Investors And The Recent Changes To The Residential Tenancies Act
Investors - RESIDENTIAL TENANCIES ACT
Investors, owning an investment property in the Greater Toronto/Hamilton Area can be a great way to generate additional household income and can be one of the most lucrative investments. Unfortunately, having the wrong tenants can end up costing you more than you make. In May 2018, the Rental Fairness Act, 2017 was brought into force and introduced amendments to the Residential Tenancies Act which could seriously impact your investment property. This article, written by Peter Balatidis - Mississauga Landlord Tenant Paralegal, will deal with two of the many recent changes to the Act as it relates to the new lease form and the rights of investors and corporate landlords.
STANDARDIZED LEASE FORM
The Ministry of Housing developed and implemented a new standardized lease form to be used for all written residential tenancies in Ontario. Investors, who have retained the services of a Realtor to find potential tenants need to be informed of these new changes. The OREA offer to lease is not an agreement on its own and must be used in conjunction with the new standardized lease form. Investors are free to use the OREA schedules to add on additional clauses. However, clauses which are illegal or inconsistent with the Act and its Regulations are un- enforceable and the parties will not be able to rely on them. Investors entering into a written residential tenancy agreement on or after April 30, 2018 are required to use this new Standardized lease form as it will be mandatory
for all written tenancy agreements in Ontario. The Residential Tenancies Act does not require a lease to be in writing. A lease can be in writing, oral or implied. However, investors are strongly encouraged to document the terms of the tenancy by way of a written agreement, signed by the landlord(s) and the tenant(s) before the tenancy begins. A written lease agreement is important as it defines the responsibilities of the parties and allows the landlord(s) to reserve certain rights. If landlords do not use the Standardized lease form when entering into a written tenancy agreement on or after April 30, 2018, they will have 21 days to provide one to the tenant upon written request. If the landlord does not provide the tenant with a Standard Form of Lease within 21 days after the written request was made, the tenant is allowed to:
a) Withhold one month’s rent; or
b) Give the landlord a 60 days’ notice to end their tenancy early.
If the tenant withholds the rent payment, the landlord has thirty (30) days to provide the tenant with a copy of the standardized lease form. If the landlord does not comply, the tenant will not have to repay that month’s rent. It is important to note, that the tenant is only allowed to withhold one month’s rent and is expected to continue making their monthly rent payments for the duration of their tenancy. If the landlord provides the tenant with a standardized lease form within 21 days of the written request, but the tenant does not agree with the terms, the tenant can give the landlord 60 days’ notice to end their tenancy early. However, this notice cannot be given later than 30 days after the landlord provided a copy of the lease. The termination date, on the notice must also be at the end of a rental period.
If a monthly or fixed-term tenancy agreement was signed before April 30, 2018, and it renews to a month-to-month tenancy after April 30, 2018, the tenant cannot ask for a standardized lease form unless both the landlord and tenant agree and new terms are negotiated on or after April 30, 2018.
It’s been well established in case law that a corporation is its own separate and distinct entity but how does registering your investment property under a corporation effect your rights under the Act?
In 2010, these issues were addressed by the Court of Appeal in the case of Edward Slapsys c/o 1406393 Ontario Inc., and Abrams.
The main issue in appeal was whether s.48 of the Act, permitted a sole shareholder of a corporation to evict a tenant if the shareholder requires possession for personal occupancy.
By way of background, the landlord owned a rental property registered under a numbered company. The landlord issued an eviction notice stating that he required the property for his own personal use. The Tenant opposed the application and the matter was heard before the LTB.
The tenants’ position was that the sole shareholder of the corporation was not the landlord as defined by the Act and therefore could not evict the tenant. The case was appealed to the Divisional Court of Ontario with a decision favourable to the landlord. The tenant appealed the decision to the Court of Appeal. The Court determined that the definition of landlord is not restricted to the owner of a rental unit. When the Rental Fairness Act was introduced, the law overrode this decision and corporate landlords are no longer eligible to evict a tenant for their own use.
Section 2 of the Act provides in part:
(a) The owner of a rental unit or any other person who permits occupancy of a rental unit, other than a tenant who occupies a rental unit in a residential complex and who permits another person to also occupy the unit…
The Court ruled that Slapsys was the sole directing mind of the corporate owner and therefore a landlord. However, the recent legislative changes no longer allow for a corporate landlord to evict for its own personal use. Did our legislature take this decision into consideration when implementing this change? The issues dealing with corporate landlords will be heard on a case-by-case basis.
Peter Balatidis is a paralegal with Balatidis Legal Service who specializes in Residential Tenancies Law. Trust the professional advice of Balatidis Legal Services; landlord and tenant board paralegals servicing Mississauga, Brampton, Toronto, Oakville, Burlington and Hamilton.