Thursday, 13 August 2015

GURANTORS & CO-SIGNERS OF RESIDENTIAL LEASES

If you are looking for information respecting the nature of a guarantee or the obligation of a co-signer with respect to residential leases governed by Ontario's Residential Tenancies Act then I am pleased to offer these comments.


A guarantor in the residential leasing context is understood to be a person who agrees to pay the rent for a tenant should the tenant fail to pay the rent owing to the landlord.  Sometimes, it is also assumed that a guarantor is responsible for damage to the rental unit or complex and any other expenses arising out of the leasing arrangement.    In the rental housing context, the word guarantor is often used interchangeably with the concept of a co-signer.   Often enough, a residential lease contains a line at the end of the lease for the guarantor or co-signer to sign with the notation of "guarantor" or "co-signer" beside the line on which that person is expected to sign.


Some leases contain a line or paragraph about the co-signer or guarantor.  I have seen a great many versions of so called "standard" clauses and generally find that these clauses are vague and often enough don't spell out the expectations of the guarantor or what the guarantee actually guarantees.  As well, the lease clauses sometimes direct that the guarantor or co-signer who is being asked to sign the lease will also sign a separate document that is the guarantee and then, when you look for that document, you discover that no such document was ever signed or prepared.


The law of guarantee is quite complex and there are many aspects to the law that go well beyond the scope of a typical residential landlord and tenant law guarantee.   That being said, there are certain basic requirements for any guarantee to be enforceable against a guarantor.  The most important thing, I think, is the requirement for certainty of terms so that it is clear that there was indeed an agreement between the parties and that the nature of that agreement is clear.  Where this is missing there is a willingness, with exceptions, in the Courts to find that a guarantee is void for vagueness.


As indicated, the technical side of guarantees are many.  This article concerns itself with guarantees and the Residential Tenancies Act and what you need to know about the Landlord and Tenant Board's authority to deal with a guarantor, make findings respecting the guarantee, and make orders based on it.


It seems settled that a guarantor is not a tenant. The case of Kar v. Chung [2001] O.J. O.J. No 3817 (Ont. C.A.) speaks to this proposition and the same proposition is reflected in the Landlord and Tenant Board interpretation Guidelines on Eviction for Failure to Pay Rent.  Guideline 11 states in part that the Landlord and Tenant Board will not make an order against a Guarantor even where the granting of the tenancy to the tenant was conditional on the tenant having a guarantor.  As a result, a landlord may not expect to receive an order against a guarantor for unpaid rent even if the lease is drafted in such a way as to make it appear that the guarantor is a tenant.  While a lease may provide for a right of occupancy on the part of a guarantor and hence they are arguably tenants no one actually expects the guarantor to occupy the premises as a tenant.  Not being in occupation further limits the Board's jurisdiction to make an order even if the guarantor were considered to be a tenant.


The Kar decision referred to above provided an interesting explanation of the effect of a guarantee clause contained in a written lease.  The decision is very short so the endorsement is reproduced below in its entirety:


E N D O R S E M E N T

Released Orally: September 25, 2001
[1]               We disagree with the reasoning of both Mr. Justice Murphy and the Divisional Court. 
[2]               The lease was entered into on May 4, 1997 and it was to expire on May 4, 1998, subject to the tenant’s right to renew for another year on giving 60 days notice.  The tenant did not give notice.  The Landlord and Tenant Act R.S.O. 1990, C. L.7 was then in force.  Section 104(1) of that act provided as follows:
Subject to subsection (2), upon the expiration of a tenancy agreement for a fixed term, the landlord and the tenant shall be deemed to have renewed the tenancy agreement as a monthly tenancy agreement upon the same terms and conditions as are provided for in the expired tenancy agreement.
[3]               The legislation does not purport to affect or apply to guarantors.  The guarantor in this case is not deemed to have done anything.  There was no language in the guarantee itself dealing with renewals.  In those circumstances it seems to us that the guarantee expired at the end of the first year.
[4]               Part of the award of the Divisional Court was for damage to the premises.  There was no evidence whether it occurred during the first year or after the guarantor’s liability had ceased. 
[5]               In these circumstances the order of the Divisional Court is set aside and the judgment of the trial judge restored.  The tenant is entitled to her costs here and below.  Those costs are fixed, on consent, at $5000.


