Saturday, 15 June 2013

My Assigned Lease: What is my Liability?

This week I received an email inquiry about the implications of a lease assignment.  Looking back through my blog I note that this is one area that I haven't written much about.  I think this is because assignments in the Residential Tenancies context are fairly rare.  That being said, it is clear that some landlords do cause or allow residential leases to be assigned and what is equally clear is that some landlords are unaware of the Rules that apply to lease assignments under the Residential Tenancies Act.

The fact scenario that I received via email this week goes something like this.  The rental property, located in Ontario, Canada, is a rather sizeable apartment.  It was first rented out by the landlord, to a group of tenants in May of 2008.  Subsequently, the lease (term of the lease unknown but presumed to be lengthy) was assigned to a second group of tenants, and then again to a third group of tenants.  The property seems to be occupied by groups of three tenants at a time.  Each group of tenants accepts the lease as an assignment to them as a group.

The current group of tenants, having received a Notice of Rent Increase, decided that the rent was too high and they decided to terminate their lease (now on a month to month tenancy) on a valid 60 day Notice of Termination.  Prior to the current tenants vacating the premises the landlord came to do a move out inspection.  In that inspection the landlord determined that the carpet was ruined and needed replacing and that a wall had been painted without consent and needed to be repainted.  The landlord is seeking to charge these tenants (the last group of three) $1800 for the carpet and $450 to repaint the wall.

The last group of tenants object to the damages assessment as they say that they didn't damage or soil the carpet and they further say that they were not the ones who painted the wall.  Their position is that the carpet and wall are in the same condition that they received it in from the prior tenants who assigned the lease to them.  Unfortunately, there is no move in/move out inspection between the groups of tenants and neither the landlord or tenant have definitive proof of the condition of the rental unit when it changed hands.  This again, is a situation where a signed move in inspection would have been tremendously useful.

The question of who damaged the carpet (if indeed it is damaged and not just worn out--we know it is a minimum of 5 years old) is a question of fact that will need to be determined by the adjudicator.  As you see, "who" caused the damage is indeed very relevant and critical in determining who is liable for any damages.  The same is true for the painted wall---who painted it?  As an aside--and this blog won't get into how to defend a claim for damages (see other articles on this point) but suffice it to say that reasonable wear and tear and the "life span" of a paint job (see regulations for a Statutorily recognized lifespan of painted walls) suggest that the landlord's claim in this case is over-reaching.

So, why is it important to know "who" as between the three groups of tenants caused the damage?  The reason lies in responsibilities that the Residential Tenancies Act imposes on tenants who take an assignment of a lease from prior tenants.  The section of the Act is fairly complicated but nevertheless must be understood to understand liability. That section is Part VI of the Residential Tenancies Act starting at section 95.

Of these sections, the part relevant to the fact scenario described herein is section 95(8).  What that subsection describes and explains is that liability for damage and modifications (like carpet and paint) remain with the tenant(s) who caused the damage or modification.  So, in a situation like this fact scenario, where you have three groups of tenants who took an assignment of the same lease--the first group of tenants are liable for any damage or modifications they caused up to the date of the assignment.  The second group of tenants are only liable for the damages and modifications they cause from the date they took the assignment of the lease to the date they assigned the lease to the last group of tenants.  What needs to be understood is that in the Residential Tenancies context, the liabilities of one group of tenants (for damage, medication, etc.) does not follow the assignment and are NOT imposed on the subsequent assignee tenants.  A landlord who suffers losses must sue the group of tenants who caused the damage and not just the last group of tenants who are in possession when the lease ends.

So, in the fact scenario recounted above, the landlord will need to establish that the carpet damage occurred after the lease was assigned to the third group of tenants.  If the landlord is unable to establish that fact, and the tenants' evidence is that the carpet is in the same or better shape as when they received it; it is unlikely that the landlord will be able to impose any liability on the third group of tenants due to the operation of Section 95 of the Residential Tenancies Act.  Any evidence that the last group of tenants can find to support their contention that they received the unit in the condition the landlord is complaining about is to their benefit.  For example, it would be great to find pictures of the unit (Facebook maybe?) from the previous tenants that proves the condition of the unit prior to them taking possession.  While it may be difficult to find photos that show the carpet clearly enough--it is entirely reasonable to perhaps find a picture of the painted wall at a time pre-dating the assignment of the tenancy.

Ultimately, the burden of proof in an application or statement of claim seeking compensation for this damage rests on the Landlord.  It is a difficult burden to meet if the landlord failed to take a reasonable step of conducting a move out// move in inspection between the various groups of tenants.

Michael K. E. Thiele
Ottawa, Ontario

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Any answers provided are intended to reflect the Law of Ontario, Canada. The answers are not legal advice and no one should rely on the answers provided as legal advice. The answers are intended to be general information about Ontario Law and are the personal view of the author based on the limited facts provided to the author. The answers may not be legally accurate and may indeed be contrary to the law of Ontario. Answers and conclusions drawn may have been different if facts had been shared that have not been disclosed in the comment/question. This blog is intended to assist people in learning about Ontario Landlord and Tenant Law. However, if you have actual legal problems this blog should under no circumstances replace proper legal advice obtained by retaining a lawyer or licensed paralegal to advise you. Nothing in this blog, comments submitted or answers provided, gives rise to a solicitor and client relationship. Comments are published as submitted and commenters should be aware that if they identify themselves in a comment that their identity will become public upon the comment being published. Comments that have been published may be deleted upon request to the author.

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About Michael Thiele

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Ottawa lawyer and partner at Quinn Thiele Mineault Grodzki LLP.  Graduate of Queen's University in Kingston, Ontario.  Called to the bar in Ontario in 1997.  Undergraduate degree at Colby College, Waterville Maine, U.S.A.