Thursday, 14 August 2014

Last Month's Rent Deposit: When do you use it?

Tenants in Ontario are quite familiar with usual requirement of landlords to provide a first month's rent and a Last Month's Rent deposit before moving into an apartment.  In fact, it is unusual for a landlord to provide a tenant with possession until such time as these two amounts are paid.


As discussed in other articles in this blog, a Last Month's Rent deposit is the amount of the monthly rent that is held by the landlord for the last month of the tenancy.  The legal authority to collect this deposit may be found in section 106 of the Residential Tenancies Act.  The amount of the deposit is limited to the lesser or the amount of rent for one rent period and the amount of rent for one month.  The deposit could be less than one month of rent if there is a rent discount [see section 106(2) RTA for the limit on the amount of the deposit].


So what normally happens is that a tenant signs a one year lease that sets out the first month of the lease and which sets out the last day of the last month of the lease.  For example, a lease may provide that the lease starts on June 1, 2014, and that it ends on May 31, 2015.  This is for a term of 12 months.  The question is, when does the last month rent deposit get used?  Many tenants and landlords believe that the deposit is to be used for the month of May 2015 because that is the last day of the term of the written lease.  This is not necessarily correct.


While a person may have a written lease for 12 months, the fact is that in Ontario the tenancy does not end at the expiry of the term.  Automatically, using the example above, the lease continues on a month to month basis on June 1, 2015, unless the lease has been terminated by Notice of Termination that has been properly served.  If the tenancy has not been terminated by giving 60 days notice, the Last Month's Rent deposit is kept by the landlord until the tenancy is actually terminated.  This means that a tenant, who has not terminated the tenancy, is in fact required to pay the rent for June, 2015 and onwards.


To carry through on the example, let say the tenancy continued on a month to month basis until August 2015, and on August 15, 2015, the tenant decides to terminate her tenancy.  The tenant will provide the landlord with a 60 day Notice (Form N9), which will have October 31, 2015 as the termination date (the termination date must be the last day of a term).  In this example, the Last Month's Rent deposit will be applied to the month of October 2015.


Michael K. E. Thiele
Landlord and Tenant Lawyer
Ottawa, Ontario

80 comments:

  1. I just received a note from the landlord that because my last month's deposit was $304 when I moved in to my apartment in 1980, they require an additional $554 to bring it up to current rent levels. Is this legal? Can they do so after so many years?

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    1. Hi:

      An interesting question. Section 106 of the Residential Tenanices Act applies to residential tenancies in Ontario. It applies even though the law that applied to tenancies in Ontario---in 1980--was different than the law that applies today.

      There are two parts of your question that I think are of note. In 1980 the law that applied to Residential Tenancies was the Landlord and Tenant Act. In those days, the Landlord and Tenant Act (LTA) covered both commercial and residential tenancies. Within the Landlord and Tenant Act (LTA) there was a Part--namely Part IV---that dealt with residential tenancies. Section 84(2) of the LTA provided that a landlord had to pay a tenant interest on the Last Month's Rent deposit in the amount of 6% annually. Have you been paid this interest? Presuming that interest amount is simple interest, the annual payment to you should have been $18.24.

      The 6% rate of annual interest continued through various legislation including the Tenant Protection Act. It was only the 2006 Residential Tenancies Act that changed the interest amount from 6% to a varying percentage based on the annual guideline increase amount. However, from 1980 when you paid the rent deposit until the day section 106 of the Residential Tenancies Act came in force--you are owed 6% per year. Generally speaking the RTA came into force on January 1, 2007--meaning you should have been paid (roughly) 26 years times $18.25=$474.50 (though likely a but less depending on when your tenancy started in 1980.

      After January 1, 2007, you were entitled to annual interest on your deposit in the amount that is set annually. It has never been as high as 6% since then, but it has been several percent for a good number of those years. Did you get this interest? You are entitled to it and could apply to the Board to get it. If you did not get the interest you can see that the amount exceeds the difference that the landlord is looking for from you.

      To answer your question---can they ask you to increase your deposit. The answer is absolutely MAYBE based on section 106(3) RTA which states: "If the lawful rent increases after a tenant has paid a rent deposit, the landlord may require the tenant to pay an additional amount to increase the rent deposit up to the amount permitted by subsection (2) [which subsection sets the amount of the rent deposit].

      Interestingly, there does not appear to have been an equivalent section 106(3) in the Landlord and Tenant Act when your lease began. The authority under which your deposit was collected did not provide the landlord with the right to seek a top up of the deposit. Given the explicit transition provisions with respect to "interest" (transition meaning from the various statutes LTA to TPA to RTA), one wonders if section 106(3) applies to you.

      I think that one can read section 106(3) in different ways. The first way is that there is a general statutory right of a landlord to require a tenant to top up their rent deposit. In this interpretation of the application of the section a landlord gets to access this right simply by asking a tenant for the money.

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    2. The second way of reading the section (which is the way I favour), is that section 106(3) of the RTA provides a landlord with the right to require a tenant to top up the rent if the landlord contracts to that requirement in the lease. I think this is a fair reading of this subsection as it is dealing with a right (i.e. the right to require a rent deposit) which is discretionary on the part of the landlord in the first place. Section 106(1) only provides that a landlord may require a tenant to provide a rent deposit on or before entering into a tenancy agreement. The law does not require a landlord demand a rent deposit. Equally, the amount of the rent deposit is limited to a maximum--but not a minimum (see section 2). It seems to me that given that the amount of a rent deposit or whether there is a rent deposit at all is a matter of negotiation I think that the landlord must also negotiate with the tenant to agree to a top up of the rent deposit if the future rent increases. Hence, my argument and position is that the landlord may only require a tenant to top up the rent deposit if that requirement was negotiated at the time that the lease was entered into.

      Given that the LTA did not contain this top up provision when you rented your apartment in 1980, I doubt very much that the landlord negotiated this right (check your lease though). Accordingly, in your situation I don't think the landlord has the right to demand a top up of the rent deposit (at least that is my argument).

      There are other reasons to argue that the right to a top up of the deposit must be negotiated. Section 106(7) and section 106(9) only seem to "work" and not stand in contradiction to each other if one interprets section 106(3) as being a term that was negotiated for in the lease agreement.


      CONCLUSION

      So, I presume you thought you were asking a simple yes or no question. On the surface, the simple answer perhaps is "yes" and I think you would likely get a "yes" if asked around. I wonder, if you called the Landlord and Tenant Board 1-888 number and asked this question what they would tell you. My guess is that they would say "yes, the landlord may require the top up", but I don't actually know what they would say. (would you make the call and report back? I'd be curious).

      Aside from the foregoing, and presuming that you've been paid all the interest you are owed, the last question would be--what can the landlord do about it if you don't pay the top up of the rent deposit. It is of note that a clear remedy is not set out in the RTA for failing to pay the top up. Perhaps it become a basis for termination under an N5 as being a breach of a lawful right interest or privilege? It is a bit of a stretch though. Perhaps the most a landlord could get, presuming he is successful is an order for money. Not that this is immaterial, but if you are of severely limited means and coming up with the money is difficult this should give you comfort that eviction won't flow from a failure to pay.

      Anyway, I've likely said enough, but it certainly is interesting. If you happen to be in Ottawa and this issues turns into something bigger I'd be very please to help you out or speak to whoever represents you in this case (even if it is one of the Legal Aid or community legal clinics).

      Good luck
      Michael K. E. Thiele
      www.ottawalawyers.com

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  2. Hi Michael. Thank you for an excellent, detailed reply.

    To answer your questions, unfortunately, I do not have records from the beginning of the tenancy with respect to interest paid on the deposit. I do recall getting some interest payments but I am unsure if they were consistent and complete. Can I request (or demand) those records from the landlord prior to agreeing to pay the top up?

    I called the Landlord and Tenant board. They did in fact say "yes, the landlord can request the top up regardless of the law at the time". You mentioned 2 different interpretations of section 106(3). It seems the first interpretation is what the Board is advocating.