What should be learned from this endorsement (which remains as the law today under the Residential Tenancies Act even though the case was decided under the Landlord and Tenant Act), is that the nature of the guarantee and the extent of it must be clearly expressed.  The automatic renewal of a fixed term lease to a month to month lease does not renew a guarantee.


Another consideration in relation to guarantees is the circumstances under which a landlord may require a tenant to provide a guarantor.   In my view, the circumstances under which a guarantee is required may indeed lead to arguments that the guarantee was illegally required and hence is not enforceable.  A context in which this argument may arise is when a landlord automatically requires a guarantor for particular types of tenants. In a policy on Human Rights and Rental Housing, the Ontario Human Rights Commission discusses discrimination against young people by landlords.  Discrimination against young people can take many forms but one of those ways is to require all young people to provide a guarantor as a matter of policy.   People as young as 16 are entitled to rent and can not be refused because of their age.  If a landlord responds to a young person's rental application with an automatic requirement for a guarantor I think a clear case of discrimination is made out as it is quite likely that a 16 year old is looking for an apartment of their own (and one their own) because they do not have people in their lives who are prepared to act as guarantors. 


For people considering whether they are prepared to become a guarantor they should understand that a landlord may not act quickly in evicting for non-payment of rent or that a landlord may not take steps that seem reasonable to minimize the accumulation of rent arrears.  The landlord may also not tell the guarantor about problems in the tenancy and the guarantor may feel that the lack of involvement in the tenancy and problems in the tenancy should disentitle the landlord to claim against the guarantor.  For the most part, these concerns and arguments will carry little weight--unless of course there are negotiated terms respecting what the landlord will do vis a vis the guarantor.


SUMMARY


Guarantees have many technical aspects and the fundamental principles of contract law are important in determining respective rights and interests.  However, technical arguments tend not to be effective when landlords sue guarantors if the circumstances of the guarantee are such that it is fairly and reasonably understood from the documentation what the guarantor was agreeing to do. Signing a guarantee is a serious matter and the liability for that signature can very quickly represent thousands of dollars in unpaid rent and/or damages.


Michael K. E. Thiele
www.ottawalawyers.com


41 comments:

  1. Hi Michael,

    First of all, I would like to thank you for your so helpful blog, and I started to read this from a long time ago. I am a tenant of an apartment in Waterloo, Ontario. My fixed term lease will end on September 31st and after that it should be a month to month tenancy. I want to move out and assign the apartment to my friend, so I talked to the management office. However, the staff told me I couldn't do that because I am in a month to month lease now unless my friend signs a new one-year lease. Because my friend just wants to live there until December 31st, so he doesn't want to sign a new lease. I know it is a special or weird situation, do you think if it legal for me to assign the apartment when I am in a month to month tenancy?

    Thank you for your precious time and great help!

    ReplyDelete
    Replies
    1. Hi: Your comment states that you wish to move out but it does not make clear whether you have given a Notice of Termination or not. Your lease end date of September 30 (not 31st) does not mean that your lease is ending unless you have given 60 days written notice to the end of term. If you haven't done that yet your earliest termination is November 30 at this point (as we are in mid-September).

      There is nothing stopping the landlord from taking your friend on as a month to month tenant on an assignment. It's not an impossibility to assign a month to month tenancy. That being said, a landlord may simply not want to assign the rental unit as the may believe they can get a higher rent by putting the unit back on the market. The landlord has the absolute right to refuse an assignment. The refusal gives you the right to terminate the lease earlier than your otherwise legally required notice date.

      So yes, it is legal for you to seek to assign the lease--even on a month to month. However, it is also legal for the landlord to refuse the assignment thereby triggering your right to terminate the lease sooner.

      Good luck

      Michael K. E. Thiele

      Delete
  2. Sorry for the '31st' mistake... and I haven't given the notice to the landlord yet. Thank you very much for your quick and valuable response! I'll negotiate with the landlord again.

    ReplyDelete
  3. My parents have co-signed a tenant agreement for a family member. The original fixed agreement expired in 2014, however the agreement appears to have reverted automatically to a month-to-month lease arrangement. The tenant is not responding to calls from the co-signer or landlord. Can you please advise if the co-signer is still obligated financial to cover the rent if the original agreement is now month-to-month; If the tenant cannot be reached can the eviction process begins, if a co-signer needs to pay the rent at what point do their obligations cease and what would occur if the co-signer cannot pay.

