law can guide you through every step of your residential real estate transaction. We will ensure your interests are protected while assisting you through the process by reviewing all relevant paperwork and contracts, negotiating on your behalf, and defending your rights if a dispute arises. At Bader Law we also advise on employment, corporate, and estate matters. To learn more about how we can make the buying and selling process less stressful, contact us online or call us at (289) 652-9092.