    The other relevant aspect to the matter is that in my original tenancy agreement, cable television was included in the rent. They terminated that inclusion in 2010. I simply accepted it and paid out of pocket for the cable to this day. I would like to now "counterclaim" what they owe me retroactively and to apply the top up against that amount (which is in the neighbourhood of $3600 assuming $60 per month cable bill), as well as requesting a $60 rent reduction going forward. Would this be an acceptable approach?

    Thank you kindly in advance.

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  3. Hi Micheal,

    I came across this reference online and a question for you regarding a challenging scenario. Three signed tenants agree amongst themselves to vacate their apartment on an intended date. The tenants are expecting their deposit paid to the landlord at move-in will fairly cover last month's rent. Two of the three fail to provide proper 2-months notice. The third roommate therefore decides to leave early unfortunately forfeiting their last month's tenancy. Though the landlord has no obligation to reimburse the 3rd tenant their share of the deposit, the other two roommates agree to take on this responsibility and promise to reimburse the 3rd their last month's rent. After the 3rd tenant vacates the apartment, the other two rescind their agreement and do not reimburse the 3rd. To what extend do you believe the 3rd tenant can dispute this, and if so, with which governing body should they plead their case?

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    1. Hi: I had to read this fact scenario a few times and I'm still not sure I get it. I'll repeat what I understand the case to be. There are three tenants in a single lease (joint tenants), which lease has gone month to month (i.e. beyond the fixed term). The three tenants decide to give the landlord a notice of termination and move out. One tenant gives the Notice of Termination, the other two tenants don't. The tenant who gave the Notice of Termination moves out earlier than the Notice of Termination.

      If these are the facts (and I'm not sure if I understood your question correctly), then my view of the situation is as follows. The tenancy is terminated as of the termination date in the 3rd tenant's Notice of Termination. The 3rd tenant is liable for the rent up to the termination date in the Notice of Termination--moving out early does not get that tenant a credit. The remaining two tenants, being in the unit after the termination date become unauthorized occupants after the termination date. The landlord being aware of the presence of these unauthorized occupants has the choice to apply to the Board to evict them, make a deal with them for a new tenancy, or have a new tenancy deemed with the passage of 60 days. Depending on how the landlord proceeds, the tenant who moved out may have some liability to the landlord for that period of time that it takes to evict the other two tenants but that third tenant could sue those tenants in small claims court for that amount. If the 3rd tenant (who moved out) is going to be liable to the landlord for any rent it is going to only happen if the landlord sues that tenant in small claims court as the landlord can not name this tenant in LTB proceedings as the tenant is no longer in possession of the rental unit.

      Please let me know if I've missed the point of your question and I will try again.

      Michael K. E. Thiele
      www.ottawalawyers.com

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  4. Hi Michael, you got it right! Apologies--it is a bit of a convoluted scenario... However, the agreement that the two roommates have made to their third to reimburse them the deposit is not legally binding..?

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    1. Hi Again: A promise to pay money is legally binding if there is consideration for the promise. What was exchanged for the promise to pay. How did the failure of the other 2 tenants to give notice cause the 3rd tenant any prejudice? Is it that on the failure of the 2 to give notice that there was an agreement that the 3rd tenant would move out early and the other 2 would continue in the tenancy, use the space and perhaps get another roommate to move in? If it is something like that then I can see the promise to pay the share of the deposit back to the tenant who moved out as being enforceable. He gave up the right to occupy the premises to the end of the term in exchange for the payment of his share of the deposit. That should be an enforceable agreement. Failing the payment being made the only place that the 3rd tenant could go is the small claims court (presuming a value under $25,000).

      Michael K. E. Thiele
      www.ottawalawyers.com

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  5. Hi,

    This article is very interesting, but my situation defers a little bit, and I wasn't able to find an answer anywhere else online. Can I ask for your advice?

    I am on a month to month basis and my landlord gave me notice June 22nd, asking me to leave by July 31st. I decided to leave as early as possible, and left the house June 30th. Initially the last month rent was going to be used for July, but since i left before that date, I would like to get my last month's rent back.

    It seems normal to me, but from a legal point of view, is this possible? Also, how much time does the landlord have to reimburse me ? (he is ignoring my texts and emails on the topic, and I am afraid he won't give me my money back)...

    Thank you so much for your help,
    Quentin

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    1. Hi Quentin: Can you tell me the reason for the landlord asking you to leave. Did he serve you with any kind of Notice of Termination? If you weren't served a Notice of Termination was there a letter or note of some of other written notice that explains the basis for the request. Michael K. E. Thiele

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    2. Hi Michael,
      Thank you very much for replying to my comment.
      He only sent me a text message saying "I will be applying your last month rent in July. Please vacate the premises by July 31st" (sent on June 22nd).
      Out of the blue, no explanation. I don't have a lease, I'm month to month so the contract stated 30 days notice.
      When I asked him for a reason, and a discussion face to face to understand his decision, he refused.
      I asked if I did anything to upset him and he said "I'm not upset, we have nothing to discuss". Always by text, since he would not talk to me.

      So I guess that would be the only notice of terminationn, if that is even valid? And there was no reason given at all.

      I didn't try to fight it and I just decided to leave asap, and sent him an email saying I would leave by June 30th...

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    3. HI Quentin: Thanks for the additional details. I'm left wondering if you are in Ontario? What the landlord did is wrong and contrary to the Residential Tenancies Act. In Ontario a tenancy continues automatically after the end of a fixed term lease. A landlord is not permitted to terminate the tenancy just because the lease is ending. Grounds for termination have to arise from the Residential Tenancies Act and they are limited. For cause terminations are obvious (non-payment of rent, illegal activity, impaired safety). But presuming you are a "good tenant" the only not for cause basis for termination is landlord's own use or purchaser's own use or (conversion,demolition or repair). Each of these not for cause grounds have specific forms and technical requirements and the last one even brings compensation with it and a right to reoccupy in some circumstances.

      All that to say, the landlord's text termination and unilaterally applying your LMR for a month that he decided was your last month was not legal. He is either ignorant of the law or presumed that you were and that you would simply comply with his demand. Does this mean that he gets to keep your LMR--for the month that you paid but were not living there? I think the answer is no, but you need to be creative to get there. Because the termination was illegal the law (RTA) doesn't speak to the issues created by this kind of termination.

      When a landlord provides a Notice of Termination, especially in not for cause terminations using a Notice of Termination, the RTA provides certain rights to terminate earlier to the tenant. In legal termination situations the landlord would be forced to return the LMR where in response to a legal notice you terminate sooner as authorized by the RTA.

      I think, if these are all the facts, that you interpret his Notice of Termination--via this text, as a Notice to Terminate for landlord's own use. The Notice is short so even if properly served in an N12 Notice of Termination Form, it would have been invalid. However, you plead reliance on the Notice given and that you assumed it was legal given that it was coming from your landlord. In an N12 situation (when legally served) you are entitled to terminate sooner (s.48(3) & (4), and you only have to give the landlord 10 days notice. On the facts you provide you have given that 10 days of notice. Hence, one argument is that you are entitled to a refund of the LMR using the logic of section 48 of the RTA and the right to terminate earlier. Basically you ask the Board to recognize what the Landlord has done as equivalent to an N12 notice and find that you are entitled to rely on the early termination provisions because you relied on his representation that you accepted as legally valid.


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    4. If that argument does not fly with the Board, and alternative way to proceed would be to take a T2 application and allege harassment and obstruction and interference with your quiet enjoyment of the property. The logic is simple. You were happily in your tenancy when the landlord proceeded against you illegally. He applied your LMR to a month that he was not entitled to do. He told you to move out by the end of July without explanation or legal right to do so. He didn't ask you, he told you. Nothing about what he did was legal and he did not tell you that you had the right to stay in the premises. That kind of conduct should be discouraged by the Landlord and Tenant Board. You could ask for a rent abatement (for at least one month or more if you like) an order that the landlord no longer behave like this, and a fine for good measure.