    ReplyDelete
    Replies
    1. Hi: Very seriously, the answer can be "yes" or "no". The wording of the guarantee is critical to the answer. Most "guarantees" are not properly drafted and technically the obligation ceases after the fixed term of the tenancy. However, there are exceptions and increasingly landlord's are incorporating guarantor language in the lease term that survives the expiry of the lease term. The updated language makes the guarantors liable right until the lease expires--including month to month.

      Your parents can only know the extent of their legal liability by having a their guarantee reviewed by an experienced lawyer or paralegal.

      Good luck

      Michael K. E. Thiele
      www.ottawalawyers.com

      Delete
  4. I wish to opt out as being a guarantor for a tenant. what is the procedure

    ReplyDelete
    Replies
    1. Hi: You need to look at the terms of the guarantee to see if it provides a way to terminate the guarantee. If not, then the guarantee is likely to continue for the length provided by the guarantee. If it is a serious issue for you then you should see a lawyer to have the guarantee reviewed to determine if it is still valid and what can be done to terminate it. The key lies in having the guarantee document itself available to be reviewed.

      Michael K. E. Thiele

      Delete
  5. Hi Michael, I was living in Minto TOWNHOUSE. I am the co-signer and my friend is main lease holder. however i moved out of that place on December 1st 2015. Now i am trying to remove my name from the lease but Minto management says i need main lease holder to sign that he is ok with me leaving the premises and he can afford it by himself. But main lease holder is not willing to sign the papers so i am stuck in to this situation. i am not living to that minto townhouse anymore but my name is still on the lease as a guarantor. is there a way i can take my name off from the lease. please guide me through this. thanks.

    ReplyDelete
    Replies
    1. Hi Gagandeep: Guarantor clauses are actually quite tricky. I hope I understand you correctly. You were never a tenant on the lease or in the premises but just a co-signer or guarantor? This can be unclear from lease documents so it would be worthwhile to check. If you were a tenant under the lease and the lease term has expired you may have the right to terminate the lease and serve a notice of termination. If you never were a tenant then of course you have no right to terminate the tenancy.

      Your obligations under an guarantee need to be closely looked at. Do the guarantee obligations survive the fixed term of the lease? You can tell this by looking at the lease and guarantee language. The landlord you name does have a fairly broadly worded guarantee document so it would be important to see what exactly you signed. If your guarantee does continue during the term of the tenancy it will take a termination of the tenancy to terminate the obligation or the cooperation of the tenant as the landlord describes.

      Michael K. E. Thiele
      www.ottawalawyers.com

      Delete
  6. Contra Proferentem18 December 2015 at 09:41

    Hello,

    I enjoy your blog immensely and hope you could point me in the right direction.

    What is the extent of a guarantor’s liability when the tenancy agreement fails to specify the details of the liability (ie: damage, rent) and the agreement points to a phantom collateral agreement that was never delivered?

    ReplyDelete
    Replies
    1. Hi: Good question. I wish the answer was readily apparent. You have competing arguments about how to resolve these issues and competing legal principles come into play. Generally, a guarantee is required to be clear and detailed with respect to its terms in order to be enforceable. Combined with a contra proferentem argument (which I presume you know) the guarantee becomes worth less and less. I have had the very issue of the lease referring to a collateral agreement to be executed in relation to an intended guarantee and that collateral agreement never being drafted. My position was that in the absence of the collateral agreement the guarantee never came into being. That position was successful in that the counsel for the landlord decided not to proceed with the case. After that time, I had the same issue arise again with a similar result.

      All that being said, I've also been to trial on a guarantee where notwithstanding lack of details and specificity that you would expect the Court determinate that both parties knew what they were contracting about and to focus now only on the documents would be to disregard what they actually intended. Hence liability was found.

      There are a great many cases interpreting the responsibility of guarantors and there are entire and sizeable legal texts dedicated to the topic. Doing the impossible and distilling it all down to a sentence or two, I'd say the absence of detail, specifics, and execution speaks against the existence of an enforceable guarantee with the caveat that an imperfect guarantee in the written form can be overcome with collateral evidence of the parties' intentions.

      Michael K. E. Thiele
      www.ottawalawyers.com

      Delete
    2. Contra Proferentem22 December 2015 at 10:11

      Thank-you for taking the time to respond, it was very helpful.

