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
Thursday, 14 August 2014
192 comments:
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.
The content of this article and any responses to comments are intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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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?
ReplyDeleteHi:
DeleteAn 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.
DeleteThe 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
Hi Michael. Thank you for an excellent, detailed reply.
ReplyDeleteTo 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.
Hi Micheal,
ReplyDeleteI 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?
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.
DeleteIf 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
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..?
ReplyDeleteHi 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).
DeleteMichael K. E. Thiele
www.ottawalawyers.com
Hi,
ReplyDeleteThis 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
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
DeleteHi Michael,
DeleteThank 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...
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.
DeleteAll 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.
DeleteIf 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
Hi Michael,
DeleteThank 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
Hi Michael,
DeleteThis 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
Hi Michael,
DeleteJust 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
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.
DeleteGood luck
Michael K. E. Thiele
Hi! A great blog and I have a quick question similar to the previous one.
ReplyDeleteI 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?
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).
DeleteMichael K. E. Thiele
www.ottawalawyers.com
Hi Michel thanks for opening this blog. I find this blog extremely useful in fully understanding the landlord and tenant act.
ReplyDeleteI 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?
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.
DeleteMichael K. E. Thiele
www.ottawalawyers.com
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
ReplyDeleteHi: 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.
DeleteGood luck
Michael K. E. Thiele
www.ottawalawyers.com
Thank you Michael, I appreciate your response and the information.
DeleteKaren
Hi I was certain a law was passed statin that landlords could not charge last mo thts rent angmore
DeleteHi: No the Last Month's Rent deposit is still chargeable.
DeleteHello,
DeleteMy understanding is that the RTA gives the option to the landlord to request one month's worth of rent prior to moving into a place (i.e. the last month's rent deposit). The RTA doesn't give the option of having the tenant also pay first month's rent as a form of deposit (i.e. some landlords request both the first and last month's rent with the rental application, which is two month's of rent rather than just the one that the RTA mentions). I was under the impression that first month's rent is due on the day of move-in (typically the 1st of the month). Are landlord's allowed to ask for both first and last month's rent with the rental application (even though the RTA only mentions the one month worth of rent)?
Thanks.
Hi: You are technically correct. The first month's rent is only due on the first of the month. It is only the LMR that can be asked for in advance. That being said, the reality is that Landlords ask for first and last all the time. Failure to provide both may result in not getting the apartment. Perhaps wrong in law--but that is a reality to deal with.
DeleteHi Michael, I appreciate your informative blog and reading through the questions and replies on this particular post.
ReplyDeleteI 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!!
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.
DeleteGood Luck
Michael K. E. Thiele
www.ottawalawyers.com
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.
ReplyDeleteHi: 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.
DeleteMichael K. E. Thiele
www.ottawalawyers.com
Hi Michael,
ReplyDeleteI 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?
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.
DeleteSo 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
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.
DeleteHow 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
wow, what an insightful, knowledgeable and considerate response! Thank you!!
ReplyDeleteCan someone please show me that calculation used to determine interest on last months rent?
ReplyDeleteHi: 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%.
DeleteTo 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
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.
DeleteWith 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
Can the landlord apply the interest earned for the year to the LMR? Is this legal?
DeleteThe short answer is "yes". The landlord has an option to pay the tenant the interest directly or to apply the interest to the Last Month's Rent deposit so that the LMR deposit is equal to a month's rent. This authority is in section 106(7) Residential Tenancies Act. Section 106(6) creates the requirement to pay interest to the tenant and 106(7) allows adding the interest to the deposit to a maximum to satisfy the 106(6) requirement. While section 106 RTA seem comprehensive there appear to be holes in the procedure and inconsistencies. In my view, a landlord needs to actually communicate the payment of interest when it is due by adding of interest to the LMR deposit. Failing that communication (when the interest is due), the tenant can (or should without restriction be able to) exercise the right to deduct the interest from a subsequent rent payment (section 106(9)RTA).
DeleteHi 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?
ReplyDeleteHI: 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).
DeleteMichael K. E. Thiele
www.ottawalawyers.com
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.
ReplyDeleteC Landry
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
ReplyDeleteHi 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!
ReplyDeleteHi: 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.
DeleteMichael K. E. Thiele
www.ottawalawyers.com
Hi Sir,
ReplyDeleteI 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.
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.
DeleteYour 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
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?
ReplyDeleteHi 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.
DeleteMichael K. E. Thiele
www.ottawalawyers.com
Hi Michael,
ReplyDeleteGreat 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
Hi Micheal,
ReplyDeleteGreat 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,
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.
DeleteYou 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
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.
DeleteHi 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 ?
ReplyDeleteHi 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.
DeleteMichael K. E. Thiele
www.ottawalawyers.com
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
ReplyDeleteHi: 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.
DeleteIf 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
Love reading all the questions and answers in your blog. Very informative.
ReplyDeleteMy 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.
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).
DeleteThere 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
Hi Michael,
ReplyDeleteExcellent 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.
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.
DeleteHope that answers your question.
Michael K. E. Thiele
www.ottawalawyers.com
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.
DeleteAfter 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.
Hi Michael,
ReplyDeleteMy 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?
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.
DeleteTo 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
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.
ReplyDeleteHi: 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.
DeleteGood luck
Michael K. E. Thiele
www.ottawalawyers.com
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
ReplyDeleteHi: 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).
DeleteMichael K. E. Thiele
www.ottawalawyers.com
Hi Michael, Fantastic blog, and thank you in advance for any advice you can give to me.
ReplyDeleteOur 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.
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.
ReplyDeleteHi: 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.
DeleteNotwithstanding 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
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.
ReplyDeleteHi Rebecca:
DeleteThe 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
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 ?
ReplyDeleteHello 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?
ReplyDeleteThank you in advance.
HI Zahra:
DeleteI 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
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.
ReplyDeleteNow, 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!
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.
DeleteGood luck
Michael K. E. Thiele
www.ottawalawyers.com
Hello Michael,
ReplyDeleteCan 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
Hi Holly:
DeleteTry 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
Hi,
ReplyDeleteWe 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
Hi Gabriel:
DeleteThe 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
Hello Michael,
ReplyDeleteMany 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
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.
DeleteGood luck
Michael K. E. Thiele
www.ottawalawyers.com
The LLTB has issued an eviction order for my tenant. I am quite confident that they will not leave by the date issued on the order and that I will have to have the Sheriff enforce the eviction.
ReplyDeleteBecause I am unsure what sort of time frame this will take, I am wanting to know what circumstances there are where a landlord doesn't have to refund last months rent deposit. The eviction date is March 13th- if they go then, or in march, do I return rent deposit? If enforcement by Sheriff brings the eviction into first week or so of April, Do I return rent deposit?
Thank you.
Hi Vickie:
DeleteIn the context of evictions, especially if you have to get the Sheriff involved, I doubt very much that you will owe the tenant any of the Last Month's Rent deposit back. You likely have an order for the per diem (daily) rent owing after the eviction date which is also owing to you (and comes off the LMR). You may also have Sheriff's costs to enforce the eviction which will be around $350, and that is owing to you as well on the strength of the LTB order. If, after you pay all of the rent and the daily rent post termination and the sheriff's fees and there is anything left over from the deposit then you need to return that to the tenant (seems unlikely to me). There is another possibility and that is that there is damage to the unit. While you can not technically use the LMR to pay for damage there is a logical set off approach to be used--which might require you to apply to the Small Claims Court if the tenant does not agree. If this is your situation let me know.
Michael Thiele
www.ottawalawyers.com
Hi there
ReplyDeleteMy month to month tenant gave her 60 days notice on August 10.
On September the 8 she gave me 2 days notice that she will be terminating her tenancy as of September the 10 and is demanding her last months rent reimbursed. Is she within her rights to do so?
Hi: Most likely "no", she is not within her rights. Presuming that rent is due on the first of the month the tenant's 60 days notice must also be on the last day of the term (which is the day before rent is due). The end of term, even on a month to month is the day before rent is due. Hence, a monthly tenant giving notice on August 10 would only be able to terminate by notice for October 31. The 60 days is conditional on the last day of the term being the date. Hence, the Notice being given on August 10 can't meet the notice requirements until October 31.
DeleteIf the tenant leaves early you may have a duty to mitigate your losses and take steps to re-rent in a reasonable fashion. Failure to reduce your loses might mean that the tenant can avoid the full notice period. Otherwise though, you are entitled to be paid rent until October 31.
Michael K. E. Thiele
www.ottawalawyers.com
Michael, quick question,
ReplyDeleteWhere a tenant is going immediately into month-to-month (and not signing a year long lease at the outset), do I still have the right to ask for first and last month's rent?
Thanks in advance
Hi: The short answer is "yes". The legal authority to collect the deposit is in section 106 of the Residential Tenancies Act. The tenancy agreement referred to in that section includes a month to month tenancy. See the section for the additional details about amount, etc..
DeleteMichael K. E. Thiele
www.ottawalawyers.com
Hi Michael,
ReplyDeleteI'm renting a room in a house for short-term, but due to noise/disturbances (unable to sleep well) and shared bathroom use, I've decided to leave early. On Oct 8, I notified the landlord, through WhatsApp, about my plans and the issues/reasons for wanting to leave early, but he refused to return my last month's rent, insisting that I can leave by end of November. Now, I'm planning to file a T2 application against him, but I don't have his full name and address. The landlord does not reside in the property, but he has a cousin who occupies a room on the same floor as my room and we share the same bathroom and kitchen with other tenants. I've asked the cousin for the landlord's details but he refused to give them and replied , "I don't know".
The thing is, I responded to the landlord's rental ad on kijiji, corresponding only via email and over the phone because I was from a different city then. I was able to meet him a couple of times to check on the property. My payments are sent online through Interac (Scotiabank) to an email address owned by the cousin, as far as I know. I informed them that I'm only interested in short-term rent and there is no written contract. Needless to say, I have not received any receipts for my payments. All I have is the landlord's phone number, but he has been refusing to answer my calls. I also have the cousin's email address (used for the online payments), but after sending him 4 emails about my issues and my request to get the landlord's details, the only reply I got was that he didn't know who I am, I should stop harrassing him, and that his response was my last warning. These deceitful and suspicious behaviors from them will be part of my T2 application.
I'm planning on moving out by end of October. What is the best way to remind the landlord that I'll be moving out, can I just leave him a voice mail and leave the keys inside the room? If I'm able to search for the landlord's full name and address from county records, can I still file the T2 after I've left the property? If I'm able to file the T2, is it advisable to contact a lawyer for the hearing or can I attend on my own?
Now, regarding my payments which were sent online through the email address... Since after a few emails/notices sent to the same email address, I received a response that the supposed owner of the email address does not know who I am -- can I report this as a scam and have the bank reverse the transaction, so I can get back my last month's rent?
Hello,
ReplyDeleteI'm not sure if the question has been already asked.
I moved out on October 31st 2018, by assigning my lease to someone else (not subletting). The primary lease ends April 2019. Due to the context, I paid all month rents, so that the landlord still has the last month rent amount. How long has she the right to keep it ? (She told me she will refund me, but I'm still waiting)
You have asked a question that does not have an RTA based answer. If you've looked through the assignment provisions you will have found that the LMR (last month's rent) is not dealt with. In practice, landlord's will cooperate and receive an LMR from the assignee and then refund the first tenant. They are not explicitly required to do this but arguably it should be considered part of the assignment process. When a landlord does not facilitate the assignment in this way then the tenant can get a check from the assignee to cover the LMR that they will get to use towards the last month's rent whenever it is that they decide to terminate their tenancy. The LMR will not necessarily be used in April 2019. If the lease continues month to month--which the new tenant has the absolute right to do---then the LMR will be held until some future date when the lease ends and then will be applied to the last month.
DeleteIf neither the landlord nor the tenant are prepared to pay you the LMR then you will need to consider legal action in small claims court.
Good luck
Michael K. E. Thiele
www.ottawalawyers.com
My landlord issued an n12 to so that I move out by Jan 31. I issued an n9 to give 10 days notice that I am leaving before Jan 1. Should the lmr be refunded to me.
ReplyDeleteHi: Yes, your LMR should be refunded (Last Month's Rent). The LMR is not a bonus that the landlord gets to keep. You are required to pay the rent for your occupation but if the landlord has prepaid rent for a period after your legal termination then a refund is due to you. Remember also, you are likely entitled to an additional 1 month compensation because an N12 was served on you.
DeleteMichael K.E. Thiele
www.ottawalawyers.com
Landlord granted & received order to evict Ontario tenants for damages and not paying for damages as lease stated. Landlord ordered to pay tenant back last months rent, minus the damages.. How long after tenant surrenders keys to landlord and vacates, should landlord be refunding what is owed? How many days approx?
ReplyDeleteHi Lori: The Order from the Landlord and Tenant Board usually spells out when sums of money should be paid. If the Order is silent then the money is due and payable immediately. Some landlords will pay with a cheque immediately and some need a few days to process a cheque. However, the money is due when the Order says it is due.
DeleteMichael K. E. Thiele
www.ottawalawyers.com
Hello, I paid last month's rent on a unit that may be coming available in March 2019. I was told 2 weeks ago that other people were interested and they needed last month's rent to secure it so I paid it. It is being renovated and I have contacted them about signing the lease but have yet to hear back. If I decide not to take it will I get the last month's rent back? Thank you.
ReplyDeleteHi: You would think that this question would have an easy answer. It turns out that it is anything but easy. The reason is that your fact scenario engages two relatively new provisions of the Residential Tenancies Act (section 12.1 and section 47.0.1). Without these sections my view is that you are committed to the lease as that is what the payment of the Last Month's Rent is for. There is no further chance to "think about it". If you fail to occupy the rental unit the landlord would have to apply your deposit to the rent that becomes due and apply it to the rent only (i.e. not a penalty etc.). The landlord would also need to try to mitigate its loses and try to re-rent. If you told the landlord now, for example, that you are not moving in in March the landlord would have to try to re-rent. If successful then you would be owed a refund of the deposit because the landlord has replaced you with someone else.
