Real Estate

Be cautious of add-ons to new lease agreement

By Paula Kulig, AdvocateDaily.com Contributor

Ontario’s new standardized lease agreement for residential tenancies will bring uniformity to the rental process, but landlords must ensure that any additional items they attach to the document don’t disregard the basic agreement, says Toronto real estate lawyer Sarita Samaroo-Tsaktsiris.

Under s. 15 of the form — which took effect April 30, 2018 and applies to all rental residences except care homes, sites in mobile home parks, most social housing and land lease communities — a landlord is permitted to attach a document with additional terms if the tenant approves.

“I’ve warned my landlord clients to ensure that provisions are legal and are in line with the intention of the standardized lease. If a landlord attempts to insert clauses as they please, they should be cautioned. I've been asked if landlords could add an additional month's rent or further requests for deposits in this section, and I would caution against this,” says Samaroo-Tsaktsiris, principal of SST Law Professional Corporation.

“If there’s a disagreement and a tenant challenges one of the provisions to the Landlord and Tenant Board and it’s deemed an illegal clause, there could be consequences for that landlord,” she tells AdvocateDaily.com.

The Residential Tenancy Agreement includes an eight-page form and a six-page appendix that provides basic information on everything from ending a tenancy and rent increases to maintenance/repairs and smoking. The form itself, which is filled out by the landlord and given to the tenant, sets out rental details that were included in previous forms, but in a clear, concise way.

“Previous leases can still be used that were drafted prior to April 30, unless they include clauses that are illegal. They can be challenged based on the new rules,” Samaroo-Tsaktsiris says.

The new regime also allows a tenant to withhold one month’s rent if a copy of the lease is requested and isn’t provided by the landlord within 21 days, the Financial Post reports.

“That is a major change,”Samaroo-Tsaktsiris says. “Sometimes there have been issues where a landlord wouldn’t provide a copy of the lease. So, the government has stepped in and said you can’t collect one month’s rent if you do not provide a copy of the executed lease agreement within 21 days.”

The standardized agreement also refers to daily and weekly tenancies, which may be a nod to the popularity of short-term rental services. It provides for a notice period shorter than the 60-day term for monthly tenancies, she says. It also requires the landlord to provide information on the last 12 months of electricity usage if a tenant is responsible for paying for hydro.

Samaroo-Tsaktsiris says the new agreement now allows landlords to collect an advance deposit that is equivalent to no more than one month’s rent — which is to be applied to last month’s rent — but the first month’s rent is not payable by tenants until the day they move in. The change is significant for real estate agents who act for landlords in finding tenants for their properties, she says.

Previously, when two months’ rent was paid in advance, one month went to cover the agent’s commission upon acceptance of an offer, and the HST — which is payable on that commission — came from the other month’s rent received by the landlord, she explains, noting that under the new system, the HST isn’t taken into account.

“Realtors will now have to ask for additional funds from landlords to cover the HST for their commission. That’s an issue. I’ve spoken to realtors and they said this should have been considered at the time of the drafting of the agreement,” Samaroo-Tsaktsiris says.

“I believe the standardized lease has to be amended and a second version must factor in who is responsible for the one month’s rent payable for the commission, in addition to the HST, so that it doesn’t make it complicated for real estate agents to be paid.”

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