      Delete
  7. Hi, Michael!! I have a situation that involves a guarantor of an apartment that I want to move into, and I could really use your help!

    My boyfriend moved into his apartment 8 months ago. His income is well enough to afford the place on his own, but his credit wasn't so they asked his grandfather to sign on as guarantor. We've been dating for a few years and want to move me into the unit. I have provided them with a signed version of his lease and my income information, but they are asking us to have his grandfather write a letter of permission to allow me to live in the unit. His grandfather knows we're dating, and approves of me moving in because he wants his own name off of the lease (from what I understand, he will no longer continue as guarantor once the 1 year lease is completed anyways). His grandfather is currently unavailable in general, so we can't get the letter from him right away.

    What I am wondering, is does the landlord have the right to tell me that I can't move into his unit if I don't have the letter right away? Or at all? From what I understand from your other blog posts, landlords do not have the right to restrict or ban girlfriends, boyfriends, guests, etc from living in the unit with the listed tenant. An since his grandfather is not listed as a tenant, I'm assuming the same protection applies to us. We are considering moving me in on the down low, but what I am afraid of is whether or not they would have grounds to evict me. What little I was able to find said that they can't evict me if I move in unless his rent stopped being paid OR they could prove that I was interfering with the reasonable enjoyment of other tenants in the building. But since I've been living there part time for 8 months already, and that hasn't happened yet, it's not likely at all. And once his 1 year lease is over, his grandfather is no longer guarantor anymore anyways.

    Please let me know if what I think is right, and if they really can or can not evict me if they find out etc thank you!!

    ReplyDelete
    Replies
    1. Hi Naomi:

      You're bang on! Good luck with the move in.

      Michael K. E. Thiele
      www.ottawalawyers.com

      Delete
  8. i am a tenant in a highrise building..over the weekend my exboyfriend handed over a 60days notice to my landlord.he is only a co-signer not a tenant.my landlord(superintendant) refuses to show me the letter..i did call the head office and they stated that he can not hand in a 60 days notice due to him being a co-signer...what are my rights as a tenant

    ReplyDelete
    Replies
    1. Hi Shannon: If you are the only "tenant" on the lease then only you are in a position to terminate the lease. Your ex-boyfriend has not right to terminate your tenancy. The use of the word co-signor is sometimes confusing. It often means the same thing as guarantor. If your ex-boyfriend's only role was to be a guarantor for the rent and otherwise he was only an occupant of the unit (or not), then whether his attempt to terminate his guarantee is successful or not will depend on the wording of the guarantee that he signed. If there is no separate guarantee and he only signed on the lease as a "co-signor" without anything describing the obligations of a co-signor then it is arguable that he has no liability at all. Ultimately though, a co-signor is not a tenant and only tenants and landlords have the right to terminate or seek to terminate the landlord and tenant relationship.

      Michael K. E. Thiele
      www.ottawalawyers.com

      Delete
  9. Hi Michael! First I want to thank you for your time, I learned a lot from your blog!

    My wife and I are living in Montreal and moving to Toronto in a month. We are both self-employees. Our credit score is excellent and incomes more than enough. Still the listing agent is asking for a guarantor based on the fact that we are self employees, isn't it a little discriminatory?

    ReplyDelete
    Replies
    1. Hi Rene: This is a nuisance for sure. However, a landlord may require a guarantor. The key to the discrimination puzzle is whether the reason for the demand for the guarantor breaches the Human Rights Code. With the details you have provided I have nothing to go on to say it is discriminatory and contrary to the Ontario Human Rights Code. "Self employed" people do not have Human Rights Code protections because of their self employed status--- as far as I can see. This means that nothing in the Human Rights Code prevents discrimination against the "self employed". If you want to see the protected grounds and see whether any of those capture you--take a look at the Ontario Human Rights Code on www.canlii.org. It is a free search.

      Good luck

      Michael K. E. Thiele
      www.ottawalawyers.com

      Delete
  10. Hi there again! I commented above a couple of weeks ago and had another question! Thank you for answering!

    I found the guidelines for landlords, tenants, occupants and residential tenancies on the website for the Social Justice Tribunal of Ontario. My boyfriend finally ended up finding a copy of the lease that he signed for his apartment unit. I'm having doubts about the legitimacy of it, and how much control they have over whether or not I can live there as an occupant. The SJTO guidelines state that occupants can live in the unit so long as they have the permission of the tenant that lives there, to live with them. That occupants don't have to sign a contract with anyone, or necessarily get landlord permission either, just tenant permission.