DeleteThe complicating feature is the two new sections. Ontario has a new standard form lease. That standard form lease must be provided to tenants in prescribed tenancies (which very likely includes you). That lease needs to be provided within 21 days of the date of demand and the failure to do so, or your unwillingness to enter into the agreement can result a termination of the tenancy with notice. Also, the failure to produce the standard from lease will entitle you to withhold rent for one month.
So, you have made the demand to sign the lease but not yet heard anything. The time-line is ticking and certain rights will accrue to you (see section 12.1 and 47.0.1). Will it be that straightforward? Unlikely as there may be a conflict within the new section 12.1 as the provision dealing with the time of signature (12.1(2)) simply provides that the lease shall be signed on or before the day that the tenant is entitled to occupy the rental unit under the tenancy agreement. Does the signing versus production within 21 days conflict? Perhaps.
So, I mention the above to bring it to your attention that there are "issues". Trying to anticipate possibilities in the abstract is difficult--and likely impossible. Right now, I think you are committed to a lease. If the landlord does not comply with producing the lease to sign then you will have a remedy. Arguably, even if the landlord produces the lease and you simply refuse to sign you are then entitled to terminate the fixed term on 60 days notice to the last day of a rental period.
Good luck
Michael K. E. Thiele
www.ottawalawyers.com
Hi, Michael. This one's a bit long, sorry about that! I would greatly appreciate if you can give me some advice.
ReplyDeleteI'm a student studying in Ontario and am subletting out my housing room during the Winter term (January to April). It's student housing, and is an apartment suite with five bedrooms that share a common area. I have a lease for one of the five rooms.
I found a sublet who signed a sublet information form to give to my rental company back in October. The form includes the room being rented, the rental period (4 months), and some personal information. The amount of rent being paid is not included, but is mentioned and agreed upon through facebook messaging.
She also paid one month rent in advance, but we requested it as being the first month (January) of rent. I have read something related to rent deposits being only legal in Ontario if it's the last month of rent, so I'm not sure if this would be an issue...
On January 5th, my sublet entered the unit with the intention of moving in and sees that the suite has 4 other female tenants, but one plans on having her boyfriend move in with her. She mentions to me that she feels uncomfortable with the guy living with them and requests we do something. We talk to the tenant with the boyfriend and she apologizes and states that her boyfriend will leave by the end of the week. This issue was brought up and resolved in the span of a few hours (5:30-9:30PM).
Even so, my sublet wants to break the subletting agreement that we signed and is requesting the deposit back in full. I told her that we will not return the deposit in full given the late notice and the fact that it is meant to protect me in this scenario, but I could return a portion when/if we or she managed to find someone else to sublet to.
She is now requesting her entire deposit back and threatening to bring lawyers into the picture. Luckily, I did manage to find a new sublet, but my original sublet has been extremely rude and unreasonable throughout the entire process, and did not help find a replacement even when I requested her help. Who is in the wrong here?
Thank you.
HI: Well you ask an interesting question when you write "in the wrong". It seems to me that your question isn't entirely legal but encompasses a moral element, politeness, and decency. Is it okay for your sub-tenant--with whom a contract has been struck to be obnoxious? On the facts you present it is very difficult to have any sympathy for the sub-tenant so the "in the wrong" answer is the sub-tenant is wrong. Of course, that might change if we heard her side of things and perhaps she has a perspective that would justify her behaviour and aggressive backing out of this contract/lease.
DeleteI should however, answer this question not from a "Dear Abby" perspective but from a legal one. The law does not care so much about who is rude, weird, obnoxious, etc.. The focus is somewhat more on the application of law to the facts of the contract and the breach of the contract (if any). In this circumstance, you should consider yourself a landlord and the sub-tenant is your tenant. The Residential Tenancies Act (RTA) will regard you in this way--even though you are a tenant in the unit yourself. This means, for any disputes with the sub-tenant that you (even though you are a tenant) could utilize the processes of the Landlord and Tenant Board as a landlord. You could evict for non-payment, misconduct, illegal act, etc.. My point is that the sub-tenant relationship imposes serious landlord and tenant duties on you and the sub-tenant. The sub-tenant's reaction seems a little too flippant and does not seem to recognize her legal responsibility to you for the rent etc..
On these facts you would have been correct to keep the deposit and apply it to rent on an ongoing basis to the end of the sublet.
The exception, however, is that once the sub-tenant refuses to move in and withdraws from the lease the law imposes on you a duty to mitigate the losses. You can't just sit back, leave the unit empty, and sue the sub-tenant for the 4 months of the sub-let rent. The law requires you to try to re-rent (or re-sublet).
You indicate that you have successfully re-sublet the unit. If this means that you are zero dollars out of pocket on the "rent" then your first sub-tenant is entitled to a refund. The reason is that you can't keep or use rent money for anything other than rent. No penalty, no hassle money, no forfeit--only rent.
So, from a legal perspective based on the facts you have provided you are correct in how you dealt with the sub-tenant. However, because you managed to mitigate and re-sublet, the first sub-tenant is likely entitled to a refund (however much she is "morally" wrong).
Michael K. E. Thiele
www.ottawalawyers.com
I see, thank you so much for the detailed response!
DeleteIf I were unable to find a new subtenant for the month of January, would I then be able to keep the original deposit to pay for January rent?
Thanks Michael for the detailed answer!
DeleteIf I were unable to find a new sublet, would I then be able to keep the deposit to pay for January rent (despite requesting the deposit as a first month rent, instead of last month)?
HI Alex:
DeleteTechnically the only deposit that may be requested is the Last Month's Rent (LMR) while the practice is to pay first and last when the lease is signed even if the first day of the tenancy has not yet arrived. How I am reading your facts I don't think anything turns on what you called the payment received from the sub-tenant. Certainly, the first month deposit was to be applied to January and we are in January.
If the sub-tenant wanted to make a big deal about what the deposit was called or what it was for then perhaps there is an issue. However, if you are owed money for rent then you would have the right to sue for that rent--ultimately creating a set off of one amount against another [yes, this gets messy].
To your question. If you were trying in good faith to mitigate your losses and you did not find anyone then the rent for the first month of the sublet would become due. You would continue to search for someone and then the 2nd month would become due. These amounts are payable by the sub-tenant subject to proof of your attempts to mitigate. Of course, the sub-tenant may raise any number of claims or breaches by you (let your imagination run wild) and this answer presumes there are no such valid claims by the sub-letter.
Michael K. E. Thiele
www.ottawalawyers.com
Hi Michael,
ReplyDeleteI've read through the comments and consulted the Residential Tenancies Act and haven't found a solution to my problem. Am wondering if you're willing to consider my situation.
About a year ago, my landlord forgot to deposit my rent cheque. In the months following, the cheque in question was either misplaced and/or became stale-dated. A few weeks ago when the landlord realized her error, she emailed me to say that she'd applied my LMR deposit to the month in question. We are up-to-date on rent, but there is no LMR deposit any more. The landlord is asking for a new LMR deposit, and has indicated that she will not proceed with needed repairs to the unit until she receives it. Stating I am in "breach of contract."
There's another issue that falls outside of the scope of this thread,but is related to my query. Last year the landlord took six weeks to repair my shower. When it was repaired the job was not completed and I finished it myself. The landlord has not compensated me to this day and is refusing compensation until a new LMR deposit is paid.
If you're able to answer either question I'd greatly appreciate it!
Thanks,
Alex
Hi Alex:
DeleteIf the issue of the rent proceeded to the Ontario Landlord and Tenant Board the adjudicator would tell the landlord that the LMR can not be applied to a month of arrears. The LMR may only be applied to the actual last month's rent. Landlords and Tenants all the time try to use the LMR for other purposes but the fact is that under the RTA its only lawful application is to the last month's rent. The Board would then reverse the application of the LMR to the month for which rent was not paid (or in your case--cheque misplaced by landlord). That would leave you in arrears of rent for that month, or if the landlord applied every month of rent to the oldest arrears you would be in arrears for the current month. That would then generate a valid N4--Termination for Non-Payment of Rent and you would then have the right to pay and stay. Given that it is the landlord's fault you may incur stop payment charges and the like. I think it reasonable to ask the landlord to pay those bank charges. I don't think you would get anything for your "time" in dealing with this mistake.
The landlord can not get before the Board for termination or eviction for not "replacing" the LMR. There is no form for that and it isn't a legitimate application to the Board. Hence the landlord might feel stuck at the moment and no one has told her that her application of the LMR to rent arrears is improper. When she does figure it out you should expect an N4.
As for compensation for your work. Note the timeline--deadline under the RTA--for these kinds of claims to be 1 year (see RTA section 29(2)). If you don't act before a year expires you may lose your right to claim compensation altogether. You may wish to consider filing a T6 application if you are close to the deadline.
Good luck
Michael K. E. Thiele
www.ottawalawyers.com
Hello,
ReplyDeleteMy husband and I (residents of Ontario) signed a tenancy agreement for one year in July of 2017, and paid first and last at that time. Once that was up, we remained as month to month tenants. On December 24th of 2018, we gave our 60 days notice, to be out by the end of February. We paid rent for January, and then we ended up getting possession of our new place the beginning of January, so we moved the majority of our things into the new place and have been staying there and told our landlord we could be out by the end of January. We just saw that she has put an ad up to rent out the old place starting February 1st. Can we get our last months rent back if she plans to rent out the place in February, the month that last months rent should have been applied to?
Hi: Absolutely yes. If you give her early possession and she re-rents for February 1 then there is no basis for the double dipping on the rent (i.e. getting two rents for February). I would try to be a little clever about this and perhaps write to her advising that you will turn over the keys or possession if she re-rents for February 1 and invite her to let you know. Technically, you can keep possession until the end of your notice period and the time that you have paid rent for.
DeleteGiven the rental market in most of Ontario at the moment, re-renting should not be too difficult.
Michael K. E. Thiele
www.ottawalawyers.com
Hello,
DeleteThank you very much for your reply. What would be the best course of action if she refuses to return the money if we return the keys January 31st? We have a feeling she will not return the money and are trying to figure out how to proceed if she does not.
Hi: If you can't get the landlord to return the money voluntarily take a look at the T1 application on the Landlord and Tenant Board website. When you return the keys (early), get confirmation that you are returning the keys and possession because the landlord has re-rented.
DeleteMichael K. E. Thiele
www.ottawalawyers.com
Hi Michael regarding our last mounths rent .We signed a lease for a year that states no smoking in a house that has 3 units .We are on the top so we all use the same entrance.Since the day we moved in it has been a nightmare the other tenants smoke nonstop all day our clothes furniture small like smoke my sinuses get so bad that l can't even get up.l am a EA and can't go to work smelling like that.We brought it to the landlord's attention it took him over 3 weeks to actually come out and meet with us he made us feel that there was not much he can do because he said he didn't smell anything he suggested to use to take pictures to show prove.But he did say that were aware he was coming and would be making a couple surprise visits in the coming days.Three weeks later he finally emailed us and stated that the place did smell of smoke and he was going to send them a notice. 2 weeks later still smoking contracted landlord again he said was going to send another notice.Then the smoked stopped.The tenant on the middle floor always bring drug addicts and hookers into there place we have found many them drunk and drugged out on the stairs and also on the front yard we emailed the landlord about that too.Our bikes were stolen from our back porch with the locks cut.We also have mold on one wall.Now we found bedbugs in our apartment we had to throw out all our items mattress sofa blankets pillows rugs .Contacted the landlord they came and sprayed the place,he stated that we can break our rental just fill out the forms .The tenants downstairs starting smoking again.We have proof and pictures of everything. We don't feel safe here we are leaving as soon we can.All our furniture is damaged with smoke and bedbugs.Should we not be entitled to get our last months rent .Thank you
ReplyDeleteHi Michael, thanks for this interesting and informative blog post as well as your feedback to the question. I am in a situation with my landlord here in Mississauga, Ontario:
ReplyDelete1. Took lease occupancy from Dec 1, 2015 and paid first and last month (Nov'16) rent in advance, followed by 10 cheques - Jan through Oct 2016
2. On November 19th 2016I met with the landlord to renew the lease for the 2nd year and presented 12 post-dated cheques (December 2016 to November 2017) being under the impression that the landlord utilized the already paid LMR in Nov'16. Since there was no correspondence from the landlord in days & weeks leading up to the aforementioned dated and he did not ask for the Nov'16 rent/cheque, it was assumed that the LMR was utilized for this purpose, so I sent the money home and informed the landlord the same when he asked for it during our Nov 19, 2016 meeting. He acknowledged, received the cheques and sent me an email confirmation along with scanned copies of the cheques he received.
3. Subsequent annual lease terms - 2017-18 (when he increased the rent by 3% contrary to the 1.5% under the 2017 Rent Increase Guideline) and 2018-19 (with an increase of 1.8% increase) - both were renewed with the landlord receiving 12 post-dated monthly cheques dated Dec till Nov for each term.
4. Now suddenly, and into the 2nd month of the 4th annual lease term, the landlord first claimed our lease to be a month-to-month and now is demanding the LMR claiming he must have one month deposit. In response I have given him reference to the section 106(1) of the RTA that he can only demand a deposit on or before entering into the lease agreement and that requiring an LMR mid-agreement from an existing tenant is in contravention of the act under S.234(d), but he says his demand is legitimate. It is important to note that I have never missed any rent payment in 38 months and there has never been a gap.
I am convinced he is doing it in bad faith and believe so as he is continually changing stances/statements and has tried various pressure tactics on me, such as:
1. Calling me into a meeting and bringing pre-filled N11 for me to sign reason being he wanted the unit "for his family/in-laws"
2. Upon my refusal and demand to be served N12 in accordance with his situation, he threatened me of legal options and eviction
3. He then said he will put the unit up for sale
4. He got the HVAC system repaired by his own contracted technician and is now claiming that he did not authorize the repair - despite being present at each visit made by his technician
5. He is now accusing me of causing willful damage to the townhouse's HVAC system (that disrupted heating in my house causing extreme inconvenience for my kids for almost three weeks during the Christmas & New Year period) and today served me N5 (with a termination date of Feb 5th - that's just one week from now and is not in compliance with the law). I have reasons to believe and proof to present that the HVAC system was already faulty that he wrote to the builder/property management about in early 2016 to fix. This includes photos he took of the faulty HVAC system.
