Mandatory Lease Agreement in Ontario

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As directed by the Rental Fairness Act 2017, the Ministry of Municipal Affairs and Housing created the mandatory residential lease with 5 reasons in mind:

  1. To use “easy to understand language to help
  2. Landlords and tenants understand their rights and responsibilities,”
  3. To reduce illegal provisions,
  4. To reduce misunderstandings caused by verbal agreements, and
  5. To reduce dispute resolutions with the Landlord and Tenant Board.

The Act also introduced additional protections.  Here are some highlights.

Landlord’s Personal Use: Due to abuse of the Landlord’s own use provision, the landlord must give 60 days’ notice before the end of the tenancy, and pay the tenant one month’s rent as a penalty. Alternatively the landlord can offer another unit acceptable to the tenant.

What if a buyer requires a rental unit? The payment penalty of one-month’s rent is not required in this case, but the property cannot have more than 3 unit rental. Once an offer becomes unconditional, and notice to terminate is given to the tenant, the landlord can apply to the Landlord Tenant Board to affect the termination. The Buyer must sign an affidavit stating that they or a member of their immediate family will occupy the unit on closing, and be required to attend any court hearing to confirm.

Added Statement in Agreement of Purchase and Sale: In the notice of termination clause in the Offer, it should additionally state that the buyer intends to occupy the property for at least one year and to indemnify the seller for any damages suffered because the buyer did not move in. This is important because there are a number of penalties that can be imposed, as well as an administrative fine of up to $25,000.

You Can Add Additional Clauses to the Agreement.

As the lease agreement states, “An additional term cannot take away a right or responsibility under the Residential Tenancies Act, 2006. Any conflicting term will be void and not binding.

Smoking

In the lease, the landlord and tenant can agree to allow or prohibit smoking in the unit and on the landlord’s property. Even if smoking is allowed, the landlord can apply to the Board if it substantially interferes with “reasonable enjoyment of the landlord or other tenants, causes undue damage, impairs safety, or substantially interferes with another lawful right, privilege or interest of the landlord.”

What About Marijuana?

 “Landlords will be able to spell out a ban on smoking marijuana in rental units for new leases post-legalization — the same as they do for tobacco use,” this according to a Toronto Star article dated January 22, 2018 by Peter Goffin of the Canadian Press.

Author and Lawyer, Mark Weisleader, recommends a number of additional terms to include with the Lease Agreement. In it, he recommends a No Smoking/Marijuana Clause to disallow smoking of any kind including marijuana, as well as prohibiting the growth of cannabis in a unit.

The mandatory agreement does not apply to month-to-month rentals and lease agreements prior to April 30, 2018.