    Our issue is that we were told that his grandfather was the guarantor. But when we found his lease, his grandfather was listed as both a tenant, occupant AND guarantor. The lease has nothing about guarantor or co-signer responsibilities listed in it, too. They literally just hand wrote "guarantor" underneath his grandfather's signature. His grandfather has never been a tenant or occupant of the unit, or paid rent for the unit, so I'm confused as to how they are allowed to list him on the lease in that way. Either way, though, my boyfriend is also listed as a tenant and occupant, so I'm assuming I'm still allowed to move in with his permission either way?? The way they even had them both sign the lease is questionable. My boyfriend's signature is on 3 of the 4 witness and agreement lines, and his grandfather signed the last line and they wrote "guarantor" under it. The landlord was trying to get me to a) sign the lease as a tenant and b) saying that I had to have the grandfather's permission to live there at all. Even though as an occupant I don't have any contract, and I'm not responsible for the rent, damages, complaints, etc. so he wouldn't be liable for me anyways.

    ReplyDelete
    Replies
    1. Hi: I think you have the right sense of it. If your boyfriend is fine with you moving in you don't need to have any else's permission. The landlord can not insist that you sign on as a tenant and can't interfere with you being there with your boyfriend. The issue with the grandfather is likely a red-herring (i.e. meaningless). It sounds like the intention with the grandfather was that he is a guarantor and not a tenant. Without any clauses extending his liability as guarantor beyond the first fixed term his obligation is likely over if your boyfriend is on a month to month tenancy now.

      Michael K. E. Thiele
      www.ottawalawyers.com

      Delete
  11. Hi, I have a question on lease renewal.

    My first year term is finishing in October. Renewing clause of my lease reads "the tenant reserves the right to have first option of renewal of the lease for a further 1 year term with any increase to be governed by the rent control board. The tenant will give the landlord written notice of intention to exercise his right to renew no latter than 3 months prior to termination date of lease. Otherwise the right of the renewal shall be null and no effect".

    Personally I want to live for a couple of years but I don't want to stick to Oct renewal date (due to school year). Would my lease be renewed for an year in case I give intent to renew? Would it be renewed as month-to-month keeping in view Residential Tenancies Act clause 38 if I don't give intent to renew? What could be the best strategy to get a renewal on month-to-month basis?

    2nd part of my question is if rent goes up every year by the amount set by rent control board?

    Thanks in advance for your guidance

    ReplyDelete
    Replies
    1. Hi: I'm presuming of course that you are in Ontario. In Ontario you do not have to do anything at all to continue your tenancy on a month to month basis. You simply continue on living in the unit and paying your rent. When you want to terminate you will give a Notice of Termination (use a form N9). If the landlord wants to increase the rent then the landlord will have to serve a Notice of Rent Increase in Form N1. If the landlord asks you if you are staying you can, of course, simply say yes. I think what the renewal clause is trying to get at is to give you a fixed term of 1 year--so that you are not on a month to month. Fixed terms can be useful in small buildings where landlords may decide to move in or where significant repairs are expected---for a fixed term like a year the tenancy can not be terminated earlier than the end of the year for non-cause grounds. On a month to month the tenancy could be terminated on proper notice.

      The amount of the yearly rent increase is set by the government. You can see the annual amount on the Landlord and Tenant Board website. This will apply unless your unit is exempt from rent control.

      Michael K. E. Thiele
      www.ottawalawyers.com

      Delete
    2. Thank you very much for your guidance. I have gone through your others posts as well. Your blog is are very useful.

      P.S Yes, I am in Ontario.