Also, being a 3+ years old tenant, I am paying relatively less rent than other similar units in the neighborhood, I feel he wants to get rid of me by trapping me in a case and getting eviction orders so he can benefit from a higher rent for this unit.
Please advise what's my best available option. Many thanks.
Hi: From what you describe it certainly appears that your landlord is looking to get his rental unit back and you "out". The tactics he is using (as you describe) is fairly typical of a landlord trying to just come up with "something" after realizing that the law is fairly strongly in favour of a tenant's security of tenure.
DeleteI don't have much to offer you at this stage. You seem well informed and know that you are not required to sign anything nor move just because the landlord wants you to. Having "evidence" is always a good thing so keep records of contact, take photos and video of whatever goes on, and simply be mindful of the fact that the landlord is looking for ways to terminate. You will of course be aware of your right to file tenant applications and you can seek relief for the actions of the landlord from the LTB. Whether you have enough at this stage to make an application worthwhile is for you to decide. However, you might consider whether the process of an LTB hearing would modify the behaviour of your landlord. Even if you did not win or win much being willing to engage the LTB process might demonstrate to the landlord that you will assert your legal rights. Keep in mind for tenant applications that you have a one year time limit to file applications.
Michael K. E. Thiele
www.ottawalawyers.com
Thanks so much for your quick response, Michael. Really appreciate it. Need just a bit more clarity on a couple of things:
Delete1. Where do I stand on the LMR matter? Do I still owe him an LMR, given the fact that we're in the middle of 4th year of tenancy.
2. If I were to file a T2 (considering he's claiming damage refund (N5) or eviction and simultaneously asking for an LMR), is it Reason-4 "Harassed, coerced, obstructed, threatened or interfered with me" that I should choose?
I have sufficient evidence to prove that I am being coerced through these tactics into paying him the money. But need to be sure that I am not holding anything back unlawfully. Also the tenancy contract clearly stated that any repairs to the unit as well appliances amounting less than $100 is to be paid by the tenant - and landlord is to pay anything above this amount.
A further feedback from you will be very helpful.
Many thanks again!
Hi:
DeleteFor what is likely an unexpected reason I don't think that you owe the landlord and LMR. The reason is that you still have an LMR. You are actually in arrears of rent for one month (Nov 2016). The landlord applied the LMR to that month improperly and in fact is not permitted to apply it to a current month of rent. Resigning for further fixed periods does not mean that there were new leases each time. In my view the same tenancy agreement has continued from the beginning notwithstanding the 4th year of tenancy on a newly executed further one year term.
Alternatively, if you could convince the adjudicator that there was a termination and new tenancy at the end of each 12 month term then you would be correct about the LMR having been used and the landlord not having the right to demand one now. If this argument flies, though, then the rent from year to year is legal regardless of the increase amount as the landlord can legally charge whatever he wants at the beginning of a new tenancy.
I'd go with a single tenancy. File the T1 application for the illegal rent increases and get a rebate for those. You have the right idea on the T2---harassment etc..
Lastly, note that the lease clause you mention about the tenant being responsible for repairs up to $100 is also illegal. The landlord can not shift the maintenance obligation onto the tenant.
Michael K.E. Thiele
www.ottawalawyers.com
Thanks so much again for your help and valuable feedback, Michael. Much appreciated.
DeleteHi Michael.
ReplyDeleteThank you for running a very informative blog. Your advice and insight has been very helpful.
I am hoping you can help me out in my current situation. I am a student living in rental housing with a one year lease from May 1/18 to April 30/19. Originally, there were four of us that signed the lease and are paying $2500/month. Since that time, one of the other students have left. The three of us are then required to pay the full amount of the rent. Under a normal lease, I would expect that this would be a typical sort of payment arrangement. However, under my lease, the landlord has outlined the condition as follows:
"All tenants are splitting the rent equally at $625 per person. However, all tenants are equally responsible to pay the total rent of $2500 on time. Should a tenant leave or not be able to pay the rent or gets evicted for misconduct all other tenants share equal responsibility for the total rent of $2500 and shares the responsibility to find new tenant."
This condition seems to place an unwieldy burden on the remaining tenants, not only to cover the other persons rent, but also find a new tenant. In one sentence, the landlord stipulates what each person in required to pay, but then says we have to pay more is someone leaves.
The lease also contains other issues such as a requirement for a security deposit which is above and beyond the required first and last month payments, a requirement for post-dated cheques, a condition that rent won't be raised more than once every 8 months, along with a multitude of other conditions, some of which seem very restrictive.
Although I don't believe that the lease is fully proper, my main concern is the first issue I addressed in regards to the fluctuating responsibility of the tenants towards the rental payment. Is this a legal way to require payments be made? It would appear we signed on to a fixed payment for each tenant but through o fault of our own, are now required to pay more than most of us are able to comfortably afford.
Thank you for any advice you can provide.
Hi:
DeleteThank you for this puzzle. It seems like a perfectly balanced screw up. The answer I think still turns on adding more information that is not reflected in your question. I'm interested, aside from the written clauses, what the various persons signing (including the landlord), believed that they were agreeing to. If you and your roommates, regardless of the words on the page, believed that you were collectively and individually responsible for the entirety of the rent then the inquiry ends and you're just on the hook. However, if you each believed that you were individually obligated only for the sum of $625 and collectively for $2500, then perhaps there is something to talk about. I think everything turns on whether there is one tenancy or four individual tenancies.
At first blush, it seems clear that there is only one tenancy. The landlord one thinks, is describing in simpler English the effect of a joint tenancy---i.e. all the tenants are individually and collectively obligated to pay the rent, pay the damage and the landlord can chase any one tenant for all of the liability. Where the landlord recovers everything against any one of the tenants that tenant can sue his co-tenant(s) for contribution or indemnity for the amount the first tenant has paid to the landlord.
What the landlord is describing is the nature of a joint tenancy. This reality is often surprising to tenants who think that their liability is limited to their share of the rent. That is clearly not the law.
Where then is the argument? The fact is that the condition you have in quotations is anything but clear. "all tenants are equally responsible ..." would be much clearer if it said "all tenants are individually responsible". As it stands now, "all tenants" i.e. the group are equally responsible. Clearly all the tenants are not required to each pay $2500 so what is this sentence actually saying.
Further, if there is in law a single joint tenancy then why does the lease purport to split the rent equally at $625. This is none of the landlord's business and an equal split is not to be presumed as tenants often split unequally (better bedroom, more chores, etc.). Creating an equal split in the lease, in this sense seems to be creating four separate obligations and hence four separate leases.
The next concern is with the "should a tenant lease ... " sentence. This sentence sets out some legal impossibilities if there is only one lease. It is impossible for one of the four tenants on the single lease to be evicted for misconduct. The landlord does not have this power and there is no jurisdiction at the Board to sever out one tenant from the group of four. Suggesting the possibility to evict one tenant suggests that there are four tenancies--not one.
DeleteFurther, creating a responsibility to find a new tenant is also a weird thing to require. In a typical single lease it is none of the landlord's business whether a tenant (from a group) is replaced or not. If the remaining tenants want to use the extra space or simply don't care to replace the tenant who left that is up to the remaining tenants. Further, the remaining tenants could just decide to take in a roommate--and not a tenant and simply charge the roommate without giving the roommate RTA rights. In this way the landlord is mixing into something that is none of his business. However, because he is making it his business do these terms reflect a reality that is not a single joint tenancy? Is it the case that these conditions are reflective of there being 4 tenancies (one per bedroom), the total sum of revenue being $2500 from the rooms, with the home occupants required to replace any tenant who leaves or who is evicted so that the rent again totals $2500. Is the landlord saying, if you don't replace a tenant who leaves or who is evicted THEN the remaining tenants are responsible for the missing tenant's rent? It doesn't quite say this, but what is said isn't consistent with the law either---hence giving the words legal and rational effect is nearly impossible.
Ultimately, when it comes to contractual interpretation we look at the contract/lease clauses and where there is a contradiction, ambiguity and lack of clarity these parts of the contract are read against the interests of the drafter of the contract. This is the contra proferentum rule.
Anyway, I'm not going to reach a conclusion on this question. I will note that if this got before the Landlord and Tenant Board the Board would, regardless of the words on the page, try to get to the heart of the matter and find what the parties actually intended. The Board is specifically granted this power and is not limited to the words on the lease.
Good luck
Michael K.E. Thiele
www.ottawalawyers.com
Dear Michael,
ReplyDeleteI lived in a house for homestay. My school contacted this homestay for me (but I'm not sure if the homestay is legal or not, because some of the houses don't apply for being a homestay). My landlord ask for first month, last month rent and other security deposit from me when I first moved in. We never had any form of lease agreement. After few month, I decided to move out and gave the landlord 2 weeks notice. We never agreed on if it is one year contract. but my landlord said it is an implied contract for one year rental. So she didn't allow me to move out. Then after 2 weeks, she agreed me to move out and gave back the last month rent to me. But she never paid me back the security deposit (which is illegal in Ontario ). Can I get the money back using T1 ? Because I didn;t give the landlord 60 days notice of moving out, is it going to effect getting the money back? Thank you so much. Yvonne
Hi Yvonne:
DeleteThe facts matter an awful lot and the outcome depends on the interpretation of the facts. If you were on a month to month--without a lease--then you are free to terminate your tenancy at any time on 60 days notice to the end of term. You appear to have not given 60 days notice and as such the landlord could claim rent for the period of the notice--i.e. the law would extend your 2 weeks of notice to the first lawful termination date. That would cap your rent liability subject to the landlord re-renting sooner.
What may be interesting is that you say the landlord "agreed" to allow you to move out. If the date of your move out was "agreed" then your tenancy terminates at the end of that period and any rent that is prepaid needs to be returned. What is interesting in your situation is that the un-returned sum is an illegal security deposit (because it was not for Last Month's Rent). From that perspective you may indeed apply to the Board for a return of this money. The landlord may argue that the agreement to terminate was subject to her keeping the security deposit--which I think would be an invalid argument as the landlord is in possession of money that she was never entitled to be in possession of.
So, the short answer is that you likely would have success with the T1 Application--even though your notice was short. It will be important to prove that what was returned was your Last Months Rent deposit and not the security deposit.
Good luck
Michael K.E. Thiele
www.ottawalawyers.com
if asking for an additional damage deposit is illegal...Why is it nessarry to pay the whole last months rent at the time of signing a rental agreement.I dont know what time your living in , but the reality is that not everyone can afford a last months rent all at once.odsp.ow and i can go on.i have no problem paying first and last.what i have a problem with is paying the whole last ammount at THE TIME OF signing.A provision needs to be made that gives a tenent the option to make payments to pay the last month rent.I'm signing a years lease , Im not going anywhere - but the last months rent is demanded at the signing ... and its for a future date a year away.Open your eyes mister lawyer man.this is one of the reasons you have homelessness or are the haves that stupid to realize that this creates a block for everyone.its not unreasonable.if rent is 1000 dollars, IM going to need 2 or 3 months to pay the last month.Do you have 1000.00 in your pocket right now?HOW about 2000 dollars? The last 120 days we have lost everything because of landlord negligence and im not putting up with this anymore !!!!!start making laws that can benifit the poor , because this shuts us out.wake uP damn it.
ReplyDeleteHi Mike: I understand your frustration especially in this time when housing is difficult to find. Recently I was speaking at a homelessness conference and all I can say is that there are a lot of us looking for ways to deal with the challenges facing the homeless and nearly homeless.
DeleteThe article you are commenting on is based on the law as it is written. That law, the Residential Tenancies Act, sets out the legal rights of landlords with respect to last month rent deposits. As a lawyer I have no ability to change that law. What I do is help tenants and landlords understand what the law is. If you would like to give input on changing the law you should contact your MPP or join the various housing advocacy groups that work to change the law and support tenants. There is a lot of opportunity to get involved.
As for your comment about the last months rent. I understand completely that having two months rent (in full) is a challenge. Legally, however, if the landlord lets you move in without collecting the full Last Month's Rent in advance you can simply refuse to pay it after you're in and there is nothing the landlord can do about it---legally. The solution--if the landlord wants to be helpful but not expose himself to the legal risk of not getting paid---is for you to pay the last month's rent deposit first. Then, by agreement with the landlord pay the first month's rent a bit at a time until it is paid up. Pay the 2nd, 3rd, 4th, month of rent as required. If you do it this way you will have rent arrears for the first month, for a little while, but the landlord has "agreed" to it so there won't be a problem. The landlord is protected because if you don't honour the agreement he can evict for non-payment of the first month's rent. If you honour the deal then no problem and the tenant continues normally.
The above suggestion might sound like a weird thing to do--however I make the suggestion because if you do it this way both the tenant and landlord can "win" and a new tenancy is created.
Good luck in your housing search. If you run into difficulty with the landlord who thinks he needs to get both first and last at the same time--show him this response as a way to work with you that still protects him.
Michael K. E. Thiele
www.ottawalawyers.com
I have a question for you. I have a roommate that did not serve any notice and moved out in December 2018. They are on a year lease which is not finished until the end of April 2019. They have continued to pay their rent up until February 1st. The landlord is trying to be understanding and work with this person in hopes of avoiding taking things to the LTB. They have not paid their rent for this month, February, and I am wondering if the landlord can use their deposit for the month of February.
ReplyDeleteThey intend to continue to work with this person, trying to get them to pay for the month of March now (seeing as we are coming up on March and the room is still in his name).
The Landlord is currently looking for a new tenant to rent his room ASAP and will agree to terminate the current tenant's lease if and when a new tenant is found. The tenant has agreed to this (not in writing). So if they find someone to rent for the month of March, can they use their deposit for the unpaid month of February? If they cannot find a tenant until April, can they still use the deposit for the month of February and try to get him to pay for March? Does it HAVE to be the last month of tenancy or the last month of the lease?
On a side note, I feel like I know the answer to this, but can a rent deposit be used for anything other than rent? Such as repairs/cleaning?
The landlord is a friend of mine so I'd like to help them out as well as ease the living situation.
Your help is greatly appreciated.
N Cat
Hi:
DeleteI take it that this is a rooming house type situation where everyone is on their own lease with the landlord. In situations where tenants have moved out (without proper notice) I would be very surprised if they continued to pay rent. Even if there is legal responsibility for that rent it makes little sense to pay it.