      I think you would get one or the other for sure on these facts. There is an opportunity for mediation at the LTB as well and if you seek a sizeable fine and abatement I think your landlord will take legal advice and be advised that what he did was wrong. I'm sure that would bring him to the table to offer you what you are owed.

      Good luck, if you proceed with this please let me know how it turns out.

      Michael K. E. Thiele
      www.ottawalawyers.com

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    5. Hi Michael,

      Thank you so much for all this help! This detailed answer is so helpful to me, I'm very grateful. I had no idea what to do, and being rather young and coming from France, I know even less about canadian law (I live in Oakville, Ontario, to answer your initial question).

      I'm not sure I'll be able to proceed with the first option because I technically didn't give him 10 days notice after he asked me to leave: I emailed him first on June 25th saying I would leave July 5th (so that's 10 days), but then I decided to leave even earlier, and sent him another email (on June 28th) saying I'd actually leave on the 30th.

      So maybe the board will be understanding, but we never know.

      So I'm thinking I should just file the T2? I looked at it, and it looks like I could ask for my rent back, and maybe also for other out of pocket expenses that this situation incurred to me (like I had to purchase a bed for my new place, since it was unfurnished, which is quite a big expense for my budget): maybe I won't get that, but at least I could ask.

      I will give a few more days to my landlord and if he doesn't answer me or pay me back, I will fill the form...After being treated like that I am not inclined to be forgiveful, now that I know that what he did was illegal and that I have recourse against it.

      I will definitely let you know how it goes, and again, thank you so much for taking the time to write such a detailed response !!

      Quentin

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    6. Hi Michael,

      This is Quentin again.
      I have waited one month to my landlord to give me my July rent back and he didn't so I will file the T2.
      I actually sent him a registered mail asking for it again last week, just to make sure I did everything properly and gave him the opportunity to do right by me.

      It definitely pissed him off because he refused to pay me and on top of that just sent me an invoice for "damages to the walls" in my former room, for 300$.
      I looked at your article about wear and tear on this blog and I think I don't have to pay it: it was only a total of 5 nails for paintings, and I had put up curtains as there was't any. I left the curtain fixtures on the wall (for a total of 4 other nails) because I thought it could be used by the next tenant.
      Can this be considered normal wear and tear? The contract I signed stated that I can't put up any pictures or paintings or curtains but he gave me the authorization orally (I guess that's not worth anything...). Is he still bound by the law or does this clause in the contract allow him to make me pay for something like this?
      Moreover he gave me 11 days to pay the 300$, and I am wondering: what is my risk if I don't pay him? Can credit record be affected, or can he sue me?

      Oh and by the way, is there a deadline by which I have to file the T2 after the events happened (prescription)? (Because I'll be on vacation in august-september so I was going to wait to file it, to make sure I am there when they give me a hearing date)
      Thank you...
      Quentin

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    7. Hi Michael,

      Just giving you an update on my case. I had the Case Management Hearing this morning and unfortunately since the landlord technically shared a kitchen with me and the other roomates on the main floor (even though he stayed mostly in his basement), I was told that the Tenant Act doesn't apply in this case...I did not know about the exemption of "Section 5 paragraph i", the mediator told me about it during the hearing. I had no idea that this detail would determine whether the law applied or not.

      I am a bit confused by this: it seems a bit strange to me that his actions would be illegal under the Tenant Act but suddenly becomes ok when he shares a kitchen with us.
      Is there another law or Act, made specifically for when the landlord lives in the same house?

      Thank you,
      Quentin

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    8. Hi Quentin: Certainly the sharing of a kitchen and/or bath is an important detail as you can see that the RTA does not apply when the tenant shares the kitchen and/or bath with the tenant. This needs to be the case from the beginning of the tenancy. As for your question about other legislation. There is no specific law for your situation. You will be governed by general contract law.

      Good luck

      Michael K. E. Thiele

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  6. Hi! A great blog and I have a quick question similar to the previous one.

    I was just served my 60 days + the balance of September. I have paid rent on Sept 1st covering until the 30th. If I serve my 10 day notice and move out early am I entitled to my LMR back since it won't be applied to Oct or Nov?

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    1. Hi Brian: I'm presuming you received a Form N12 (Landlord's Own use). The N12 is served under section 48 of the RTA. Section 48(3) & (4) allows you to terminate your tenancy earlier if served an N12. The minimum notice that you must give is 10 days (s.48(4)). You would indeed be entitled to a refund of paid rent (balance of September) and the LMR. You are only required to pay for the time that you occupy the rental unit. All other money must be returned to you (without deduction).

      Michael K. E. Thiele
      www.ottawalawyers.com

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  7. Hi Michel thanks for opening this blog. I find this blog extremely useful in fully understanding the landlord and tenant act.

    I have one short question regarding last months deposit. I'm on a month to month lease in a room in a house in Ontario. I am planning to move out in the end of November and will be giving my one month notice at the end of october. When in moved to my current place the landlord only asked for first months rent but not last months rent. According to my research the tenant does not have to pay last month's rent when enough notice is given. My question is is the tenant obligated to pay last months rent before moving out, given the fact the landlord did not ask for last months rent in the beginning?

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    1. Hi Victor: I'm sorry that the answer is not what you are likely hoping for. A tenant is responsible for the rent for the entire duration of their occupation of the rental unit. This would include even any period of over-holding after the termination of the tenancy. The Last Month's Rent deposit is something that the landlord is entitled to ask for under the Ontario Residential Tenancies Act but is not obligated to require. Failure to require a last month's rent deposit is not a waiver of the rent for the last month.

      Michael K. E. Thiele
      www.ottawalawyers.com

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  8. Hi Michael, very informative blog! I also have a question regarding the use/return of last month's rent: I moved into an apartment effective July 1, 2012 (yes, Ontario) and paid first and last prior to moving in and the landlord let me move in early (June 22nd I believe) without charging extra since the unit was vacant. I stayed in the unit until August 21st of this year and always provided post-dated cheques for rent in advance. I technically did not give 60 days notice as I advised the landlord mid-July that I would be moving September 1st. I had already provided a cheque for Aug 2015 rent plus the landlord had the LMR (paid in 2012). Because of the failure to provide 60 days notice, I believe the LMR was used for September 2015; however, I left the unit cleaner than when I moved in and it was able to be rented to another tenant for September 1st plus I replaced the 40 year old stove and left it in there. During my 3 years there, I never received any "interest" payments on the deposit and my rent increased only marginally (from $795 to $815). My question is: Since the landlord was able to rent the unit for September 1st am I entitled to get my LMR deposit back? Many thanks, K

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    1. Hi: Yes, you are entitled to refund of the LMR. The landlord can't have applied it to September as a new tenant was in possession and paying rent. You are also entitled to interest on the deposit. This is a rather simple application to the Landlord and Tenant Board if the landlord does not voluntarily send you a cheque. Make sure you have evidence of your rental unit being re-rented for September 1. The landlord's right 60 days notice and the rent during that time is subject to a duty to mitigate (reduce the loss). The re-renting for September 1 was that mitigation meaning your liability ended August 30.

      Good luck

      Michael K. E. Thiele
      www.ottawalawyers.com

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    2. Thank you Michael, I appreciate your response and the information.
      Karen

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  9. Hi Michael, I appreciate your informative blog and reading through the questions and replies on this particular post.

    I have a similar question to an above poster: We received notice that my landlord wishes to re-occupy our rental unit (in Ontario). He gave us a verbal notice on October 15 and stated that since he must give 60 days notice, we have until Jan 1/16. I do realize that technically nothing is valid until he provides us with a N12 which I have asked for.

    Although it is a major inconvenience for us to move out (we have only been here 2.5 months?!), we have been looking for rental units and have potentially found one for November 1/15. I asked the landlord if he would return last month's rent for October if we vacated by Nov. 1, to which he declined. However, one of the potential units called him for a reference, so now he knows we may be moving out early anyway. He phoned me today confirming that we are moving out November 1st as he has already booked a moving truck to move his belongings back in! I told him we are not vacating by November 1st unless the last month's rent is returned.