      Delete
  12. Hello .. My boyfriend is a guaranteeing
    On a place for my daughter. My daughter moved out after many fights with a exboyfriend and police called. The superof the builed told her that is the best thing to do and also but the elevation on hold for her to move out ... So now the builed mangment is calling my boyfriend after 3yrs for the rent that she didnt pay .she has hit rock bottom and lost her kids. So she dont have money to pay .dose he still have to pay this and can they take it from his pay .. Please help
    Thank you Debbie

    ReplyDelete
    Replies
    1. Hi: It is important that your boyfriend get legal advice before admitting or acknowledging any aspect of this alleged debt. There are some technical defences here including an argument that any debt is statute barred--so long as the debt is not acknowledged as owing. The full answer to your question can only be provided after meeting with your boyfriend and reviewing the guarantee clause. Many guarantee's expire after the first full year term of the lease unless specifically renewed. Also, many guarantee clauses are vague enough that one has no idea what the guarantee refers to. It is also unclear whether your daughter's ex boyfriend continued to occupy the rental unit after she moved out. If so, there may indeed be a claim against him. If he didn't stay and your daughter simply moved out it is arguable that the landlord agreed to terminate the tenancy by conduct. If the rent being claimed is for a period after your daughter moved out then arguably there is nothing owing. As you can see there are a lot of variables. Your boyfriend should not deal with the landlord until he gets legal advice. If money is an issue, try a local community legal clinic.

      Good luck to you

      Michael K. E. Thiele
      www.ottawalawyers.com

      Delete
  13. Just wondering, after the first year of a lease where you have a cosigner. Once the lease has ended, and the renter has had a good record/standing with the landlord is a cosigner still required for the renter? Can the cosigner be released from their responsibility and no longer associated with the lease? Or is that up to the landlord/property management?
    Thanks,
    C

    ReplyDelete
    Replies
    1. Hi Clayton:

      A co-signer is generally understood to be a guarantor of the tenant's obligations under the lease. Most often that is understood to be for payment of rent in the event that the tenant does not pay the rent. There is some discussion about co-signers being responsible for all of a tenant's obligations--which may include liability for damage caused wilfully or negligently by anyone allowed on the residential complex by the tenant.

      The problem with many "co-signer" agreements is that there is no actual agreement. Often enough, the lease simply has a separate line for the co-signer to sign and the words "co-signer" are written after their name. When this is the case what has the co-signer agreed to? It is a mystery and as you begin to try to answer the question you end up trying to figure out what was in the minds of the parties when the document was signed. I think it is fair to say that most co-signers think that they might be on the hook for rent arrears by signing but equally, I think most co-signers would be surprised to think they could be on the hook to pay for wilful or negligent damage of anything in the residential complex caused by the tenant or any of his or her guests.

      When you look at the law of guarantee one sees that the law requires the terms of the guarantee to be clearly set out in order for it to be a valid guarantee. A lease which only uses the word "co-signer", "guarantor", or other such word with nothing else would not seem to meet the requirements of a valid guarantee. That being said, the reality is that guarantors are often successfully pursued in Small Claims Court with vague written agreements or effectively one word agreements based on the presence of the word "co-signer" or "guarantor". The inquiry, in many cases, seems focused on what the parties had in their minds when they signed the lease document.

      Specifically to your question. We have relatively recent appellate authority that makes it clear that a guarantee or co-signer agreement in the nature of a guarantee expires at the end of the fixed term of the lease. Hence, once the lease goes month to month, the guarantee expires and is unenforceable against the co-signer. The tenant can not be required, as a condition of maintaining the tenancy , to get another co-signer--even if the payment history was poor or there were other problems.

      Due to the clarity of the appellate authority on guarantees not automatically renewing or continuing with the statutory month to month tenancy after the expiry of the fixed term you do now see landlords preparing guarantee clauses that purport to continue until the tenancy is terminated (i.e. the guarantee continues into the month to month all the way to the end of the tenancy). The law suggests that the terms of the guarantee are important and that the landlord and guarantor can choose the contract language and be bound to it. Hence, wording that continues the guarantee after the expiry of the initial fixed term (usually one year), is presumptively enforceable subject only to other defences afforded in this area of the law.

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

      Delete
  14. My sister was the guarantor on a town house. After the year she sent a registered letter to remove herself. She received a text not long after from the tenant my daughter stating she had to move by april as she was no longer the co signer and did not have another one. On june 26th in the mailbox there was an order stating arrears of 955.73 from february plus compensation of 6237.20 . my sister was never notified of any of this also they have her named as a tenant on the lease. She was only ever a guarantor not a tenant.

    ReplyDelete
    Replies
    1. Hi Lorraine: It is difficult if not impossible to comment on the rent arrears and the compensation (is the compensation rent arrears or damage at $6237?--that is a lot of money for a one year lease). Your daughter did not have to move simply because your sister sought to terminate her guarantee. This is not a ground for termination of the tenancy by the landlord. Hence, as long as your daughter continued to meet the obligations under the tenancy she would have the legal right to continue the tenancy. Of course, meeting the obligations appears to be the problem with an order for $955.73 plus $6237 (roughly $7200) being made against your daughter.