I would expect the following to occur. The tenant vacates and stops paying rent. The landlord then takes steps to mitigate losses and seeks to re-rent the unit to someone else. The landlord needs to take active good faith steps to re-rent and be able to demonstrate those efforts. Once the landlord re-rents the landlord can figure out what the losses are. Take the time between when the former tenant last paid rent and the start of the new tenancy. That will be the biggest amount of the loss. Apply the Last Month's Rent (LMR) that was being held to the rent owing. The LMR can not be applied to anything other than rent (i.e. not to damage, not to cleaning). Once that is done you have the amount that the former tenant owes for the early termination of the lease (lack of proper notice). The landlord can send a demand letter or sue in Small Claims Court. Proceeding to the Landlord and Tenant Board is not an option because the tenant is not physically present in the rental unit. The LTB has not authority to hear a case filed by a landlord when the tenant is not in possession of the rental unit.
The Small Claims Court will fairly easily grant 60 days of rent arrears presuming the landlord shows mitigation efforts etc.. The 60 days is easy because that is the accepted and commonly understood notice period. Beyond 60 days it starts being a little tougher and the Court will wonder what is wrong with the place and did the landlord really try all that hard to re-rent. It will be difficult, absent unusual circumstances, to get more than 60 days from the former tenant (not impossible--just more difficult). Given that the landlord is already holding the LMR, the expected additional arrears would be just one month. Is it really worth it to chase one month's rent? Consider the time and expense of Small Claims Court--the answer is usually no.
Hope that helps
Michael K. E. Thiele
www.ottawalawyers.com
Hi Michael,
ReplyDeleteI have not read all of this post so I hope I am not repeating a question or asking something you have already answered.
However, if you have a tenant that stays for a year term. What I understand is that upon leaving they are entitled to their deposit interest upon leaving the property. Is this correct?
Hi: Your tenant's last month's rent deposit earns interest at the rate of the annual guideline amount (hence in 2019 the deposit earns 1.8%). The tenant is entitled to be paid the interest annually. If they give notice to terminate for the exact end of their 12 month lease then you would be paying interest on 11 months. You don't pay interest for the month which the last month's deposit is used. If the tenancy continues on a month to month basis after the one year term then you would retain the deposit pending a termination of the tenancy (which includes the month to month). If you have served a Notice of Rent Increase then it is possible to use the interest on the deposit to top up the Last Month's Rent deposit so that the deposit equals the new increased monthly rent (i.e. you do not have to pay the interest to the tenant in these circumstances).
DeleteMichael K. E. Thiele
www.ottawalawyers.com
Good Morning Michael,
ReplyDeleteI have a question I am hoping you can help me with.
I have a condo rented out to an individual who was on a work visa, awaiting acceptance of his PR card. His year lease ended earlier in the year and he is now a month-to-month tenant. He had provided me with a first and last month's rent deposit before he took posession of the unit. He informed me via email that he has had complications with his situation and has had his PR application denied, and has not been able to return to the country after taking a trip abroad and has to await a new work permit which could take an indefinite amount of time. He has had his girlfriend living there and has informed me that they are unable to pay the rent for april. He gave me notice (improper based on regulations) on March 27th that she will have their posessions moved out of the unit by the weekend (end of the month). I have no exact termination date, only that he won't be present, and is relying on her to move their things out by this weekend. He wants his last month's rent deposit back.
- I will ask him to provide me with proper written notice of his exact termination date
- Since he is giving me 2-3 days notice that he is moving out in 2-3 days, do I have to return his deposit for the month of April?
- My finances will be affected as I don't have enough time to re-rent the unit for the month of April and rely on the rent to cover my expenses for the condo.
Please help! Some advice would be greatly appreciated.
Sincerely,
Teresa
Hi Teresa:
DeleteA tough situation for you and your tenant. The bright side is that at least the tenant is vacating and not putting you to the expense and delay of an application to the Landlord and Tenant Board.
The lawful way for the tenant to terminate his tenancy with you is by serving a Form N9--which is a tenant's notice of termination. Served in March 2019, the termination date would be May 31, 2019 (60 days to end of term--presuming rent is paid on the 1st). He would be responsible for rent to that date.
Because he is vacating earlier and returning possession to you within days, you will now be in a possession to re-rent the unit. While you are entitled to being paid the rent money during the notice period you are also obligated to try to re-rent the unit if you want to pursue the tenant for the additional rent that will become due.
You will apply the deposit to rent that becomes due. If you manage to re-rent the unit within a short while you are not entitled to double dip (i.e. have rent for the same time period from the previous tenant and from the new tenant). If there is overlap--then you would have to return that portion of the rent to the former tenant. If there is no overlap then you are entitled to keep the deposit to ultimately apply to the rent that becomes due during the notice period.
Michael Thiele
www.ottawalawyers.com
Thank you so much for your response Michael. Greatly appreciated! :) Teresa
DeleteHello Michael,
ReplyDeleteI've found your blog of great interest and thank you for your time. My question is... if the tenant does not give proper notice, I'm guessing the landlord is still required to pay back the LMR?
The rent is due on the 15th of each month, the tenant has notified the landlord on the 27th of April that she has to move out and will be out by the 12th. Sending the landlord into panic--but they have been able to rent the unit-- on the 15th of April.
From your blog, the landlord has to repay the LMR ... since they will be getting rent for April -- is this true even though the tenant did not give proper notice (and only verbally). Also, is there a timeline that they have to pay? (ie. on the day the first tenant moves out?--30 days?)
Hi:
DeletePresuming a month to month tenancy, the tenant was obliged to give 60 days notice to the end of term. Meaning, the earliest her notice on April 27 could have been effective is June 30 (again assuming she is on a month to month and not a fixed term lease). There is no question that her notice is short and invalid. Nevertheless, the landlord had a duty to try to mitigate losses--i.e. re-rent. The landlord has been very successful at re-renting quickly (hopefully the original tenant will actually move out). From a rent perspective, the landlord can not double recover rent. Hence, the landlord must return any prepaid rent to the first tenant that is covered by the rent of the new tenant.
There is no specific timing for the return of the LMR--or a return of a part of the LMR. Simply a reasonable time is acceptable.
The elephant in the room question is whether the first tenant suffers any kind of penalty for short and invalid notice. Should the landlord not get some kind of compensation for this unexpected disruption? Shouldn't there be a penalty or at least forfeiture of the LMR? What about requiring the tenant to payout the lawful 60 days of notice rent? To answer the elephant--"no". The RTA is not set up for penalizing tenants for short notice. The duty to mitigate is present and if successfully done the tenant gets the benefit. Note that this is not a legal concept only for tenants--it is a general principle.
That being said, the first tenant can be responsible for the costs of mitigation, extra costs on turnover the unit, and expenses associated with the short notice. These are technically not recoverable against the tenant at the LTB--these would have to be claimed at the small claims court. Technically, you can not take these sums from the LMR deposit as the LTB will say that the LMR can only be used for rent and must otherwise be returned. That being said, the interplay between small claims court and the LTB where the landlord retains the LMR (event though they have mitigated) to deal with obvious expenses and damages (imagine a ton of junk left in the unit because the tenant moved out quickly that cost a significant sum to have cleaned up and taken to the dump). While the tenant might get an Order at the LTB for the return of the LMR the landlord at the same time could go to Small Claims and seek a judgment for the costs of clean up. The two amounts--in a weird way--end up setting off against each other. While the LTB will not wait for the SCC, the tenant can only enforce the LTB order through the SCC which then can hold up any exchange of funds pending the settlement of the SCC matter.
Michael K.E. Thiele
www.ottawalawyers.com
Hii
ReplyDeleteI have question i provide rent frst and last month and i want to move out in november i told my owner taht i am november will be my last my month and they told me that you have to pay until we find new person on your place and once they give rent frst and last then we will give you your money and you may move... tell me is this is legal or not
Hi Kiran:
DeleteThe first question is whether you are on a month to month tenancy or if you are still in a term. Usually, the first year of the tenancy is on a fixed term of 12 months. After the first term expires, instead of moving out, you let the tenancy go month to month.
If you are still in a fixed term (presumably of 1 year) then the earliest you can terminate your tenancy is for the end of that term. You will need to give 60 days notice to the end of that term. If your lease ends on November 30, 2019, then you would use a Form N9 (available on the landlord and tenant board's website) to give the landlord notice of termination for the last day of your lease term at least 60 days prior to the end of the lease.
If you are on a month to month tenancy, then you can terminate your tenancy at any time on 60 days notice. The last day of your notice needs to be the last day of the term--which in a month to month tenancy is usually the day before rent is due. So, if you pay rent on the 1st, then your notice of termination is for the last day of the month. To terminate a month to month tenancy you use the same N9 Notice of Termination form that is available on the landlord and tenant board website.
The N9 Form also has useful notes at the end of the form that explains exactly what you need to do to terminate your tenancy.
Once you have legally terminated your tenancy you only have to pay the rent to the date that you gave notice for. Once you move out your obligation to pay rent ends. If November 30 is a legal termination date for you then you would apply your last month's rent deposit to November (so don't pay rent for November) and then simply move out. You are not required to pay rent until the landlord gets a new tenant.
Based on what you say in your question, and presuming the landlord is not trying to pull a fast one on you, I'm guessing that the end of November is too soon to terminate and that your fixed term lease goes for longer than November 2019. Technically, you are not permitted to terminate until your fixed term is up. Hence the landlord's statement that you must continue to pay rent. You have an option to assign your lease and go through those steps. There are articles in this blog about how that is done. It can be a bit tricky though, so if you have a community legal clinic available in your area consider getting some legal help from a paralegal or lawyer who knows about landlord and tenant law.
Michael K. E. Thiele
www.ottawalawyers.com
Hello Michael! Let me preface this with a thank you for running this blog and answering questions, I surely have benefited from the time I expended here.
ReplyDeleteI recently rent out a room, I arrived to check the room out and sign the contract, and unbeknownst to me and due to my limited experience with renting out apartments since I'm an international student, have not fully grasped the contract terms and essentially blindly signed the contract. Shortly before moving in my guarantor accompanied me to the apartment and upon doing so and reading the contract himself made the discovery that none of the utilities were covered. Considering that this is a student house, I would have to pay all electricity, water and gas costs of the entire home, as I was the only tenant at the time. He protested and the landlord agreed to terminate the contract and return the full rent amount (Last+First+Deposit). However upon moving out of the apartment the landlord has constantly delayed the rent reimbursement and has yet to return any amount of money even after finding tenants to occupy the entire house.
What do you think, do I have any merit for a case here? I really believe this should be taken to court because the landlord has ceased communications with me and is not replying to any of my messages. I have been promised a rent reimbursement by the beginning of this month as tenants were found to occupy the house at the 1st, but I am still without any of it.
Again, thank you very much for the help, it is very much appreciated.
Hi: It is difficult to write about the circumstances you describe as the legal status of what happened here is unclear. In one sense, you admit to signing a contract without reading it and simply "blindly" signing it. In most circumstances, this is entirely your fault and you are held to your contract that you willingly but blindly signed. Saying that you "did not know" is unlikely to get you out of any otherwise valid contract/lease.
DeleteIn your case, the landlord appears to have been kind enough to let you out of your lease. The terms of that agreement, to terminate the lease, are not set out in your question. That agreement could have been to cancel the contract as if it had never been signed. In that case you are entitled to all of your money being returned to you. OR, the agreement could be to let you out of your lease, the landlord will re-rent, but the rent already paid is used to pay current rent obligations. OR, the agreement to terminate has you forfeiting any already paid money.
In the Residential Tenancies context, it is not legal to "forfeit" rent money. It is legal, however, for the landlord to apply paid rents to rent that is due. If the landlord, having agreed to terminate the lease, then re-rents the unit the landlord can not double dip and be paid rent twice for the same unit at the same time.
Whether or not you have a case depends entirely on the terms of the agreement to terminate. I'm guessing that the terms are not written. The idea that the landlord would simply let you walk away from your lease and pay nothing is a little hard to believe. You have wasted the landlord's time and the landlord would have relied on your lease for the premises. It does not make sense that he would agree to pay everything back.
On your facts, as you describe them, I don't see a Judge being overly sympathetic to you. You may have signed a poor bargain (lease), but you did so willingly and without due care. Why should the law reward you with a refund for blindly signing a contract?
I certainly can understand that you were likely excited about renting, it was all new to you, and you were moving forward hoping that everything would turn out for the best. Lots of young people head out in the world for adventure in this way. However, life leads to experiences and in this instance you have had an experience and good (and likely cheap) lesson that it is not a good idea to sign legal papers without reading them and understanding what you are reading.
Depending on how you see this, you do have legal recourse. I would not recommend the Small Claims Court. There is a financial risk to proceeding there and it will take a fair amount of time. Instead, I would recommend the T1 Application for Rebate that you can find on the Landlord and Tenant Board website. See if any of the options set out in this form reflect your particular facts. If so, this application to the LTB is the lowest risk method of getting your case heard by an adjudicator without any significant and negative cost consequences (i.e. it is unlikely that you would be ordered to pay the landlords legal fees if you lose)[the opposite is true in small claims court---if you lost there you would most certainly be ordered to pay your landlord costs].
Lastly, before taking or starting any kind of legal action, I highly recommend finding a lawyer or paralegal to review your case. Even if you do not retain them to run the whole case for you, consider retaining them for only an hour or so to review your documents, interview you for relevant facts, and provide an opinion on the merit of your case. This would likely be the best money spent as you would have a clear idea of what the legal system is likely to do with your case.
Good luck
Michael K. E. Thiele
www.ottawalawyers.com
Hello Michael! Just a quick question, how many days can my landlord hold back my deposits? I ended my lease early by assigning my lease to my friend which was accepted by my landlord (a property management company) and they promised any unused deposits will be returned to me. We signed written documents of assignment of lease beginning of June, however, it's been three weeks and every time I ask for status update they told me the cheque was pending for signature, I'm not sure how long I have to wait for... Thank you in advance for your help
ReplyDeleteHi Angie: I hope that this is not a situation of the landlord playing games with you. There should only be one deposit with the landlord---because the only legal one is a deposit for the last month's rent. Any other deposits need to be returned to you immediately because they are illegal.