    I guess my main question is, if we do end up moving into our new unit by November 1st, do we have a legal leg to stand on for getting our last month rent back? I have never had any issues with landlords in over 10 years as a tenant, so I am finding this very distressing and I do not want to be ripped off in any way.
    Thank-you!!

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    1. Hi: If there was a proper notice to terminate for landlord's own use then you are entitled to terminate your tenancy on 10 days notice to the landlord. This necessarily means that the landlord must return a Last Month's Rent deposit and any additional prepaid rent. The issue in your case is going to be establishing that the Landlord's Own Use sections of the RTA have kicked in. Your landlord might even deny having terminated your tenancy on this basis. I wouldn't count on anything until you have an actual N12 in hand. If you are moving on the strength of the landlord's verbal notice then please do try to at least get some email confirmations etc., that your actions are motivated by the landlords notice and get him to confirm that he has given you a verbal notice to vacate for landlord's own use. Your argument for relief is more difficult but not impossible. Ideally--though, you don't do anything until you're holding a valid N12 notice.

      Good Luck

      Michael K. E. Thiele
      www.ottawalawyers.com

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  10. Good Afternoon Michael, I really appreciate the information you provide. I have a question. I gave my tenant the required 2 months notice -N12 (he was on a month to month) From October 15-December 14. (rent due the15th of each month). I put through his cheque for October 15 with the understanding that he would live out is last month rent in November. He later sends me a text a the end of October that he found a place and is moving Nov 15. The keys were returned Nov 18. He is now requesting a return of his last month. Am I legally required to return it, since he chose to move earlier than Dec 14. I look forward to your response.

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    1. Hi: Please take a look at the N12 form that you served--specifically in the important information section of the form. There you will see that a tenant who receives the N12 may indeed terminate the tenancy sooner on a minimum of 10 days notice by serving a form N9. With the tenancy lawfully terminated you are obliged to return any prepaid rent for the period of time beyond the lawful termination date.

      Michael K. E. Thiele
      www.ottawalawyers.com

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  11. Hi Michael,

    I cannot commend you enough on such a valuable resource you have created for both landlords and tenants. You are a true contributor to the community giving back with your knowledge and experience.

    I am a landlord and my tenant was late for November rent, and was not willing to pay until a garage door opener was installed. I knew this was not a valid requirement according to the law, but I installed it anyway. Now, she is withholding december rent and telling me to use her last month's rent deposit while having no intentions of moving. I served her with a N4 on Dec 8th but forgot to write 'UPPER LEVEL' after the address, since the basement is also rented out. After getting some advice from a paralegal, he told me the case can be thrown out by the board at the hearing just because I did not specify 'UPPER LEVEL' on the N4 notice. There is no mention on the notice to specify if it is or not. But I want to know, can the case be thrown out just because of that?

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    1. Hi: Yes, no, and it depends, is the utterly unsatisfying answer to your question. There is a real risk of the case being thrown out and depending on how long you are waiting for a hearing having to start all over again after the hearing can be a very long period of time with no rent being paid. The advice from the paralegal is cautious and likely safe advice if it was given near to the time that you served the N4. It would be easy enough to simply start over if you only lose a couple of days. Now, you are 8 days into a 14 day notice period and starting over puts you quite a bit behind. Of course, if you continue on, wait for the 14 day period to expire and then apply to the Board and get your hearing date and then have your case dismissed due to a defect the 8 days will seem pretty reasonable.

      So why is the answer to your question not clear cut? I suppose the place to start is to determine what is required in the Notice of Termination. This is set out in section 43 of the RTA. It provides:

      Notice of termination
      43. (1) Where this Act permits a landlord or tenant to give a notice of termination, the notice shall be in a form approved by the Board and shall,

      (a) identify the rental unit for which the notice is given;

      (b) state the date on which the tenancy is to terminate; and

      (c) be signed by the person giving the notice, or the person’s agent. 2006, c. 17, s. 43 (1


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    2. The key of course is in (a) requiring you to identify the rental unit. With an "upper" unit (not sure what the lower is called), it doesn't sound like you have two municipal addresses for these rental units. Hence there is a matter of what you call the units and there was a fair amount of choice in how you did that. One option was to identify the upper unit with the municipal address and then differentiate the lower unit by adding basement or lower to that unit. Another spot to look would be to the lease to see how the rental unit is identified in the lease. If it is described in the lease as "upper" then that speaks against you. If it is only the municipal address then that is likely helpful to you.

      How this plays out really depends on specific facts that I don't know about and how the adjudicator reacts or deals with the issue. It also turns on whether the tenant figures it out as an issue, whether you do a deal at the hearing in mediation knowing you have this potential technicality hanging over your head if the case goes to hearing. The outcome is by no means a foregone conclusion. Your paralegal has simply highlighted a potential problem, rather early on in the process. This is pretty sharp on your paralegal's part so I wouldn't give short shrift to this paralegal even if you didn't like the advice.

      I imagine when you say "just because of that" that you are somewhat incredulous at the possibility that this oversight may have such a significant consequence. That, however, is the law. On the mandatory elements of a Notice of Termination you must indeed be correct. The Board has no authority to amend the Notice of Termination nor to ignore a defect because it seems technical. There is certainly a fair amount of appellate authority to support this legal fact even though it may seem a rather draconian outcome for a mistake that does not seem material to the issues at hand.

      There are some strategic choices to be made. You could start over to be safe, you could run with it, you could serve a backup N4 identify the issue but proceed with the first N4 and argue that the first is valid, you could try to make a deal with the tenant, and likely a few other options that I'm not thinking of just now. It sounds like the paralegal you consulted had some insight into he process and is aware of the technicalities in LTB law. You may want to consider retaining him/her for the hearing.

      Good luck

      Michael K. E. Thiele
      www.ottawalayers.com

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  12. wow, what an insightful, knowledgeable and considerate response! Thank you!!

    ReplyDelete
  13. Can someone please show me that calculation used to determine interest on last months rent?

    ReplyDelete
    Replies
    1. Hi: To calculate the interest on the last month's rent deposit you need to know what the annual guideline amount is. That amount can be found on the Landlord and Tenant Board website. For ease, I can tell you that the guideline amount for 2015 is 1.6%, for 2014 it was .8%, for 2013 it was 2.5%.

      To calculate the Last Month's Rent interest you need to know the amount of rent that is on deposit for the last month. For ease of calculation, lets assume that the landlord is holding $500.00 as the Last Month's Rent deposit. The formula to calculate the amount of the deposit interest is as follows Last Month's Rent on deposit multiplied by annual guideline increase amount as a percentage which equals the annual interest on the Last Month's Rent deposit.

      So using a the numbers it looks like this:

      2015: $500 multiplied by 1.6% = $8.00
      2014: $500 multiplied by .8% = $4.00
      2013: $500 multiplied by 2.5% = $12.50

      Alternatively if your calculator doesn't have a percent symbol on it this is the same as above:

      2015: $500 multiplied by .016 = $8.00
      2014 $500 multiplied by .08 = $4.00
      2013 $500 multiplied by .025 = $12.50

      The interest on LMR is simple interest meaning you don't compound it. However, if the landlord takes the interest and adds it to the LMR instead of paying it to you the effect is like compounding because the starting LMR number is higher for the subsequent year.

      Hope that clarifies it for you.

      Michael K. E. Thiele
      www.ottawalawyers.com

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    2. I should mention that the above interest amounts are for an entire year. If you have a partial year for the first interest calculation you would take the number of days remaining in the year after the deposit was given. Divide the annual interest that you calculated above by 365 days of the year. This gives you the daily interest amount. Then multiply the daily interest amount by the number of days remaining in the year after the Last Month's Rent deposit was given. This gives you the partial LMR interest for the first year.

      With respect to the year in which the tenancy ends remember that there is no interest payable for the month to which the LMR is actually applied.