      I presume that the order that arrived in the mail was from the Ontario Landlord and Tenant Board? If so, your sister has recourse and you've identified the issue---your sister was never a tenant and did not occupy the premises. On this basis she could file a Request to Review with the Landlord and Tenant Board to have her name removed from the Order. If the facts are as you describe she will win that almost automatically. Given the passage of time she will likely need to file an extension of time request with the Request to Review. The forms are on the Landlord and Tenant Board website. Once she gets her name removed from the Order it is no longer an Order against her.

      While this solves the problem in the short term, the question really turns on what this $7200 is? Can I assume your sister has a bit of an issue with your daughter? Have they spoken about the legitimacy of the landlord's demand? Anyway, I'll leave that dispute to your family.

      Once your sister gets her name removed from the Order the landlord could decide to make a demand of her for what is owed. Your sister can ignore it and then the landlord could sue her--likely in small claims court. Your sister, can defend the claim and at the same time sue your daughter to indemnify her for anything that your sister has to pay to the landlord.

      Whether your sister has a defence to the landlord's claim against her is something that needs to be reviewed in a lawyer's office. There are many defences and you might be surprised what is available. Of course, if it is pure rent, the defences will be rather limited and you might be looking for defences based on the nature of the guarantee. Again, something that needs to be reviewed with a lawyer.

      Good luck to you and the "stress" that I'm sure this has caused in your family.

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

      Delete
  15. Hello Michael. Great site thank you for all your information.
    Can retired seniors be guarantors to their daughter and husband who are trying to live and rent in Ottawa.
    Thanking you in advance
    Keith

    ReplyDelete
    Replies
    1. Hi Keith: There is no legal test for who may or may not be a guarantor. Retired seniors may certainly be guarantors--and in fact often are. Whether a person is acceptable as a guarantor has more to do with the pocketbook than anything else. It will be the landlord who determines whether the guarantee offered by the proposed guarantors is acceptable or not.

      Cheers
      Michael K. E. Thiele
      www.ottawalawyers.com

      Delete
  16. Hello Michael:Further to your above response to Keith, can an Ontario landlord require that a guarantor provide proof of income? I have already voluntarily provided a full credit report.
    Thank you in advance.
    Guy

    ReplyDelete
    Replies
    1. Hi Guy: I can't find anything that would prohibit such a requirement. I think a problem may arise where the requirements on the guarantor exceed requirements that can be used to select a tenant as you then get into human rights grounds. Query if a demand or criteria required of a guarantor, that could not be required of a prospective tenant on Human Rights Code grounds, not be argued to be discrimination under the HRC? I don't see a problem with proof of income per se, but how that is used as a tenant selection criteria can be a problem.

      Michael K. E. Thiele
      www.ottawalawyers.com

      Delete
  17. Hi Michael: I have signed a lease as a guarantor for my son and his room-mate. There did not seem to be much choice in the matter as my son needed a place to live. He is on ODSP. I believe his room-mate is also on same. ODSP pays the landlord directly as per my son. He has never defaulted. His room-mate has defaulted but then paid up so has no outstanding owing. I believe the room-mate is now setting up third party payments as well. The lease terminates September 1, 2016. They intend on continuing to occupy the apartment month to month or, if required, perhaps sign another lease. I wish to terminate my responsibility. The guarantor clause is worded thus: "The Guarantor agrees with the landlord that this Guarantee shall remain in force so long as the Tenant remains in possession of the premises, whether under this lease or any renewal or extension thereof, or under operation of law."
    My question is this therefore: Can I submit my intent to terminate my guarantee even if my son and his room-mate extend their stay after the expiration of the lease; ie., Sept. 1)?

    ReplyDelete
    Replies
    1. Hi: This is a difficult question to answer. For many years the wording of guarantees were vague about what happened after the expiry of a fixed term. As the article above indicates, the law generally found those guarantees to expire with the term and not continue on into the month to month portion of the lease that automatically continues beyond the expiration of the usual one year term. The key, according to the caselaw was the clarity of the terms of the guarantee.