DeleteThe last month's rent deposit is a bit trickier. It is there to pay for the last month's rent--which is the last month of the assigned lease. It will not be "unused" as the landlord describes because it will be applied to the eventually last month of the tenancy. If this is what the landlord is doing, it is sneaky.
In many assignment situations the landlord helps out the assignor (you) by refunding to you the Last Month's Rent deposit after the assignee (new tenant taking over your lease) makes a deposit equal to the Last Month's Rent. The Residential Tenancies Act does not require the landlord to do this but it makes the assignment process much smoother when they do. If you are not getting you LMR back from the landlord then you should get it from the assignee (new tenant) because they are getting the benefit of your deposit as it will pay their last month of rent when they move out.
Michael K. E. Thiele
www.ottawalawyers.com
Hi just a quick question, if your landlord is required to pay interest on your LMR, can he use it to top up your LMR to your current rent rate after your yearly rent increase is applied?
DeleteHi: Yes. Take a look at s. 106(7) RTA. The landlord should "pay" the deposit but it can be a credit to the Last Month's Rent deposit.
DeleteMichael K. E. Thiele
www.ottawalawyers.com
Hi Michael, I have a question.
ReplyDeleteI signed a one year lease with a landlord in Toronto but my visa application was denied. I explained the situation to the landlord and I asked for a refund for the LMR or even a portion that I had paid but the landlord refused.
Meanwhile they had already found another tenant to rent my room to before the start of the lease. Is there anything I can do to get my LMR back or am will I fail if i tried to argue it legally?
Hi:
DeleteUnder the Residential Tenancies Act there is no such thing as a "forfeit" or "penalty" or any other synonym meaning the same thing. Money that is paid for rent, whether a current month or Last Month's Rent must be applied to rent. It can not be used as a service fee, application fee, penalty, or whatever else the landlord wants to call it. It can only be applied to rent.
When you entered into the lease agreement, you obliged yourself to pay a Last Month's Rent deposit along with monthly rent in a specified amount for a fixed period of time (or perhaps immediately on a month to month basis). Your payment obligations were for "rent". When you became unable to fulfill your obligations under the lease (because you did not get a visa) you were in a position in which you would breach your obligations under the lease. Had the first month of the lease arrived you would have been obligated to pay the rent for that month. The same can be said for the second month, third month, fourth month, etc..
Of course the obligation to pay the rent for the entire period of the lease (with you not being there), certainly seems to be an extreme and unfair legal consequence. Fortunately, the Residential Tenancies Act sees it that way too (i.e. it is extreme and unfair). The Residential Tenancies Act imposes a burden on the landlord, when faced with the situation you describe (and any situation where the tenant is in breach and has returned possession of the unit to the landlord or expressed the intention to return possession) to mitigate its damages. To mitigate means to lessen, reduce, wipe out and this obligation must be pursued in a diligent fashion. The number one way to "mitigate" is to re-rent the unit to someone else.
To the extent that a landlord "mitigates" the benefit of that mitigation flows to the former tenant (i.e. you). In your situation, the landlord completely mitigated (based on what you said), by re-renting your room before the start of the lease. Given the current housing situation in Ontario this is not a surprise.
Because there is a complete mitigation the landlord must return your pre-paid rent to you. There is nothing owing to the landlord, by you, because of the mitigation. The landlord can't just keep your LMR as a fee, charge, cost of mitigation, fees, expenses, or anything else. Your LMR can only be applied to "rent" that is due and owing. As there will never be any rent due and owing, because the landlord entered into a new lease with a new person, you are entitled to a refund.
If the Landlord refuses to return the money (as it seems s/he has), then you can file a T1 application with the Landlord and Tenant Board. If you are out of country I think you can ask the Board to conduct the hearing by telephone and they should accommodate you in this way.
Note that the "duty to mitigate" applies to everyone who is suffering damages. In other circumstances, a tenant has a duty to mitigate just the same as a landlord has a duty to mitigate. Also, the duty to mitigate is not unique to residential landlord and tenant law. It is a well established legal principle running throughout the law in Canada.
Good luck
Michael K. E. Thiele
www.ottawalawyers.com
Thank you Michael for the informative blog.
ReplyDeleteMy situation is this: I'm renting an apartment in Ontario, the tenants have me 12 months deposit checks, and I cashed them all, I figured I did it the wrong way and I shouldn't cash the last check but keep as a deposit.
The question is, if the tenants sign another one year lease then there is no problem, however, if they willing to go month to month, am I allowed to ask them for first and last month rent?
Thanks a lot.
Hi:
DeleteIt sounds to me, from your question, that you haven't quite figured out how rent and the last month's rent deposit work. I'll try to explain it here.
When you sign the standard form lease agreement with the tenant there is a part of the lease that talks about the Last Month's Rent Deposit (LMR). You are not legally required to get an LMR but most landlord's consider it a good idea to get one. If you want an LMR from the tenant you need to indicate that in the lease. Then, you get the LMR prior to the start of the tenancy and prior to turning over the keys to the tenant. If done properly, you will literally have the money for the Last Month's rent in your bank account before the tenancy begins. If you fail to get the LMR, prior to allowing the tenants into possession, it becomes virtually impossible to get it unless the tenant voluntarily pays it.
If you sign a one year lease and the lease term expires but the tenancy continues on a month to month, then you do not use the LMR for the last month of the lease term. You continue to hold the LMR as a credit to when the lease actually ends (i.e. when the Month to Month ends). You do not use the LMR for the last month of the term and then ask for another LMR for the month to month. It simply does not work this way.
From your question it sounds like you failed to get the LMR prior to the start of the tenancy. You simply got 12 post dated cheques and cashed them as the rent is due. If this is accurate, then your ability to get an LMR is severely limited. In my opinion you are only going to get an LMR if the tenant agrees to give you one. IF the tenant refuses then there will be no way for you to enforce the payment of an LMR.
Hope that clarifies the process. Good luck
Michael K. E. Thiele
www.ottawalawyers.com
I paid a$500 deposit to my landlord in september. our move in date is November1st. They require first and last months rent on November first so is the $500 deducted from the first and last months payment? or do I get the $500 back after paying first and last months rent in full. Rent first and last months rent come to a total of $2700.
ReplyDeleteHi: Based on a combined first and last month rent of $2700 I presume that your monthly rent is $1350.00. While it is common for landlords to collect a first and last months rent at the time of signing, the law technically only permits the landlord to get a last months rent deposit at the time of signing and the first months rent on the day that it is due. There are no other legal deposits or payments that a landlord may require (i.e. not pet deposit, damage deposit, fee, etc., with the minor exception being refundable deposits for keys, garage door openers and fobs). Most people pay first and last months rent at time of lease signing even though the first months rent is often being paid early.
DeleteIn your case, the $500 you paid as a deposit in September should be credited to your last months rent deposit. Hence, on November 1 you would owe $1350 for the rent and $850 for the LMR deposit. That being said, if you pay any less than $2200 on November 1 the landlord would be wise to take whatever you pay and apply it to the LMR as opposed to the first months rent. Once you are in possession of the rental unit the landlord can no longer force you to pay a last months deposit (at least not easily).
Good luck
Michael K. E. Thiele
www.ottawalawyers.com
Hi Michael,
ReplyDeleteFirstly - thank you for taking the time to write these posts and answer individual questions. You are helping a lot of people, who are often in a vulnerable position.
On September 30th I gave my landlord 60 days notice to terminate my month-to-month lease on November 30th. I found a new apartment with a lease beginning November 1st and my current landlord is aware that I will therefore be moving out within the first week of November.
The landlord would like to do renovations to this space when I move out and has therefore asked me to hand in my keys as soon as possible in November.
My question is this: if I am handing over my keys early in November to allow her access for renovations; should we be adjusting the written termination date and should I get a reimbursement of the last months deposit for the number of days I have terminated early?
i.e she would like the keys back on November 4th - should I be reimbursed last months rent minus 4 days + amend termination date to reflect Nov 4 ?
Hi: The decent thing for the landlord to do would be to reimburse you the month of November. If she does not reimburse you that month you can continue to retain the keys and maintain possession until the end of the month. You can't force her to reimburse you the November rent because you gave notice to the end of November. And, even though you are not in the unit she can not simply take possession back from you (early) without your consent.
DeleteIf the landlord is agreeable you could sign an N11 form (Agreement to Terminate) for November 4, in which case all rents paid for after November 4 must be returned to you.
Michael K. E. Thiele
www.ottawalawyers.com
Hi Michael,Thank you for this very helpful blog. I rented to 3 people, and two left suddenly, alleging the remaining person was verbally harassing and made them fear for their safety. The joint tenancy is on month-to-month. The two who left are demanding a return of their portion of the last month's deposit. Is the remaining person responsible to refund this to them? But the two do not want any contact with the remaining person. When the remaining person brings in new roommates, is he allowed to ask them for their portion of the last month's deposit, if he hasn't refunded the two who left? Thank you for your time.
ReplyDeleteHi: I presume that the tenants who left did not do so pursuant to section 47.1 (Abuse, violence). A tenant(s) leaving pursuant to section 47.1 needed to have served you a Form N15. Absent that, the two tenants moving out have not managed to terminate the tenancy if they are on one lease with the third remaining tenant. The two who left are not entitled to a refund of their deposit because the tenancy continues--even after they have left. The deposit gets applied to the last month of the tenancy--whenever that may be. If the tenant remaining in the unit wishes to return the deposit to the two who left he may do so--but he may have his own reasons for not returning it (for example: maybe the two are leaving for a reason that has nothing to do with the tenancy).
DeleteThe remaining tenant is liable for the full amount of the rent and for the continuing obligations. The two who left also remain responsible for the rent and obligations--simply moving out does not absolve them of their liability. The remaining tenant may want to bring in roommates--in which case it is none of your business and he can charge them whatever he wishes. Alternatively, with the agreement of everyone concerned you could agree to remove the two who left and replace them with one, two, or no other tenants (i.e. leave the remaining tenant as the sole tenant). However, you do NOT have to agree but if you did any agreement should allow you to retain the LMR deposit.
Michael K. E. Thiele
www.ottawalawyers.com
Hi Michael, these answers have been amazing. Of course, I have one of my own that I didn't quite find the answer too after reading these responses. In my case, the landlords are asking for the last month's deposit before we see the lease - we've needed to sign an agreement page first and to hand in our last month's alongside that (where the agreement says this is non-refundable). What are our rights if they decline us as tenants - i.e., are we able to get our last month's rent back? The 'non-refundable' wording implies that we reached an agreement on the apartment and I'm actually paying for something, where if they decline our tenancy we've not paid for anything and they still have our money...
ReplyDeleteHi: It never ceases to amaze me how some landlords make the application, lease signing, and payment of rent and deposit so unnecessarily complicated. As in your own situation that you describe one begins to wonder if the landlord isn't a bit shady--which is unfortunate if the landlord is actually well intentioned and honest.
DeleteAnyway, there is no "non-refundable" in Residential Landlord and Tenant law in Ontario. If you have reached an agreement to rent and your payment of the deposit evidences that agreement then you indeed have a lease (whether signed or not). If you don't seek to walk away from the lease then I don't see how the landlord can keep your money and not deliver the apartment.
If the landlord argues that it is still assessing you and determining whether to accept you as tenants or not then the deposit isn't actually money that they can retain. Only once the landlord accepts you can they retain the deposit as security for the rent. If you are not "accepted" then the deposit has to be returned to you as that sum of money (if retained) would constitute an illegal charge contrary to the RTA. The "non-refundable" statement in the document is legally meaningless--notwithstanding their insertion of that clause in the agreement. It is legally meaningless because the Residential Tenancies Act (RTA) doesn't allow landlords to impose whatever terms they wish.
There are a few different angles to illegal charges or attempts to illegally retain deposits, application fees, key money, and the like. In your situation and presuming it is clear that the money you've paid is a last month's rent deposit (as opposed to some other random characterization), then you might want to look at section 107 RTA. It provides: " A landlord shall repay the amount received as a rent deposit in respect of a rental unit if vacant possession of the rental unit is not given to the prospective tenant."
As you can see---section 107 would appear to be in conflict with the landlord's "non-refundable clause". Which one trumps? That's easy, the statute does. In fact, section 4 of the RTA explicitly makes void any lease clause that contravenes the RTA.
Beyond the above, there are lots of sneaky attempts to get around the limitations on deposits, application fees, key money, etc.. In my experience it is generally not a good sign when at the outset of a prospective relationship you see the party opposite playing fast and loose with rather basic legal requirements.
Good luck
Michael K. E. Thiele
www.ottawalawyers.com
Hello Michael,
ReplyDeleteThank-you for this and all your other posts, they are very enlightening. I have a question.
I signed a 1 year lease beginning Aug 1, 2019. In early December 2019, I made the decision to relocate and would be moving out January 11, 2020. I emailed my landlord indicating my desire to terminate the lease early asking if there could be a mutually beneficial agreement. The landlord declined so I found someone to assign the lease to.
I found someone who desired to take over the lease starting January 15, 2020, and the landlord approved. The landlord had the new tenant sign a new 1 year lease along with first and last months rent (no longer an assignment as I understand?). I emailed my landlord indicating that a portion of last months rent could cover the first 15 days of January, and I would like the rest returned.
The landlord is not going to return the remainder until after a move out inspection. We have every intention of cleaning the apartment when we move and we have not caused any damage, so I can't imagine there will be any incurred costs (and as I understand it the deposit could not be used even if there were).
I feel the landlord is trying to pull a fast one. Does the landlord have any grounds not to return outstanding balance of the deposit? Would it be appropriate to ask for the deposit to be returned before we move out or have an inspection?
Any insights would be greatly appreciated. Thank-you.
Hi: You are indeed correct that a deposit may only be used for rent and nothing else. There is no basis in law to withhold the deposit from you pending a determination of whether there is damage or not. Normally, a tenant should try to use the LMR deposit for the last month and not be in a position of trying to get a refund. Of course, as in the situation you describe, that is sometimes easier said than done and of course you should be entitled to rely on the landlord acting legally.
DeleteThat being said, from your scenario I'm left with a question (or two). Did the new tenant sign the lease effective January 15 or February 1? Did the new tenant pay for the period January 15 to February 1? When does the new tenant expect to take possession?