      Michael K. E. Thiele

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  14. Hi Michael, My tenant told me to use her last month's rent deposit for December, while she has no intentions of moving out and she said she will continue to pay rent monthly (January 1st) and not give me the last month's rent as a deposit, what can I do about this? I gave her an N4 on Dec 8 and can file for an L1 today onwards, but if she pays rent on Jan 1st then will I lose the application fee because she has paid rent?

    ReplyDelete
    Replies
    1. HI: The tenant is not permitted to apply her last month's rent to anything but her actual last month's rent. The rent for December is therefore unpaid (because she can't direct you to use the Last Months rent for that month). If she pays January rent then you can apply that payment to December because December is presently unpaid (because you do not have to apply the LMR deposit to December).

      Michael K. E. Thiele
      www.ottawalawyers.com

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  15. Hello Michael, I'm curious what the rate of interest was for 2014 & 2015, as to date, my landlord has not given me the interest for these 2 yrs, nor has deducted from my rent, I'm paying $500.00 for 2014, & $505.00 for 2015, & $510.00 for 2016. If you could let me know what the rate if interest is for 2014 & 2015, and how it figures out to how much etc, I'd appreciate it greatly!! Thanks in advance.

    C Landry

    ReplyDelete
  16. Hello Michael , Im wondering if you might be able to assist me . I moved in and signed a 2 year lease which is up March 31 2016. Now in November 2014 we ran into a financial problem and the landlord suggested he would use our last month rent for November 2014 and we would just continue on. That is what we have done. Now he just emailed me an N4 saying December 2015 rent was not paid , in which is what. I pointed that out to him and he said its because we are technically behind because we used our last months rent a year prior. So my question is , can he serve us with this N4 ?? Thanks in advance

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  17. Hi Michael, I have a similar question as the post above regarding N4 and LMR. As a landlord, how can I serve a N4 when I'm in possession of LMR deposit? Do I need to "use up" the LMR in order to serve up a N4? I have a tenant who is persistently late on rent and I would like give a N4 but I'm confused about the LMR deposit and how it applies to the situation. Thanks so much in advance!

    ReplyDelete
    Replies
    1. Hi: An LMR by definition is a Last Month's Rent deposit. It is received for the last month of rent which is determined by proper notice being given. The LMR is not used for ongoing rent, it is not used in replacement of monthly rent or as a cushion to cover late monthly rent. You only ever concern yourself with the LMR when you are applying it to the last month of the tenancy. Until then you hold the LMR as security for the last month of rent. If you need, you can trace the right to request an LMR through the RTA and how the LMR is to be applied, but simply, you don't do anything with the LMR until the last month. Notice how the N4 could indeed be the last month given the termination that you are giving. If the tenant avails themselves of the termination then the LMR would cover the month in arrears.

      Michael K. E. Thiele
      www.ottawalawyers.com

      Delete
  18. Hi Sir,
    I am new to your blog. I want to know about my rights as a tenant as i was kicked out of my room in the middle of this month and I have paid my rent till 29th Feb,2016. I requested my landlord to return the last month and the remaining 10 days rent of this month but she refused to pay when i gave my keys to her before leaving. I tried to contact the police but they said it is a civil matter and they cant do much. I tried to speak to Landlord and tenant board but the moment i say that landlord was sharing the kitchen and washroom, they denied to help me. In my case, it was a verbal agreement and i don't have any proof of my last month deposit. So how can i get my money back of the remaining days of January and the february,2016.

    ReplyDelete
    Replies
    1. Hello: The landlord and tenant board refuses to help you because your tenancy was likely not covered by the Residential Tenancies Act. This is because section 5 of the Residential Tenancies Act exempts rental units where the tenant shares a kitchen or bath with the landlord.

      Your only remedy is to sue the landlord. You would do this in the Small Claims Court as this is the Court with jurisdiction over cases for sums of money $25,000 and less. You would have the burden of proof which is that you would have to prove your case on a balance of probabilities (more likely than not, or 50% +1). You will be looking to sue your landlord for breach of contract and for a return of your prepaid rent and perhaps for other damages you suffered as a result of having to move out so quickly. The landlord will likely defend the case alleging whatever it is they were alleging to justify your eviction. The Judge will decide whether you should get your money back or not and whether the loser of the case should pay costs to the winner.

      Good luck

      Michael K. E. Thiele
      www.ottawalawyers.com

      Delete
  19. I am moving out of my apartment at the end of the month. I have not given my landlord 60 days but have found someone to renew the lease. If the landlord accepts the new Tennent and they move in March 1st, and my last month was February do I get my last months rent deposit back?

    ReplyDelete
    Replies
    1. Hi Cassondra: On the facts you describe you should indeed get your last months rent deposit back. The landlord is not entitled to collect two rents for the same month.

      Michael K. E. Thiele
      www.ottawalawyers.com

      Delete
  20. Hi Michael,

    Great post. I was wondering if you could answer my question. My situation is very similar to the last paragraph you wrote. So basically, November 15, 2015, I called the property head office and spoke to someone (didn't get the person's name) and asked if I could apply my security deposit against December as we wanted to move out end of that month. We are advised that it's ok as long as we pay a late notice fee of $150. I issued the cheque the next day and then the rental company cashed it November 24th. It is now February and they're collections has called me multiple times asking that I owe them the last month's rent. I told them I was advised to pay the late notice fee and that I don't owe them money. Now they're saying that my notice was not valid. I kept arguing and asked why they would cash out the cheque if they were not in agreement in the first place. What do I do?

    Your advice will be greatly appreciated.

    Regards,
    Grace

    ReplyDelete
  21. Hi Micheal,

    Great blog, and very informative! I have a question regarding a refund for my LMR. To give a little context 4 people have rented a house and each paid their first and last, approximately half way through the lease 3 of us decided to move out. We all found sublets (mostly friends) to continue the payments, from what I was informed to be a month to month basis. When we inquired about our refund of the LMR, our landlord mentioned it would be returned to us once the tenants have paid their share of the last month. It has been over a month since the last month of the lease, when asked about the refund our landlord told us that the tenants mentioned they returned our deposit. None of that has happened and neither the tenants nor the landlord are returning our questions. I was just wondering what the proper recourse would be in this situation and if I have good grounds to take him to small claims court.

    Regards,

    ReplyDelete
    Replies
    1. Hi: This issue is not dealt with in the Residential Tenancies Act (RTA) even though the rules relating to sub-lets and assignments are extensively reviewed by the RTA. I have seen many situations where landlords help out tenants and their assignees by doing the accounting to put everyone in the position they need to be. While very helpful, the landlord is not obliged to do so.

      You describe "sub-lets". In a sub-let you are giving your rental unit up for a period of time and then returning to the rental unit before the end of the term. I presume that you have no intention of returning to the unit? If that is the case then what you have done is "assigned" your lease for the rental unit. This means you are not coming back to the unit and your obligations respecting the unit are concluded from the date of the assignment. In a sub-let you remain liable to the landlord for all obligations in relation to the rental unit.

      Presuming you assigned your lease your "deal" is with the tenant who took over your lease. If you did not waive or give your deposit to this tenant then I think you indeed have a claim against the tenant. I don't at all see a claim against the landlord as the landlord is entitled to have a Last Month's Rent deposit. Presumably, when the landlord asked the new tenant for a last months rent deposit to reimburse you, the new tenant told the landlord that you had been reimbursed directly. Ultimately, this is not the landlord's problem.

      You will need to prove your deal with he tenant who took over (i.e. an agreement that the tenant would give you the deposit), or at least prove that the tenant is not entitled to keep it (should not be that difficult to do). Assuming these are the facts, you have a decent small claims court claim.

      Good luck

      Michael K. E. Thiele
      www.ottawalawyers.com

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    2. You are correct about the situation. Thank you very much for clearing everything up, I really appreciate it! I was under the impression that the landlord received LMR from the new tenants and decided to withhold it from us, but the situation you are describing is a lot more probable.