      In your situation the guarantee clause contemplates the expiration of the one year fixed term and the extended month to month. It purports to continue so long as the tenancy continues. Clearly, it is the intent that your responsibility continues until the tenancy ends. There does not appear to be any "opt out" clause or limitation to the duration for your guarantee. I don't have any particular expertise in the law of guarantee and perhaps there are ways to "cancel" a guarantee. However, I am not aware of any ways to unilaterally cancel a guarantee that is being relied upon by the person benefitting from the guarantee. Some research is needed and I can tell you that this area of the law (Guarantee) is incredibly complex.

      If it is an issue of important for you and it seems unlikely that you will be able to cancel the guarantee I'd explore the question of why you were required to provide a guarantee in the first place. As your son is on ODSP his income is guaranteed and about as stable as it can get. The same is true of his roommate who is on ODSP. Was their credit terrible? Or was the requirement for a guarantor premised on the fact that he was on ODSP? Depending on the answers to this you may have a way of challenging the guarantee as having been improperly required. Take a read through the article above again to see what I'm thinking.

      Good luck

      Michael K. E. Thiele
      www.ottawalawyers.com

      Delete
    2. Thanks Michael: My son came up with an idea. He wants to sign another lease at the end of the current one which expires as mentioned above in September 2016. This shifts the whole question so to speak. If he signs another one I won't guarantee it. So the question now becomes: "Can he insist on signing another lease upon termination of the first one now in effect?" In other words; does he have that prerogative? Thanks Michael!!!

      Delete
  18. Hi is there a way to transfer the responsibility of a cosigner to another person through a lawyer that is separate from the initial agreement with the landlord? Using some other legal agreement that would be recognized by the landlord and a court of law or does the initial agreement with the landlord have to be amended and a new cosigner added?

    ReplyDelete
  19. Hi Michael,

    I am owed past due rent from my former tenant. He had a co-signor on his lease. Unfortunately, I had to go with legal proceedings to remove him for non-payment. In the contract that the co-signor signed included the following clause, "I/We understand that this co-signer agreement will remain in force throughout the entire tenancy even if the tenancy is extended or changed in its terms." Is the co-signor obligated to pay to pay beyond the fixed terms due to this clause? I'm looking into filing small claims to collect on the rent owed to me.

    Thank you!

    ReplyDelete
    Replies
    1. Hi: The question you ask is the ultimate question that is for the judge to answer. I can offer that in my opinion you're likely covered and have co-signor on the hook. Of course, the co-signor may have other ideas and may have defences to try or a legal angle not presently contemplated. Certainly, it seems to me that it would be reasonable for you to sue and beyond that you have to go with how the litigation unfolds. That you would adjust your position as the litigation unfolds is exactly how litigation works--it is quite rare for anything to be 100% clear the entire way through.

      Good luck

      Michael K. E. Thiele
      www.ottawalawyers.com

      Delete
  20. Hello. Is it legal for my rent co-signer (my parents) to demand their own key to my place? Did one year lease now second year month to month. Waterloo, Ontario.

    ReplyDelete
    Replies
    1. Hi: This is not an issue that the Residential Tenancies Act deals with. As between you and your co-signor it is something for you to agree upon. This has very little to nothing to do with the landlord and tenant relationship between you and your landlord. What if the co-signor demanded a key to the unit from the landlord? I think that if the landlord provided a key to the co-signor that the landlord would be facilitating an illegal entry and a breach of privacy of the tenant. The landlord does not have a landlord & tenant relationship with the co-signor and hence it is very difficult to see the legal basis for the landlord to give the co-signor a key. Of course, there may be written terms dealing with access and keys and information that may qualify my general view that it is illegal to provide a co-signor with keys, access, or information. An immediate example that comes to mind is a situation where a tenant is being accommodated for a disability and the accommodation plan has the landlord providing information to the co-signor, access to the co-signor, etc., to facilitate compliance with the RTA.

      That being said, if the co-signor is a typical co-signor who is just guaranteeing the rent then I don't see how they could get a key.

      Lastly, if you are in year two--take a look at your co-signor agreement. A typical co-signor agreement expires after the fixed term unless it explicitly provides that it continues in the month to month portion of the lease. Hence, your co-signors may no longer be co-signors depending on who the co-sign (guarantor) clauses are drafted. A co-sign/guarantee does not renew on a statutory basis.

      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.

Search This Blog

Follow by Email

About Michael Thiele

My photo

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.