I know that you found this new tenant and that the tenant was prepared to take the unit from January 15. Is this documented anywhere? Can you prove that the new tenant was prepared to move in on January 15 (as opposed to February 1?). If you contacted he new tenant would the new tenant share with you the terms of the new lease?
I ask these questions as I am trying to imagine what answer the landlord might give to the Landlord and Tenant Board if you filed an application for a return of the balance of the deposit. A stupid answer would be that he was setting it off against alleged damages as that is simply illegal. Presuming that "greed" kicks in and the landlord doubles down on keeping your half month's rent--what kind of story might he make up? I'd guess something along the lines of the new tenant not being prepared to take over as of January 15. Perhaps the lease with the new tenant doesn't start until February 1. Perhaps the landlord told the new tenant that he could move in as soon as you moved out but that rent wouldn't be payable until February 1. Perhaps the rent amount for the new lease--as opposed to the rent in your lease that could have been assigned--is higher. You could imagine the landlord showing up at the Board stating that nothing is owed to you because your deposit was applied to January and that the premises weren't re-rented until February 1 under a new lease. Therefore there is no double dipping and you are not entitled to a return of any of your deposit. Depending on what evidence you have (i.e. the answers to the questions posed above, and documents to substantiate) you might just get tricked out of your refund. The refund would be due to you if the landlord is double dipping (i.e. getting double rent for the same time period). Of course, if the new lease only starts in February--and the landlord as a kindness let the new tenant move in early (after you return possession to the landlord) he would argue that it is none of your business whether the new tenant had access earlier or not.
Some strategies (if the above deviousness is planned by the landlord). Don't return possession of the rental unit until you have a commitment to return the money and better yet you have the money in hand. Or, print out a Form N11 (Agreement to Terminate), and insert January 15 as the termination date and make sure the landlord signs it. If the tenancy terminates as of January 15 then the landlord doesn't have the right to keep any rent money beyond that date. Then make sure to get a receipt for keys when you return possession on or before January 15. Or (and), get the landlord to confirm in an email that he is returning the balance of the deposit (15 days worth = $XX) after you move out and after the move out inspection. Retaining the money for "damage" isn't legal but the statement would at least confirm his position that rent is not due for the entire month of January. Further, nail down as much information as you can get from the new tenant. If you could get a copy of the new lease that would be golden--especially if the rent is higher.
DeleteLastly, if the landlord is playing games then I'd make sure to have a lot of evidence of the condition of the unit on move out. Take tons and tons of pictures of every square inch of the place (ceiling, floors, walls, appliances (inside and out), bathroom fixtures (for cleanliness and condition), outside and inside. Make sure your photos are both zoomed in for detailed inspection and zoomed out so that you get a sense of where in the unit the picture is focused. Then also, do a painfully slow walk through with your video on and take a slow video of the condition of the place--very thoroughly. You can eventually edit the parts you might need based on the whatever fictionalized allegation the landlord makes. Lastly, see if you can get a credible third party to walk through the unit right before turnover. Ensure that this credible third party would be willing to testify. Ask this person to look at everything and also to smell the unit for the smell of pet dander and urine and any other untoward smells that might be blamed on you. When I have tenant clients who rent larger properties or homes and nonsense is expected from the landlord it is worthwhile to pay a Home Inspector to do a thorough assessment of the place right before turnover (and you tell the Home Inspector specifically why he is being hired---they are cool with that--so that they focus on the types of things that a tenant might be blamed for and not structural things beyond the control of the tenant).
I hope that helps and for you sake I hope your landlord is not as devious as he might be. If the landlord doesn't return the deposit money you can always file an application to the LTB for an Order.
Good luck
Michael K.E. Thiele
can a landlord ask for first and last two months rent deposit in ontario?
ReplyDeleteHi Rose: In relation to the last month rent deposit the landlord is only allowed to ask for an amount equal to one month's rent as a rent deposit. That is provided in section 106(2) Residential Tenancies Act. Requiring a deposit of 2 months is illegal. The landlord is, of course, allowed to ask for the first month's rent but technically only when it is due and not before. In practice, landlord's often collect the first month's rent before it is due and before they are allowed to require it to be paid.
DeleteMichael K. E. Thiele
www.ottawalawyers.com
Hi Michael,
ReplyDeleteI read your article and the answer about different scenarios. I love the fact that you give us some clear information about those rental casses.
I have an issue with my landlord about the last month paid. when I moved in, I paid the first and last month in order to get the bachelor basement in his house. And 6 months later, my family back home were coming and I needed a bigger place, so I wrote him a message on December 19th telling him my intention to move. I struggled finding an apartment, and in the beginning of February, I finally found an apartment. The new landlord called the previous one to get some references in order to rent me this apartment, it was on February 6th. The previous landlord called me to ask when I will be moving and I said in the middle of February (15th).
Now I don’t really know if the notice will be the day I sent him the message on December or the day I actually told him that I am actually moving, because I would like my last month paid back.
Thank you.
Laetitia.
Hi Laetitia:
DeleteGiving a Notice of Termination (from tenant to landlord) actually carries the same requirement of precision as a Notice of Termination being given by landlord to tenant. That being said, it is not uncommon for tenants to not use the proper form (the FORM N9) and instead send an email or letter with notice. Unfortunately, the problem when not using the Form N9 is that you don't always give the required information. From your question it seems to me that you did not give the detailed information required to be given.
The key information in a tenant's notice to terminate (if not using the N9 Form) is to set out the termination date (specifically and not generally), make sure that the notice is at least 60 days (when dealing with month to month tenancies) or the end of term if dealing with a fixed term lease (for example, most tenancies are 1 year leases for the first year and these can't be terminated by notice until the end of the year).
The termination date needs to be the last day of a term--which is usually the day before rent is due.
You don't say anything about a lease in your question so I presume you moved in on a month to month tenancy right from the beginning? If so, you can give a minimum 60 days notice to the end of term. Meaning, if you gave notice today (February 28,2020), the earliest that you can terminate the tenancy is April 30, 2020. It is impossible to terminate the tenancy for a mid-month date unless that happens to be the end of term (i.e. the day before rent is due).
If your landlord is in agreement with you moving and the date can be agreed upon you should, instead of terminating your tenancy by giving notice, terminate your tenancy by agreement. There is a form for that (there is a form for everything in landlord and tenant law). The form is the Form N11 (Agreement to Terminate). You can print it off from the landlord and tenant board website.
An N11 can terminate a tenancy for any day that the parties agree too. There is no minimum notice period. The N11 form, once signed, is enforceable through an Order from the LTB. This is good for both landlord and tenant because it makes each sides responsibility clear. For you it is also useful because any rent that is paid for the period after the termination date in the N11 must be returned to you (if you move out on the date in the N11).
Good luck
Michael K. E. Thiele
www.ottawalawyers.com
Hi Michael,
ReplyDeleteHope you are doing well during this time and thank you very much for your response. My situation is regarding qualification for usage of the N15 form and how to properly submit it to a landlord. The situation has to do with an individual in my rental building(there are only 3 units) threatening the lives of my roommates and I and we have filed a police report. Because of this it seems like it would fall under Residential Tenancy Act 47.3(1)(d)(ii), but I am unsure if we qualify for its use under Residential Tenancy Act 47.3(4)(d) since the neighbour lives in another unit below us and not in our unit specifically. I have inquired with my landlord to see if we could mutually agree to ending the tenancy agreement due to the current situation. Our landlord feels like we are in no danger and therefore is not inclined to end the tenancy, but I do not he is qualified to make that judgement as my roommates and I are living in fear and currently not residing in the apartment. I feel like my landlord will be incredibly nitpicky when it comes to this N15 form due to the above reasons and I am wondering if there are ways to dispute whatever decision he comes to or if he does not answer my email with the attached N15 form. Thank you very much for your time and be well!
Hi:
DeleteThe N15 Form is a titled: "Tenant's Notice to End my Tenancy Because of Fear of Sexual or Domestic Violence and Abuse". In broad terms, this Form N15 (and section 47.1 through 47.4 RTA) is intended to provide a mechanism to terminate a tenancy early due to fear of sexual or domestic violence and abuse. Do these sections actually accomplish this? I think that can be a matter of debate. I personally find the section so terribly convoluted and imposing of pre-requisites that the tenant is unreasonably exposed to danger while trying to access the relief this is supposed to provide.
I see that you have started to work through the statutory provisions and you have clearly run into the question of whether this applies to you or not. You've picked out the understanding that the perpetrator of the abuse/violence must be "living in the rental unit". Certainly, that requirement appears as a clear pre-condition of the use of the Form given the notes on the Form N15 (first page under the heading "When a tenant can give this notice"). If this is accurate then it would seem that you can't use the Form N15 given that the perpetrator in your situation doesn't live in the unit.
Query then, is the Form N15 correct and is it necessary for the perpetrator to live in the unit? For that you might want to take a close read of section 47.3 that speaks to the kinds of things that must have happened in order for there to be a "deemed" experience of violence or another form of abuse (for the purposes of the statute and these sections to apply). For your purposes, does your circumstance fit any one of section 47.3 (a) through (f)? If so, you may indeed have a right to use the Form N15.
There isn't much I can do with the applicability of the section to your facts as there isn't enough information. Somehow though, it seems unlikely to apply given your description of you and your roommates being subject to threats on your life by a neighbour. This kind of illegal activity doesn't immediately make me think of a form N15 and from what you've written I can't see where the criteria in section 47.3 are engaged.
So that being said, I'm sorry to say that I can't be much help. I would need a whole lot more detail and we then would work through the sections to see if the criteria for an N15 are activated. My gut reaction is that the answer is likely not--based on what you've written.
If you and your roommates have indeed moved out have you also returned possession of the unit to the landlord and stopped paying rent? You may simply wish to trigger the duty to mitigate losses and force the landlord to re-rent the premises. Once that is done, at least the losses for the landlord are crystallized and the landlord can either pursue you for lost rent or not. In the same breath, you and your roommates can decide whether to pursue the landlord for your experience (you were denied your right to reasonable enjoyment) if indeed the landlord (in the circumstances of your tenancy) can be held accountable for the actions of your neighbour. The "if" isn't whether a landlord, generally speaking, can be liable to a tenant for the actions of another tenant--the law is clear that it is possible. The "if" relates to the specific circumstances of your tenancy and whether the specific facts of your tenancy support your landlord being liable to you for the actions of your neighbour.
Good luck
Michael K. E. Thiele
www.ottawalawyers.com
Hello,I have a question that I'm hoping someone can help me out with.I rented a room in a townhouse off a couple. I paid first and last.my roommate decided to move back home(out of the city) and made an agreement with the property rental company to be out 10 days before the end of the month so they could allow another family to move in earlier. Due to this agreement that my roommate made,I had to move out 10 days before the end of the month.The roomate said that i would get prorated rent back for those 10 days once she receives it from the property company. I was never on the lease and i paid my rent to my roommate who her and her mom are on the lease.I believe that it shouldn't matter when or where this money is coming from the property rental company as I was subletting a room and I believe it's my roomates responsibility to pay me back for the those 10 days from the last months rent I gave her.Am I right about this???if so can you please let me know how I should handle this.its already been 2 weeks since I've moved out.i questioned my roommate about the money and got lots of excuses.im at wits end.
ReplyDeleteHi: Yes, in my opinion you are correct. Your legal relationship was with the tenant and not the landlord. The tenant agreed to rent a room to you, took your money, and then stopped providing the room you paid for. At a minimum you are entitled to a refund of the prepaid rent for the room. You getting refunded has nothing to do with the landlord and as such you should not have to wait. That being said, if the tenant is being straight with you, the tenant may not have the money to pay you and therefore needs to wait for a refund from the landlord. If the tenant doesn't pay you the only option you will have is to file a claim in the small claims court. The cost of filing that claim may exceed the amount that you are hoping to get back. Nevertheless, if you choose to pursue it on principle you should ensure that you warn the tenant of the coming lawsuit and that the costs of the suit will significantly increase the amount (relative to what is owed) and that they should pay you (or make arrangements to pay you) if they want to avoid the costs of the litigation. Note of course, if the tenant has no assets (or limited assets) chasing unpaid debts is exceptionally time consuming, difficult, and expensive (i.e. the costs of issuing garnishments, writs, etc., is significant).
DeleteGood luck
Michael K. E. Thiele
www.ottawalawyers.com
Hi Michael I just learned about your Blog, you give people in need detailed helpful advise, thank you so much. I rented my townhouse in Toronto to a family since May 1, 2019, we signed 1 year lease agreement, before they moved in, I received 1st & last month rent as deposit with 10 post dated cheques due date 1st of each month, the last post dated cheque date is March 1, 2020. As 1-year term will expire on April 30, 2020, so far I have not received payment for rent for this month(April), I called the tenant yesterday(April 4), he said he'd like to continue rent my place in future, he would pay me on 1st of each month starting May 1, 2020, my understanding: he should pay me this month(April)'s rent as well, as the last month rent as deposit I received last year is supposed to apply to the actual last month's rent when he move out in future, correct? What should I do if he insist to start pay me monthly from May 1, 2020 and refuse pay April rent(he wants use LMR deposit instead which would technically make me has no deposit to hold)? Also, the agreement signed last year is for 1 year term only, as he wants to continue rent in future, to simplify process, I want to have a simple agreement with him that for future all terms and conditions remain the same and valid as the original lease agreement signed in 2019, is it ok? Appreciate your advise.
ReplyDeleteHi: The lease you have with the tenant automatically (by law) renews on a month to month basis at the expiry of the lease term. By law, it renews on the same terms and conditions therefore you do not have to sign anything to agree to this fact. It happens all by itself.
DeleteYou are correct in that the tenant is obligated to pay you the rent for April 2020. Because the tenant did not terminate his lease (by giving you notice), and you have not terminated the lease by notice, the lease will automatically continue on a month to month basis. Hence, the Last Month's Rent deposit is not to be used.
The LMR is not used for the last month of the term of the lease. It is used for the last month of the lease including any period that the lease continues on a month to month basis (or renewed term). Therefore the tenant owes you April rent.
The tenant then also owes you May rent and onwards until the tenancy is lawfully terminated. If the tenant gives notice to terminate then the LMR is applied to the last month of the tenancy.