      Delete
  22. Hi I was wondering f say you didn't want to move could you still use the last months to pay the rent that month if needed ?

    ReplyDelete
    Replies
    1. Hi Chantal. Unfortunately no. The last months rent deposit is to remain on deposit until you give legal notice to move. It is then used for the last month. That being said, we see it often enough that landlord's let tenants use the deposit early--which frankly is a strange thing to allow.

      Michael K. E. Thiele
      www.ottawalawyers.com

      Delete
  23. Hi have a question on first and last. I moved into a place in Feb 2014 paid first and last on 1 year lease. Then signed amother contract extending 18 months for same price of 1700. Now landlord wants to increase to 1725 which is fine and we agreed to another 2 years however now his agent is saying I owe them first and last for new price. Is that allowed considering I have never left or gave notice only have extended. I can see adding difference but I feel they still have my last month. Thank you

    ReplyDelete
    Replies
    1. Hi: If I understand the facts correctly, your landlord is still holding $1700 as the last month's rent deposit from the first lease. When you extended the lease for another fixed term the landlord continued to hold the $1700 as a last month's rent deposit. You have never used the last month's rent that is on deposit because you have never actually gotten to the "last month" of your tenancy.

      If this is correct then you are correct and it makes no sense to give the landlord another last month's rent deposit. He would then have two last month's rent deposits which would be improper. As the tenancy has never been terminated, only extended, there is no "first month's rent" to be paid either. What the agent is calling first month is simply next month's rent as your tenancy is continuing.

      Note that the increase of rent to $1725 technically requires a Notice of Rent Increase. As you are agreeable to it, there isn't much for you to worry about (though the landlord might want to think twice about asking for an accepting an increase of rent without any kind of rent increase notice).

      On these facts, I think you are correct and that the most you should be asked for is to top up your last month's rent deposit. Interestingly though, you are likely owed money if the landlord did not pay you interest on the last month's rent deposit. In 2014 you were owed 0.8% interest on the deposit (you will have to pro-rate it). For 2015 you are owed 1.6% on the deposit (simple interest not compounded), and for 2016 you will be owed 2% interest on the deposit. Just the interest for 2015 exceeds the amount of your rent increase. Your landlord can top up the deposit with the interest and pay you the difference (you are entitled to it).

      Good luck

      Michael K. E. Thiele
      www.ottawalawyers.com

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  24. Love reading all the questions and answers in your blog. Very informative.

    My question is pertaining to interest on LMR. We moved here Dec. 1, 2014 and of course, paid LMR. We have never received any interest on it and we are hoping to move from here by September or October 1st. Our rent increase for 2015 - 2016 was 2.3%. From what I've read, the interest paid on LMR should be identical to the percentage that the rent increase was. Is this correct? Our building does not fall within the maximum rent increase rules since it is fairly new.

    Also, I was under the impression that this interest was to be paid once a year but to date, we have never received anything. We had a rent increase the first of December 2015 and I gave them a cheque for approx. $35 to bring the LMR up to date.

    Do we need to ask for this interest or should it be forthcoming from the landlord/property management company each year?

    Again, thank you so much for the work you do answering all these questions. You really are thorough with your answers. Have a great week.

    ReplyDelete
    Replies
    1. Hi: LMR interest is often "forgotten" especially in tenancies where the rent ledger is maintained by hand or manual input. There are some property management software programs that incorporate the LMR interest and credit is applied annually to the ledger or some other arrangement is made to deal with the liability. However, often enough, it is just "forgotten". I don't know about your landlord nor what they typically do about LMR interest. You should be upfront about the interest and ask your property manager to give you a credit some month and perhaps pay the rent short one month to take into account the LMR interest. Note that while the RTA gives you that right, you should coordinate this with your property manager so they don't think you are short in your rent and serve you with a Form N4 (Notice of Termination for Non-Payment of Rent).

      There is little benefit in saving up the LMR interest as the interest is simple interest and does not compound. So, ask your property manager for it and discuss how you can get it without the least amount of administrative burden.

      Michael K. E. Thiele
      www.ottawalawyers.com

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  25. Hi Michael,

    Excellent blog, thank your for providing your insight to the various tenants on LMR. I suspect I know the answer to my question already, but thought I'd run the facts by you and get your thoughts as well. We are 1.75 years through a 2 year lease (in Ontario), ending at the end of September 2016. We were (and continue to be) on good terms with our landlord when, in April, we gave him 5 months' notice of our intention to terminate the lease at the end of our two year term. We gave him this extra notice as we wanted to give him maximum flexibility to put the condo on the market (he had been considering selling when we rented the place almost two years ago) and we were also interested in seeing if we could get out of the lease one month early--we're moving to another city and we wanted to be situated in the new city for the beginning of September, raising the possibility that we would have to pay September rent for two properties and getting out of the lease one month early would negate this possibility. Also, if the landlord decided to rent again, it would surely be easier for him to rent for a September occupancy, as we live in a "University town". So, the advanced notice was given in the interest of both parties.

    Anyway, one month after giving our notice, the Landlord contacted us and asked (amicably) if we could possibly vacate the premises even earlier as he needed the property to house his extended family who found themselves needing accommodations while an unrelated house sale and purchase was closing. Great, we thought! Even better; it allowed us to not only avoid the double-payment in September altogether but to move cities even earlier than expected. The earlier transfer though was dependent upon my job transfer being moved up. The foregoing are background facts.

    We (tenants and Landlord) were all waiting anxiously over the past week to hear whether my job transfer could be moved up. We finally received notice on June 3 that the transfer could be affected for July, so the advanced move-out date worked for everyone. Because we didn't hear until June 3, though, I paid the June rent on June 1 through normal channels (e-transfer), with neither party knowing with certainty at the time that June would ultimately be the "last month" of the tenancy.

    My question (finally!) is that now that everyone is clear that June will be the last month of the tenancy (to everyone's mutual benefit), how should we treat the last month's rent deposit? Are we within our rights to ask the Landlord to refund the payment we made on June 1st (or simply give us the deposit back now, given that had we known on May 29th that June would be the last month of tenancy, we wouldn't have made the June 1st e-transfer)?

    I would like to stress that I don't foresee this being an issue. We are on good terms with the Landlord, I just want to be sure we're within our rights if I reach out and ask him to refund, as soon as possible, the June 1st e-transfer (or refund our LMR deposit, which would amount to the same thing) in the next week or so. We will, after all, need the money for the LMR deposit on a new place in the new city for July 1st.

    Thanks in advance for your thoughts.

    ReplyDelete
    Replies
    1. Hi: It is a little unclear to me how formal or informal your notices and discussions with the landlord have been. Because of your friendly relationship I'm worried that agreements are not properly documented and in the event of a dispute it will be difficult to prove what was actually agreed upon. I appreciate that everything is likely to be fine based on your understanding with the landlord. However, in my view the only way to be sure is to be a little more formal with the landlord. In this case, formality is easy enough. You need a Form N11--which is an agreement to terminate a tenancy. That agreement should reflect the date that you are leaving. You sign and your landlord signs. This form allows your landlord to enforce early termination and allows you to also enforce the financial implications of the termination date (i.e. refund of prepaid rent). I would be inclined to produce the N11 form, approach your landlord to have it signed--which he should agree to do as it is beneficial for both of you. Perhaps at the same time or afterwards you ask for the return of the LMR or a refund of recently paid rent. Having the signed N11 in hand would make getting the LMR back or the prepaid June rent back relatively easy if a dispute arose.

      Hope that answers your question.

      Michael K. E. Thiele
      www.ottawalawyers.com

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    2. Thank you Michael. I take your point on keeping things formal, regardless of the seemingly good relationship with the Landlord. Business is business and the rules are there to protect everyone. It is actually uncharacteristic of me to have kept it this informal.

      After all that, though, the question was moot. I reached out to the Landlord, outlining (formally!) the facts as I understood them and asking him what his preference was for the treatment of the LMR deposit, given the facts as I understood (outlined) them. His reply was a fairly prompt e-transfer back to me for the amount of the LMR. Problem solved.

