Landlords and tenants, take note – as of April 30, 2018, in Ontario a new standard form lease will apply to all tenancies in houses, apartments, condominiums, and basement units. The standard form lease seeks to enhance clarity and consistency while avoiding unnecessary disputes.  Conscientious landlords will still be able to craft meticulous tenancy agreements by attaching additional terms to the standard lease, but diligent tenants will be able to more easily asses whether a landlord has attempted to insert voidable terms.  Beyond the standard form lease, new substantive rights to ensure compliance with the standard form lease are created in sections 12.1 and 47.0.1 of the Residential Tenancies Act, 2006  (the “Act”).

Background

Bill 124, Rental Fairness Act, 2017, was introduced in the Legislative Assembly of Ontario on April 24, 2017.  The Bill consisted of a host of amendments to the Act, including new eviction rules for when a landlord can repossess a unit for the landlord’s own use and changes to when a landlord can apply for an Above Guideline Increase in rent.  The standard form lease portion of the bill makes strictly oral lease agreements close to impossible.  The Bill follows the lead of numerous other provinces by providing one form that governs all residential tenancies, written in plain language, and consisting of check boxes, numbered sections, and notes explaining tenant rights.  The preparation of a tenancy agreement under the new regime becomes an exercise in filling in the blanks.  Bill 124 achieved Royal Assent on May 30, 2017, and while the standard form lease provisions technically came into effect on that date, the wording of section 12.1 for the most part deals with tenancies entered into on or after April 30, 2018.

The Tenant’s Perspective

The standard form lease gives tenants a quick primer on their rights and responsibilities under the Act.  In addition to the explanatory notes that cover topics such as the enforcement of smoking rules, at page 19 of the lease there is six-page appendix covering everything from the relevant notice periods for a particular class of tenancies to a landlord’s obligation to pay interest on a rent deposit that is held for more than twelve months.  Importantly, section 15 of the standard lease gives tenants the tools that they need to asses the enforceability of any additional terms that a landlord might try and impose.  Section 15 points out some of the unenforceable terms that are frequently included in tenancy agreements, despite them being contrary to the Act, such as when a landlord does not allow a tenant to keep pets.

The Landlord’s Perspective 

Especially for smaller landlords, the standard form lease is simple enough to follow with its liberal use of yes-or-no questions, check boxes, and mandatory fields that serve to make sure that important information and terms are not inadvertently left to verbal agreement.  The mandatory terms will probably be sufficient for the majority of leases, but for landlords seeking more comprehensive agreements, they can attach additional terms in section 15.  Landlords must still be wary of the explicit pronouncement in section 15 that an “additional term cannot take away a right or responsibility under the Residential Tenancies Act, 2006.”

The New Rights

The standard lease has a bite to match its bark.  Subsections 12.1 (5) to (10) give tenants the right to demand that their landlord provides a signed standard form lease and if the landlord fails to deliver within 21 days, the tenant can withhold one month’s rent.  Consequently, oral leases are essentially a thing of the past, so long as a tenant its informed of this right.  If the landlord later complies with the demand to provide a signed standard form lease, the landlord is entitled to recover the withheld rent, but the landlord must comply with the demand within the 30 days that follow this initial 21-day period.  Put simply, if a tenant asks for the standard form lease and the landlord does not provide it within 51 days, the tenant can withhold one month’s rent and keep it indefinitely.

The more powerful provisions are found in section 47.0.1 of the Act.  If the tenant demands that the landlord provides a standard form lease and the landlord does not provide it within 21 days, or alternatively, if the landlord does in fact provide the lease, but the tenant chooses not to enter into the agreement, the tenant can unilaterally end a yearly or fixed term lease by giving 60 days notice, effective on the last day of a rental period.  

The effect of section 47.0.1 is to create a new avenue for a tenant to terminate their yearly or fixed-term tenancy, entered into after April 30, 2018, as a way of ensuring that landlords provide the standard form leases.  The right of a tenant to force a landlord to deliver a compliant standard form lease acts as a powerful enforcement mechanism.

Conclusion

The standard form lease and the changes to the Act will hopefully make the rights and responsibilities of both landlords and tenants clearer for all parties.  If the form is successful, both landlords and tenants will be better informed, and disputes over unenforceable terms might float to the surface earlier, resulting in less of a need for disputes to proceed to a hearing.  The right to withhold rent, albeit in limited circumstances, is a powerful tool to force landlords to comply with the Act, as is the newly established ground for early termination.

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Mike D’Aloisio

Hamish Mills-McEwan, Articling Student