The tenants failure to pay the April rent could be the result of things. Perhaps the tenant believes that the LMR is used for the last month of the term. Maybe, if he was advised to the contrary he would apologize and pay. Another possibility is that he is facing financial hardship and because of COVID can't actually afford to pay the April rent and this is his way of getting a deferred rent without having to come right out and ask for a deferral.
The question I suppose is how to approach this. You could be straight up with the tenant and tell him that April rent is due, but that you wonder if he has a problem with paying the rent. If so, perhaps you can make an arrangement if he can assure you that ongoing rent will be paid on time. Basically, have a conversation and see where it goes.
The problem for you is that if the tenant isn't in a position to pay the rent, or if you demand that the April rent be paid and you issue an N4 (Termination for Non-Payment of Rent), the legal processes are currently stalled and there is no enforcement for non-payment coming any time soon. While I recommend to landlord's that they follow the process and issue the N4 and file in a timely way (to preserve rights if possible), you need to recognize that following the process will get you nowhere at the moment due to the COVID restrictions. However, it is hoped that if you do follow the standard procedure that eventually you will be in line for a hearing (sooner) than if you wait for all COVID restrictions to be lifted (whenever that might be).
Note: the lease terms renew automatically, except you can increase the rent by the lawful amount if you serve an N1 Notice of Rent Increase with 90 days notice.
Michael Thiele
www.ottawalawyers.com
Hi,
ReplyDeleteI have a question. My son claimed that he was moving into a condo in Toronto, and to help him out I provided him with the required first and last month's rent. On what was supposed to be move in day, he says he went to the condo, and there were still people living in the unit. The people living in the unit said they were not moving out, and had no plans to do so. My son claims that the landlord had lied to him just to collect first and last month's rent. Is this legal and does this happen? Or is my son being dishonest and trying to get more money out of me?
Thank you!
Hi KV: This does happen, though rarely. Perhaps during this COVID crisis this is happening more as people find it more difficult to move around. When this happens the new landlord, at a minimum, is required to refund the first and last month's rent that was paid. Whether your son has a bigger claim against the new landlord or not will depend, in part, on the terms of the lease that he signed. Some leases or applications to rent contemplate the possibility that sitting tenants might not move out. Given the current reality that it is effectively impossible to evict a sitting tenant (for the foreseeable future), your son and the new landlord could (at a minimum) agree to treat the lease at an end and simply return the money. The claim may be "larger" depending on the lease terms--but that would require a visit to a lawyer or paralegal to review the documents. Some leases, applications, have the lease continue pending the eviction of the sitting tenants--but in these circumstances I don't see the landlord being able to deliver vacant possession any time soon.
DeleteMichael Thiele
www.ottawalawyers.com
Hi Michael,
DeleteThank you for getting back to me. This isn't something that has happened now, this occurred all the way back in November. Not sure if that changes things?
HI KV: So it isn't COVID related. Then the question is where is the 1st and Last deposit? The landlord doesn't just get to keep it. If the landlord has kept the money then you can bring an application for a return of the money to the Landlord and Tenant Board. Whether your son is trying to just get more money out of you or not is not a question I can answer.
DeleteBest of luck
Michael Thiele
I have a question regarding deposit interest, and have read through the article and other comments.
ReplyDeleteWe mutually ended the one year lease with our tenant one month early. To make it easier for her to line up her next place, we applied the deposit to the second last month.
If the deposit interest is to be paid yearly, do we owe her interest for less than a year? If so, am I correct that we only owe her interest for the 10 months that we held it?
Hi: Section 106 RTA states that the interest will be paid annually but not that the deposit only attracts interest if it has been held for a year. I think it is well understood (and accepted) that the deposit bears interest for the period that it is held as security for the last month. Therefore, your agreement to terminate has the tenancy ending after 11 months with the deposit being used in the 11th month. The 11th month does not attract interest because there is no deposit any longer (because it was used to pay rent). The deposit was held for 10 months and therefore interest is payable on the deposit for 10 months.
ReplyDeleteIn short, you are correct.
Michael K. E. Thiele
www.ottawalawyers.com
Hi Michael,
ReplyDeleteI am new to this renting thing. I am now on a month to month basis as of June 1st which would make me eligible to start a new lease as of which date? I am still required to give 60 days notice? Do I need to provide this notice via a specific form? Thank you
Hi: From your question I assume that you have just come to the end of a "fixed term" lease which typically is a year long. Because of the Residential Tenancies Act your fixed term lease did not terminate with the expiry of the fixed term. Instead, your tenancy continued on a month to month basis and this happened automatically. You were not required to do anything in order for your tenancy to continue. It continues on the same terms as your fixed term lease.
DeleteThe month to month lease will continue, indefinitely, until you or the landlord provides lawful notice of termination. For you to terminate the lease (presuming it is a month to month tenancy) you would need to give lawful notice using a Form N9 (available on the LTB website). As a tenant you are required to provide 60 days notice to the end of term---please NOTE "end of term". The 60 days is the minimum number of days and the last day of your notice needs to be the end of term (rental period). Typically the end of term is the last day of the month because rent is paid on the first of the month for the ensuing month. While this is typical, it is possible to have terms running from any day of the month to the same day (minus 1) in the following month.
So, there is nothing for you to do if you are happy living where you are and you want to continue. If you like the idea of the comfort of a fixed term lease then you could ask the landlord for another fixed term. The landlord does not have to agree and instead the landlord could simply say that they will continue the lease on a month to month basis. A landlord has a limited ability to terminate a month to month lease so there isn't a tremendous value in getting a fixed term. The exceptions are (reasons it is good to have a longer fixed term) to guard against an N12 (landlord's own use or purchaser's own use) and an N13 (conversion, demolition, repair). These are the no fault grounds of termination and you can avoid the shorter notice of the N12 (60 days) if you have a longer fixed term. The same goes for an N13.
Otherwise, there isn't a great value in a longer fixed term because you are limited in your ability to terminate on 60 days as well. If you are in a fixed term you can't terminate the tenancy by notice until the end of the fixed term.
Hope that answers your question.
Michael K. E. Thiele
www.ottawalawyers.com
Hi Michael,
ReplyDeleteThanks for all of this, what a service (and I learnt a lot going through the entire thing!).
While I do kind of know the answer to this, I'm looking for official advice on how to proceed.
The Background:
-18 month lease, which is up at the end of September, 2020
-LMR paid, rent has never been late, interest never received (but that's another, unrelated thing, so let's shelve that)
-relatively friendly relationship with a pretty hands off, novice landlord (who I've had to walk things through with in the past)
-I myself am a landlord, which makes me a pretty independent and informed tenant.
Current Situation:
-I have a job opportunity which came up suddenly in another province, and I will be vacating by the end of June
-I informed the landlord of this and I gave him his options (again, novice landlord) and some colour re: how I myself would make this decision if I were in his shoes:
1. I would be happy to do the work and find someone to assign the lease onto, noting that meant that they would assume my current rental rate (which is quite a bit below market value for my building), and that all he could do re: a rental increase would be to increase it by the legal increase amount come Oct 1.
2. that he could, effectively "refuse" to let me assign the lease, upon which would trigger my giving him 30 days' notice. I noted this would mean he could then re-rent it to a brand new tenant at a new rate. I also offered to extend the notice to a full 45 days (this was on June 15), and we could agree to end the tenancy on July 31, to allow him extra time, and that he could even advertise a free month's rent as incentive (as I will vacate pre-July 1 and I was happy to just let the new tenant move in during my "last month"/forfeit my LMR (in full or pro-rated) if he finds someone to move in anytime during July.
I told him the choice was his, that I would honour my commitment to the lease and find an assignee etc., and I suggested he take a couple days, do some math, then get back to me with his decision.
His first reply was that we go with no assignee, and he would try and find someone for Aug 1, but if he couldn't, it was still mine. He also noted that "September rent is already paid by your LMR, so maybe he would be ok letting Aug rent go". I politely informed him that it was either option 1 or 2 (no "option 2 contingent on his success"). I ignored his note about LMR, as first problems first.
His second reply was that we do not assign, that he would action a tenant search, we would agree to end the tenancy July 31, but that I would still have to pay July 1 rent, which he would pro-rate refund if he found a tenant for, say, mid-month. All fine and good, except for the reason: he can't apply my LMR to July's rent "because he spent my LMR on his realtor fees when I moved in and he doesn't have enough to cover his mortgage if I do not pay July 1 rent" (!!!!!). How on earth he was planning to cover September's mortgage if/when I moved out at the end of my lease and he had to use LMR for September's rent fee, I have no idea.
Conclusion:
I know I'm within my rights to just insist he choose 1 or 2, and that if it is indeed option 2, I know I'm within my rights to say "cool, I'll vacate by July 31, use my LMR for July's rent" (and stop payments on my last two cheques, for July 1 and Aug 1), but please correct me if I'm wrong.
I am trying to find a solution which is both legally binding and covers both of our butts, both legally, ethically, and financially. I'm also trying to not be a jerk with this, quite naive and unprepared/uninformed landlord who I do think is probably SOL when I decide to vacate and cash in my LMR chit, whenever that happens.
Hi: I'm find it staggering, always, that there are so many landlords flying by the seat of their pants when it comes to the "law" that governs the very core of the business they are running. But for your good faith attempt to provide a balanced analysis to the landlord he could very well get himself in trouble with issues like this.
DeleteAnyway, I wonder whether you haven't already asked the landlord for the general right to assign--that seems to be the import of the questions and options you posed to him. His answer of "no to assign" he will find a tenant sounds like a refusal to the general request to assign (section 95(2)). Based on that, you could give an N9 any time now, 30 days notice--not to the end of term (s.96(2))--and be due a refund of part July rent.
If you don't feel like you've fairly and clearly asked for general consent to assign--perhaps you try it again and get a response or failed response and you can then do what you have to do. At some point, the landlord's failure to be clear and act decisively will start to cost you money that you don't have to pay (i.e. August and September---presuming you give the N9 for end of lease).
I appreciate your comments about wanting to be ethical and fair. Financially--if you don't exercise your rights you will suffer. I'm okay with fair and ethical being driven by what the law says. You've been ethical and fair when you openly disclose the law to him (i.e. don't take advantage of his ignorance) and ask him to respond in accordance with the law (which is what your choices to him were). You can do more for him if you wish but I think to do so is entirely gratuitous and it probably won't get you any thanks anyway.
Lastly, if you wanted to reach an objective choice I imagine you'd ask yourself what the rental market in your area is like, the chances of re-renting quickly, and getting an increased rent. If the answers to these questions are good for the landlord then rip the band aid off for him and make him market the unit asap--it is the better financial outcome for him (as you are leaving regardless and the implications of that will play out now or later). If the answers to these questions are poor--tough market, rent will be lower, extended vacancy, then I suppose you can keep yourself on the hook to backstop the landlord's pocketbook (until the end of September) but that doesn't make sense to me unless you "owe him" --as a friend, for a favour or kindness, etc..
Good luck
Michael K. E. Thiele
Hello Very informative thank you for posting and for all of your input. It has been very helpful over the years. I had a question...I just handed in my N9 notice to my landlord, with Sept 7 being the termination date. What month would my LMR be? August? Or Sept? They are telling me September, even though I have to be out Sept 7...why would I be paying for Sept when I will not be living there? I think they are trying to pull something. Any advice would be helpful
ReplyDeleteMichael K. E. Thiele10 July 2020 at 14:37
DeleteHi: I'll make a few assumptions in answering you because I don't have the luxury of asking you questions directly. I presume that you are on a month to month tenancy. This means that the fixed term of your lease ended and you just continued paying rent on a month to month basis. I'll also assume that you pay the rent on the 1st of the month (I make this assumption because your landlord is telling you that the LMR applies to the month of September).
If my assumptions are correct, then your N9 notice was likely invalid (i.e. void). The reason is that the N9 (which is a tenant's notice to terminate tenancy), requires a minimum of 60 days notice AND the termination date needs to be the last day of a rental period. If you are paying rent for the 1st of the month to the last day of the month then the termination date in your N9 has to be the last day of a month that is at least 60 days after you give the landlord the N9.
If the assumptions are correct then your N9 is not actually valid and arguably unenforceable. Your landlord, it appears, has adjusted your termination date to the end of September. If this is the case then you don't actually need to move out until the end of September because you have paid rent to the end of September.
If the landlord does want earlier possession of the unit the landlord should pay you back the prorated amount for the days in September that the landlord gets the unit back for.
To calculate the value of each day in September (for the refund), you multiply the monthly rent by 12 and then divide that number by 365. This number is the amount that the apartment costs you on a daily basis. Hence, if you give the unit back on September 7, then the landlord has the unit from September 7 to September 30 which is 23 days. Multiply the daily rent by 23 and this is the refund you should get (if the landlord agrees). If the landlord does not agree then you could stay until the end of September and exclude the landlord from the unit until then.
Lastly, because (based on my assumptions) your N9 is likely invalid you should confirm with the landlord that there is an agreement to terminate the tenancy--as opposed to the landlord taking the position that the N9 is just plain unenforceable. Giver today's date (July 10), you still have time to serve a valid N9 for September 30 if you are on a month to month tenancy.
Best of luck
Michael K. E. Thiele
Hi Michael!
ReplyDeleteI have a question for you. I live in a 2-bedroom unit and each bedroom is leased separately (for context). My roommate last year signed a 1 year lease for September 1st 2019 and terminating August 31st of 2020. When she signed the lease she paid first and last month's rent, so she's already paid for August 2020.
The landlord has told her that on August 1st she is to pay for August once again in full amount. He says that once she moves out, he will refund and e-transfer that amount along with the key deposit. Is this standard? He says he does this for all his tenants at all his properties.
Hi: No, it isn't standard--and arguably it is actually wrong. The LMR (Last Month's Rent) deposit is required by the Residential Tenancies Act to be applied to the last month of the tenancy. However, the last month (in your scenario) is NOT August 2020. The last month only comes along when the tenancy is properly terminated. If your roommate decided in June 2020 that she was going to move out at the end of August then she should give the landlord a form N9 (Tenant's Notice to Terminate). If the N9 is properly filled out the last month of the tenancy would then be August 2020. For the month of August she would not pay rent because it is already paid. If your roommate decided to simply continue her tenancy beyond the end of the one year lease she would simply continue to pay rent on a month to month basis. Once she decides that she is ready to move she would give the Form N9 (with 60 days notice to the end of the month). The LMR would be applied to the last month of her notice and she would not pay rent for that month.