      Delete
  26. Hi Michael,

    My landlord sold the house and told me via text ~ the beginning of June that I "need to vacate no later than August 31, 2016". They are saying my prepaid last month's rent will only be applied to the month of August, even if I were to move out August 1. I don't think this is legal but I cannot find it specifically in the tenancy act. All I can find is that I can leave earlier with 10 days notice, but does this ultimately mean they are *required* to refund my last month's rent if already paid for the month (July), or not require a payment for the month of July if I give notice in June?

    ReplyDelete
    Replies
    1. Hi: Firstly, you are not required to move simply because the landlord sold the house. Your tenancy continues whether the landlord sells the house or not. The purchasers become your new landlords. If the purchasers want to move into the house then they need to serve you with a Form N12. This can be done on behalf of the purchasers by your current landlord or by the purchasers themselves after they close the transaction and own the house. The N12 form is NOT a text message. The N12 requires a minimum of 60 days notice to the end of term. As we are currently in June, the earliest the N12 could terminate your tenancy for is August 31. Note that this is a minimum notice period and not a maximum. In my view, landlords who are selling a property with a tenant should coordinate with the tenants a reasonable date for moving if the purchaser wants to occupy the premises. As a tenant occupying the premises you have rights including a right of security of tenure. While you can be evicted for Landlord's own use, or purchasers own use, the timing of such an eviction is not as absolute as some landlords think it is. If moving is difficult for the end of August you can always seek more time from the landlord and tenant board.

      To your question. If you move on 10 days notice the balance of the prepaid rent is refundable. Hence, if you pay July rent and then move on say July 12, you are owed the remaining amount of July's prepaid rent and your last month's rent that is on deposit. You won't find this written explicitly anywhere in the Residential Tenancies Act. It flows from the way the RTA works. You pay rent for the term of your tenancy. You don't pay rent after your tenancy terminates. Giving 10 days notice to vacate is a lawful mechanism to terminate your tenancy. The prepaid rent is not a penalty or bonus that the landlord gets to keep.

      If your landlord is out and out saying that they are not going to return your Last Month's Rent deposit (don't forget the interest that you are owed) if you move out early you may want to think long and hard about paying July's rent. While technically a self help remedy that is frowned on by the Board the alternative is that you are going to have to chase your landlord for a refund if you pay July and move out August 1. Given the landlord's statement to you (that you don't get a refund) you will have to apply to the Landlord and Tenant Board, get an order and then find the landlord to enforce the order. Sometimes a little self help is best. If you are certain that you are moving out for August 1 then of course you can give your notice and then the Last Month's Deposit will apply to July and nothing will be owed by you to the Landlord.

      Good luck

      Michael K.E. Thiele
      Quinn Thiele Mineault Grodzki LLP
      www.ottawalawyers.com

      Delete
  27. Hello. I was just wondering if three people are splitting rent, but only two have payed the last month deposit...is the third person entitled to any interest on the last months deposit? Thank you for your time.

    ReplyDelete
    Replies
    1. Hi: If all three are tenants then technically all three share the burden and benefits of being tenants. The tenant who hasn't paid their share of the LMR deposit is going to get a free month of rent for the last month---is this intended? Vis a vis the landlord all tenants have the same rights, as between you the rights will be different depending on your agreement.

      Good luck
      Michael K. E. Thiele
      www.ottawalawyers.com

      Delete
  28. Great informative blog. Thank you for all your postings. I have a question. How far in advance may a landlord demand a LMR? I agreed on a 1year lease for August 1. They want the LMR money ASAP today. Am I required to pay this 'far' in advance or only on move in date on AUG 1ST.Thank you

    ReplyDelete
    Replies
    1. Hi: Section 106 of the Residential Tenancies Act contemplates the demand for and collection of a Last Month's Rent deposit at the time that the tenancy agreement is entered into (i.e. when you sign the lease).

      Michael K. E. Thiele
      www.ottawalawyers.com

      Delete
  29. Hi Michael, Fantastic blog, and thank you in advance for any advice you can give to me.

    Our tenant signed a 12 month lease in June of 2015 for August 1 2015 to July 1 2016. Tenant has recently been served an N12 as we sold our home and the purchaser intends on living in it. The tenant has filed a grievance with IEU stating that we procured an, "illegal" rent deposit, and they are demanding we return it immediately. It was equal to one month's rent. Their N12 is termination for Aug 31 (was served in June, after the house sold), and now the woman at the IEU at Ministry of Housing is saying we have to return this deposit, as it was illegal.

    I have spoken with three different people at the LTB, and they all tell me that LMR is for last month of tenancy, which we haven't reached yet as they are still living in the house. The woman at IEU says that because we collected 12 cheques for the term of the lease, that collecting a 13th cheque (rent deposit) was illegal. She says that landlords in Ontario can not ask for 13 cheques for a 12 month lease, even if one of those cheques is for LMR. IEU woman advises that LMR should have been used for July rent, and that we should return the LMR asap. If we return this LMR, I have real worry that the tenants will not pay us for August. They are upset that they have to move, and are being rather unpleasant.

    My question is, were we in the wrong for collecting 12 post dated cheques, plus a 13th cheque to be held as deposit for the last month of their tenancy? We only cashed the cheques on the 1st of each month, as they were posted dated, but we did deposit the LMR cheque upon signing the lease last year. As far as we know, they aren't exercising their right to serve us with ten days notice, and they intend to vacate on August 31, as per the N12.

    If we are in the wrong, I want to follow the law and return the deposit, as we are advised that this is a penalty of $25 000. I just don't understand how the IEU at Ministry of Housing and the Landlord Tenant Board are not agreeing.

    Thanks so much for anything you can tell us.

    ReplyDelete
  30. Hi Michael. I've been renting from my landlord for one year with two roommates. We've decided to go our separate ways and I've given my landlord a deposit (one month's rent) on a different apartment he has for rent. Not the same building, but just down the street. I was due to move in this coming September 1, but unfortunately, I recently lost my job and cannot move into this new apartment. The landlord refuses to return my deposit. Am I out of luck? Can he legally do that? Obviously, I could really use that money given my job situation.

    ReplyDelete
    Replies
    1. Hi: The answer is not likely what you want to hear. If you have entered into a lease with the landlord, even though it hasn't started yet, this lease is still a contract. Your liability on the contract has attached. Now, interestingly, because you will not move in nor take possession the landlord will not be able to go to the Landlord and Tenant Board for an order or eviction. The landlord, if he wishes, will have to sue you in small claims court. Query, though, whether he will bother.

      Notwithstanding your obligations under the lease, the landlord, knowing that you are not going to take possession is under a duty to mitigate his losses. The Landlord should be trying to re-rent the premises to someone else. If he manages to do that before September 1 then arguably (and likely) he will have to return your deposit for the premises. Also, you technically have the right to seek to assign your lease to someone else. If you know anyone who would want to rent the unit you could ask the landlord to allow you to assign the lease to that person. This would end your obligations under the lease. Take a look at the rather detailed and complicated Assignment and Subletting sections of the Residential Tenancies Act. There are other articles in this blog about how "Assignment" works as well.

      Good luck

      Michael K. E. Thiele
      www.ottawalawyers.com

      Delete
  31. I have been renting for 2 years, and the house I live in was sold. The new owners are now asking for first and last (the older owners didn't require this of me, and it was a month to month lease). It is not something that was discussed at all, and now they are requiring it with september's rent (which i just paid). I asked if I could give them a post dated cheque for the last month of the new lease (1 year), and the reply was " in all leases tenant pays first & last month in the beginning, that is a law in Toronto, unfortunately I can't accept next year postdated cheque as last month deposit." Is this true? It will be nearly impossible for me to scrape together an extra month of rent on short notice, and I'm panicking.