DeleteIf your roommate has not given proper notice, or believes that she can move out without giving notice because the lease is over---she may have a nasty surprise coming her way. The landlord might tell her (if she didn't give notice) that she is not only NOT going to get a refund but that she owes him 60 days notice--hence possibly two more months of rent. There are obligations to reduce that amount and arguments to be made--but make no mistake the RTA requires a tenant to give notice of termination and only then does the LMR get applied to the actual last month of the tenancy.
Refunds of key deposits after tenancies end is indeed normal. And lastly, the amount will be small but your roommate is owed interest on her LMR.
Michael K. E. Thiele
www.ottawalawyers.com
Hi Michael,
DeleteThanks for much for getting back to me. I spoke to another tenant of our landlord and she says our landlord is under the apparently very wrong impression that this is okay. She says it's in the wording of the lease, however looking at the lease, she did pay a rent deposit and not a damage deposit, which is what this looks like and to my research isn't standard or legal in Ontario. It seems that the landlord is planning to check the room after it's vacant and the key is returned, and if it's "ok", he will return the key deposit and the extra rent deposit.
My roommate actually did do a proper N9 notice of 60 days so she did everything right. But now that she's done that right but on August 1st paid an additional month's worth, that apparently the landlord will return to her, the worry is that he might point out a scratch on the wall or something and not return it to her, which isn't right.
And now my worry comes in. Say I decide to leave at the end of my term, December 31st, and do everything right. Give a proper 60 days N9 notice, but come December 1st the landlord asks me for full rent December 1st (which I already paid), and I refuse to pay given my tenant rights. To past tenants he's texted them to pay him again which isn't right, but he won't budge on that. Say on December 1st I don't pay this unnecessary amount, my worry is that he'll find something unreasonable to complain about the apartment and charge me for something that I didn't do. Or try and kick me out in 14 days if I don't pay this extra full month.
My other worry of course is that I do comply and pay this amount again, move out and return the key, and then he doesn't pay it back to me. Then I'm out a full month of 900 dollars.
What I think he thinks makes this alright is a set of additional terms he's added to the lease. The first point on it says "The Tenant will pay the Rent on or before the first of each and every month of the term of this Lease to the landlord". just an extra note. This wording appears to nullify my right as a tenant outlined in the standard lease- my right to not have to pay a damage deposit if that makes sense. I've already paid my rent deposit.
Thanks for all your help!
Hi Again:
DeleteThere isn't any room for a "different" opinion on these issues. The law, in fact, is quite clear about rent deposits and use of the Last Month's Rent deposit. While it seems that your landlord won't care, the Residential Tenancies Act at section 106 mandates that the deposit SHALL be applied to the last months rent. I've reproduced the section below:
Rent deposit applied to last rent
(10) A landlord shall apply a rent deposit that a tenant has paid to the landlord or to a former landlord in payment of the rent for the last rent period before the tenancy terminates. 2006, c. 17, s. 106 (10)
There is only one legal deposit that a landlord can take and that is a last month's rent deposit and it doesn't matter how that deposit is worded or what it is called. There are no other legal deposits [and of course we need an exception to that statement--there are legal refundable deposits (reflecting actual cost of the items) for things like extra keys, key fobs, garage door openers--s.17 of O.Reg. 516/06].
Of the other points you make I can certainly understand your concern and the reality is that you are not looking for a headache from this situation. My thoughts about the landlord trying to terminate and evict you for not paying the last month of rent as he "demands". I suppose the landlord could serve an N4 (Notice of Termination for Non-Payment of Rent). Technically that terminates the tenancy on 14 days notice BUT if you read the notes at the end of the Notice you will see that you do not need to move out if you disagree with the Notice. The landlord must apply to the Landlord and Tenant Board for a hearing to get an order terminating the tenancy. All of that--guaranteed 100%--will take longer to schedule, be heard, and decided than the end of your notice to move out (i.e. the case won't come on for a hearing until after you move out). If the hearing does go ahead (and the landlord actually spends the money for the application fee for a hearing), you will indeed win that application. Somehow, though, I doubt that the landlord doesn't actually understand the law and I'd be surprised if you actually ever received a Notice of Hearing.
DeleteYour comment about not getting the deposit back is insightful--and frankly, when I first responded to you I thought about writing about the same issue. Over the many years that I've done this I've seen many instances where landlords assert "damage" and take deductions from illegal deposits and LMR deposits that weren't applied to the rent. The tactic is illegal--but unfortunately effective. For example, what if you paid the rent to the end of the tenancy and left your landlord with a deposit of $900. The landlord then comes back with some nonsense claim about damage. The landlord then says the cost of fixing it is--pick a number. It turns out that you only get--pick a number smaller than $900 back. What numbers are picked might depend on where you move to---the landlord may just claim the entire $900 if he knows that you have moved out of country, across the country, or someplace where it would be rather inconvenient to pursue an application at the LTB. If you live nearby and this isn't a factor then maybe the landlord scrapes a few hundred off of the deposit and gambles that you won't take the time and trouble to pursue a few hundred dollars. I've certainly had the conversation with tenants when they want to pursue a claim but can't make financial sense of doing so with representation (i.e. legal fees exceed the value of the claim). Because legal costs are not recoverable at the Landlord and Tenant Board a person needs to be ready to do the work themselves [note: there is jurisdiction to award costs--but the rules and practice have developed to make costs unavailable in all but the most outrageous cases].
As for your last point. Lease clauses that are inconsistent with the Residential Tenancies Act are void. It doesn't matter how clever the wording is nor whether the parties explicitly agree to the terms over-riding the RTA (this is impossible to do).
Good luck with this landlord. Please ensure that you take lots of pictures on your way out and certainly ask the landlord (in writing) to do a move out inspection before you leave and to sign off on the unit as being acceptable before you leave. If the landlord refuses or fails to do so this can only be to your benefit in any proceedings that might follow.
Michael K. E. Thiele
www.ottawalawyers.com
Hello Michael, I appreciate all the help you give to people on your blog!
ReplyDeleteIn my case, I am having this issue right now.
I was planning to move out of my apartment and because of that I started reaching out to management offices. After a while, I found one building that interested me and I signed an application with this building, giving one money order for the last month of $1750.00. However, just now I decided I don't want to move to this new place anymore and they are saying that they are not going to give me my money back. The thing is, I never signed any lease contract with them, all the paperwork I signed was only about the application. What should I do? Is there a way of getting this money back according to the law?
Thank you very much!
Hi:
DeleteThanks for this interesting fact scenario. You are not alone when it comes to this kind of problem. There aren't quite enough facts in your paragraph to allow a comprehensive discussion but I can say, for sure, that you do have recourse for getting the money back---BUT, it depends on the specific facts that are not in your description. That being said, before saying or doing to much else you might want to speak with a lawyer or paralegal to consider your strategic position. Given the there is $1750 at stake it is probably worth it to take some legal advice.
You don't indicate whether the new management company actually ever offered you OR accepted your application. You applied to rent but did they accept your application? That raises the question of whether or not a contract has been concluded and until an offer that has been made is accepted--can it be withdrawn (my view is yes, it can). Assuming that your application was accepted and they recognize that you are resiling from the lease (refusing it), what is their response specifically? You say they stated that they are not giving you your money back. Okay, but what is the specific reason? If we were meeting in person I'd ask you this question while at the same time looking at the application you filled out (that hopefully you have a copy of). I'd be looking for and listening for words like "penalty", "forfeit", "cancellation fee", or something similar. Words like this--with the meaning of that word applied to your deposit--virtually guarantees that you get it back. It is illegal to apply a deposit to anything other than rent--any other kind of charge (forfeiture, penalty, cancellation fee) is simply illegal. I've often found offending language in the rental application forms. Beyond that, I'd also consider the obligation of the landlord to seek to re-rent and mitigate damages. In this rental market (hot hot hot) it seems unlikely that the unit you applied to would stay vacant for very long. Presuming a valid lease, no offending language, then the duty to mitigate still applies--which would be triggered by your clear indication that you're not taking the unit.
There may be additional grounds and issues that arise depending on what the foregoing bears out. If it doesn't go well and the landlord tries to hold you to a fixed term lease of a year (presumably that was what you applied for), there is still an "out" based on the standard form lease that needs to be proffered. Arguably, until the standard form lease is put to you and you get a chance to review the terms you could argue that there is no lease formation. That will be argued against based on the application to rent (being construed as an offer to rent from you to the landlord). It would be very interesting to see if the application to lease contains all of the lease conditions of the Standard Form Lease and any of the additional conditions they attach to it. If the fulsome terms of the tenancy were not disclosed in the application it makes for an interesting argument that there is no meeting of the minds and no conclusion of the tenancy agreement. Again, from your comment there isn't enough information to be picking this apart--but there is enough here that I do recommend you pursuing legal advice from a lawyer or paralegal with experience in Landlord and Tenant law.
Good luck
Michael K. E. Thiele
www.ottawalawyers.com
Hello, I moved into my apartment in March of last year, I paid first and last months rent & signed a 1 year lease, and now I’m on month to month basis however, my landlord just sold the house and we aren’t required to move out but this month is my last month with her as my landlord so i am wondering if I am to pay her this last month or if my last months rent I paid last year covers that?
ReplyDeleteHi Kayla:
DeleteThe deposit (LMR) will transfer to the new owner who is also your new landlord. The LMR may only be used for the actual last month of the tenancy. The last month is NOT the last month of your fixed term--it is the last month of the actual tenancy which includes the month to month portion of your stay at the premises. You may wish to confirm with the new landlord (when you have their contact) that there is an LMR on deposit and if you haven't received the interest due on your deposit that you are owed interest.
Michael K. E. Thiele
www.ottawalawyers.com
HI MICHAEL,I would like to know if I can legally withhold my next 2 months of rental cheques?My landlord gave me almost 3 months verbal notice in early
ReplyDeleteapril as he will be selling the condo I am renting from him.From my understanding of the landlord tenant act he has to compensate me for an extra month when selling and he also has the LMR checque for as well.He said he will compensate the monies but I am feeling uneasy with the situation.What do you recommend I do?
Your comment reveals a common misunderstanding. Your landlord can not ask you to leave just because they are selling the rental unit. The only way that you can be asked to leave (because of a sale) is with a Form N12. Insist on getting that form. If you read it closely you will see that the landlord needs to have already entered into an agreement of purchase and sale and the purchase has to have indicated to the landlord that they wish to live in the rental unit (and therefore ask the landlord to serve the N12). There is no way to terminate a tenancy for the purpose of listing, marketing and selling.
DeleteOf course, there is nothing stopping you from making a deal with the landlord to move out so that the unit can be sold. Typically though, if you are making a deal like that, you would ask the landlord for a bit more compensation. That compensation can frankly be whatever amount the landlord is willing to pay. The value in you moving out is that the landlord can freshen up the apartment, perhaps paint, stage, and light it in the best possible way. Making it "move in" ready and immediately available will probably result in the landlord getting a much higher sale price. As a result, you willing to move out sooner (when not required) is something that has financial value.
Hi Michael,
ReplyDeleteI have a few questions that Im hoping you can help with.
We have 2 tenants that signed a lease agreement for January 1st, 2023 to December 31st, 2023. Both names are on lease agreement. We collected first and last month's rent.
Tenant A sent us a text and said that he will be moving to another city for work and asked if there are any changes that need to be made in our lease agreement. He found another person to take over the remainder of the lease(6 months left) and stated that he would like to move out in 2 weeks. No forms submitted to us.
My questions:
1. Do we need to give him his last month's rent back? And if so, would it be for half the amount of the last month's rent since he is 1 of 2 people on lease agreement?
2. Do we need to sign a new lease agreement with the new tenant taking over or can we just have something in writing that states tenant A is leaving, new tenant is taking over and tenant B acknowledges the changes?
Thanks so much
Thanks for this question and giving enough detail to allow an answer.
DeleteThe lease you have with these 2 tenants (on one lease) has not been lawfully terminated. The fact that the tenant is moving out does not change the fact that he remains a tenant or at least a person with continuing liability for the lease. That liability (for this tenant) continues until the tenancy is lawfully terminated. That only happens if you 1) agree to terminate, 2) if the tenants serve an N9 terminating the tenancy with 60 days notice to the end of term, or 3) if you agree to modifications.
As to your questions: 1) no, you do not need to return his LMR. The LMR is for the last month's rent. That is the lawful last month of the tenancy. That means the entire tenancy. 2) You do not have to sign a new lease nor do you have to sign any document at all. The fact that "A" is leaving does not change anything for you (or it does not have to). What happens is that "B" now decides whether to take in a roommate or not. If new person found by "A" (let's call that person "C"), is acceptable to "B" then you can agree, if you like, to swap "A" for "C" on the lease. But you are not obligated to do so. "C" could simply become a roommate of "B". "A" remains liable to you. "C" is legally a stranger to you but you have no control over whether "B" has a roommate or not. The point is that you can not be forced to swap out "A" for "C".
This might seem unfair to some people. However, you can have very good reasons not to swap out tenants. Maybe you don't want to release "A" because "A" is the only tenant of the two that was credit worthy. Maybe, you'd be happy to allow this lease to slowly end as you can put the unit back on the market when "B" leaves and get a higher rent--which is a reason not to give "C" status as a tenant.
Your fixed term lease of one year will renew automatically and indefinitely on a month to month basis. This happens without your consent or agreement. Swapping out tenants for new tenants can have the effect of creating a tenancy that never ends by the tenants moving on. This is fair enough if you have no need take over the unit, no desire to sell it, and the rent you are getting reflects a fair market rent. If you let the tenancy turnover--when "B" decides to move on you can re-set the rent to market value and at that time consider renovations/upgrades (perhaps to increase value) and also decide whether to sell the unit or move in. So long as you swap out leaving tenants for new tenants without ending the tenancy in between you are limited in what you can do with the unit as the tenants have significant legal rights.
Michael Thiele