    ReplyDelete
    Replies
    1. Hi Rebecca:

      The last month's rent deposit must be collected prior to the commencement of the lease. The reason is that once the lease has started and a tenant is in possession it is impossible to compel the tenant to provide a landlord with a last month's rent deposit. There is no mechanism under the legislation to require a last month's rent deposit being paid after the tenancy has begun. If a last month's rent deposit was not required originally then one may not be demanded now.

      Note that your lease with the prior owner continues with the new owner of the house. The current owner replaces the former owner as your landlord. The sale did not terminate your lease. There is no first month rent to be paid to these new owners---it is just rent--ongoing rent that continues. There is no "Toronto" law that replaces the Residential Tenancies Act (RTA). The RTA applies in the same way across the province.

      Hope that answers your questions.

      Michael K. E. Thiele
      www.ottawalawyers.com

      Delete
  32. Hi, we've have paid first and last months rent for Sept 2015 and Aug 2016 , we did not get our rent withdrawn in august 2016 but have made a verbal agreement so continue with a month to month lease , they have already withdrawn our new rent on our new lease Sept 2016. Does this mean I received a freebie month ? Or are they going to force me to pay first and last again on our new month to month agreement ?

    ReplyDelete
  33. Hello Michael, thank you for this informative blog. My question is with regards to LMR and my old roommate who left the lease early. I paid her her amount of the deposit minus money she had owed me for other bills. She then contacted the landlord who stated that if I did not refund the full amount she would have to do so herself and then come to me for the balance. Does my landlord have any right or obligation to pay the old roommate this amount and does she have any right to request this from me afterword? Is this a roommate to roommate issue?
    Thank you in advance.

    ReplyDelete
    Replies
    1. HI Zahra:

      I presume of course that you are in Ontario. I don't know the circumstances of why your roommate left nor if it was on good terms or bad. Regardless, your roommate leaving does not require the landlord to pay your roommate her "portion" of the last month's rent deposit. In fact, her "portion" of the deposit can not be presumed to be any particular percentage. The Last Month's Rent deposit is not half and half--it is one deposit and one amount.

      The landlord should consider quite carefully giving any money to the roommate--especially if the landlord thinks she will recover it from you. You have a last month's rent on deposit. If the landlord gives your roommate money you still have a last month's rent on deposit. The landlord can not recover this from you under any provision of the Residential Tenancies Act. Unless there is some private contract between you, the roommate, and the landlord, the landlord is best to stay out of this.

      If your former roommate thinks that you owe her money--then of course she can apply to the Small Claims Court and sue you. However, as you have seemed to simply deduct what is owed to you it is difficult, if not impossible, to imagine how your roommate would be successful. In fact, your roommate should be content with the fact that you paid her anything. You were not obliged to reimburse her any share of the LMR deposit. I presume though, that you did based on a "deal" you made with her--which is fair enough.

      Hope this helps answer your questions.

      Michael K. E. Thiele
      www.ottawalawyers.com

      Delete
  34. Hi Michael, I hope you can enlighten me more on Last Month's Rent. I've been renting an apartment unit in Ottawa since January of 2012. There was a promo that time advertised on Kijiji for a free one month rent. When I signed in, I issued a brank draft for one month deposit and signed the contract and other documents. I moved in January 2012, but they begin to take rental money from me only in February.

    Now, I notified them that I am moving out by end of September. They send me an e-mail (two days after) cancelling my Pre-Authorized Payment for September. Now mid of September, all of a sudden, they informed me that records shows I did not pay my LMR so I have to pay it. They showed me an Addendum to Lease document with these lines "The Landlord agrees to defer the last month rent..... " which bore my signature (and it was really my signature). I might have overseen it that time because I just signed all the papers that was handed to me. All the while I knew that the bank draft I issued upfront was for LMR. Now, they're telling me that the cheque I deposited was for 1st month. If that's the case, then they did not give me a one month free at all as per their advertisement. Can you please let me know what options do I have? I am totally caught offguard. Thanks so much!

    ReplyDelete
    Replies
    1. Hi: It is all a matter of proof. Can you prove that the kijiji add offered a free month of rent? Do you have a copy of the bank draft? Did it say Last Month Rent on it? Either negotiate with the landlord and come up with an acceptable deal or advise the landlord that he will have to either take you to the Board or sue you in Small Claims Court after you vacate the unit. Put the issue to the Board or Small Claims Court judge. What you say is indeed believable. The word "defer" is unfortunate and is not helpful. But surely there is a way to require the landlord to disclose the kijiji advertisement--typically these are in the tenant file. If you can prove that a free month was offered then it should be easy enough to prove payment or not with the rent ledger.

      Good luck
      Michael K. E. Thiele
      www.ottawalawyers.com

      Delete
  35. Hello Michael,

    Can you kindly let me know where I can find the interest rate I am to use when calculating the interest owed for the last month's deposit?

    I am helping my brother to look after his property while he is on deployment overseas. I am not a professional and am having a hard time finding this information.

    Thank you!
    Holly

    ReplyDelete
    Replies
    1. Hi Holly:

      Try cutting and pasting this link into your browser. It should take you to a brochure explaining the last month's rent deposit and it contains a chart with all of the past years interest amounts as well.

      http://www.sjto.gov.on.ca/documents/ltb/Brochures/2016%20Rent%20Increase%20Guideline%20(EN).html

      Hope that helps

      Michael K. E. Thiele
      www.ottawalawyers.com

      Delete
  36. Hi,

    We are a social housing provider, and we have a mission to house hard to house people.

    Because of this we don't necessarily apply to the board after the termination of the N4.

    My question is, if someone pays $100 a month in rent. It's October 8, and they owe $200 (September 2016 and October 2016 rent). We serve them an N4 for the $200 that expires October 28th.

    Now it's November 8, they haven't paid November's rent. Can we serve them with a new N4 for $300? Or is the first one only void if they have actually paid their balance.

    I would prefer to serve them monthly so they get a clear indication of the current amount owed, and it's up to date when we do apply to the board. But I've heard advice, that the first N4 is still valid, and giving the tenant a new one, even though the total amount has changed, could be construed as confusing the tenant, and get the case thrown out.

    Your opinion would be greatly appreciated on the matter

    ReplyDelete
    Replies
    1. Hi Gabriel:

      The form N4, unlike all of the other notices, does not void under the RTA with the passage of time. Every other notice of termination is at the latest void 30 days after the termination date. The N4 survives until it is voided by full payment. You have no doubt noted that the N4 provides that the amount listed in the notice along with any rent that becomes due must be paid in order to void the notice. Hence, your N4 is only void once all of the rent that is due and owing at the time of payment is made. Accordingly, the multiple N4 being confusing is indeed a valid point. Further, there is simply no authority under the RTA to serve a "new" N4 when an existing N4 has not been voided. I'd recommend providing the tenant with an updated rent ledger to inform them that you will apply if you think there is a chance of payment without incurring the $170 application fee to the Board.

      Otherwise, if you are ready to apply to the Board it is best to go with the must recently served and valid N4.

      Good luck

      Michael K. E. Thiele
      www.ottawalawyers.com

      Delete
  37. Hello Michael,
    Many Thanks for all the information you are providing.
    My question is that, my tenant is late to pay this month's rent, and she has asked me to use the last month's security deposit which is equal to one month's rent, and use it for the month that she owes. She has no intention to move out. She says, that is the best she can do and after that she will pay on time.
    Basicaly she wants me to apply the security deposit for the month she owes.
    Does she has the right to do that? can i refuse?
    Many Thanks.
    Robert

    ReplyDelete
    Replies
    1. Hi Robert: Your tenant does not have the right to do this and you certainly may refuse to do so. The Last Month's Rent deposit should only be applied to the last month. As your tenant is in arrears you should consider serving a Notice of Termination for Non-Payment of Rent and following through with that process. Letting this go simply puts you further and further behind and in an even worse spot if the tenant does not have the rent next month or any other time in the future.

      Good luck

      Michael K. E. Thiele
      www.ottawalawyers.com

      Delete

IMPORTANT NOTICE

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.