If you are looking for information respecting the nature of a guarantee or the obligation of a co-signer with respect to residential leases governed by Ontario's Residential Tenancies Act then I am pleased to offer these comments.
A guarantor in the residential leasing context is understood to be a person who agrees to pay the rent for a tenant should the tenant fail to pay the rent owing to the landlord. Sometimes, it is also assumed that a guarantor is responsible for damage to the rental unit or complex and any other expenses arising out of the leasing arrangement. In the rental housing context, the word guarantor is often used interchangeably with the concept of a co-signer. Often enough, a residential lease contains a line at the end of the lease for the guarantor or co-signer to sign with the notation of "guarantor" or "co-signer" beside the line on which that person is expected to sign.
Some leases contain a line or paragraph about the co-signer or guarantor. I have seen a great many versions of so called "standard" clauses and generally find that these clauses are vague and often enough don't spell out the expectations of the guarantor or what the guarantee actually guarantees. As well, the lease clauses sometimes direct that the guarantor or co-signer who is being asked to sign the lease will also sign a separate document that is the guarantee and then, when you look for that document, you discover that no such document was ever signed or prepared.
The law of guarantee is quite complex and there are many aspects to the law that go well beyond the scope of a typical residential landlord and tenant law guarantee. That being said, there are certain basic requirements for any guarantee to be enforceable against a guarantor. The most important thing, I think, is the requirement for certainty of terms so that it is clear that there was indeed an agreement between the parties and that the nature of that agreement is clear. Where this is missing there is a willingness, with exceptions, in the Courts to find that a guarantee is void for vagueness.
As indicated, the technical side of guarantees are many. This article concerns itself with guarantees and the Residential Tenancies Act and what you need to know about the Landlord and Tenant Board's authority to deal with a guarantor, make findings respecting the guarantee, and make orders based on it.
It seems settled that a guarantor is not a tenant. The case of Kar v. Chung [2001] O.J. O.J. No 3817 (Ont. C.A.) speaks to this proposition and the same proposition is reflected in the Landlord and Tenant Board interpretation Guidelines on Eviction for Failure to Pay Rent. Guideline 11 states in part that the Landlord and Tenant Board will not make an order against a Guarantor even where the granting of the tenancy to the tenant was conditional on the tenant having a guarantor. As a result, a landlord may not expect to receive an order against a guarantor for unpaid rent even if the lease is drafted in such a way as to make it appear that the guarantor is a tenant. While a lease may provide for a right of occupancy on the part of a guarantor and hence they are arguably tenants no one actually expects the guarantor to occupy the premises as a tenant. Not being in occupation further limits the Board's jurisdiction to make an order even if the guarantor were considered to be a tenant.
The Kar decision referred to above provided an interesting explanation of the effect of a guarantee clause contained in a written lease. The decision is very short so the endorsement is reproduced below in its entirety:
What should be learned from this endorsement (which remains as the law today under the Residential Tenancies Act even though the case was decided under the Landlord and Tenant Act), is that the nature of the guarantee and the extent of it must be clearly expressed. The automatic renewal of a fixed term lease to a month to month lease does not renew a guarantee.
Another consideration in relation to guarantees is the circumstances under which a landlord may require a tenant to provide a guarantor. In my view, the circumstances under which a guarantee is required may indeed lead to arguments that the guarantee was illegally required and hence is not enforceable. A context in which this argument may arise is when a landlord automatically requires a guarantor for particular types of tenants. In a policy on Human Rights and Rental Housing, the Ontario Human Rights Commission discusses discrimination against young people by landlords. Discrimination against young people can take many forms but one of those ways is to require all young people to provide a guarantor as a matter of policy. People as young as 16 are entitled to rent and can not be refused because of their age. If a landlord responds to a young person's rental application with an automatic requirement for a guarantor I think a clear case of discrimination is made out as it is quite likely that a 16 year old is looking for an apartment of their own (and one their own) because they do not have people in their lives who are prepared to act as guarantors.
For people considering whether they are prepared to become a guarantor they should understand that a landlord may not act quickly in evicting for non-payment of rent or that a landlord may not take steps that seem reasonable to minimize the accumulation of rent arrears. The landlord may also not tell the guarantor about problems in the tenancy and the guarantor may feel that the lack of involvement in the tenancy and problems in the tenancy should disentitle the landlord to claim against the guarantor. For the most part, these concerns and arguments will carry little weight--unless of course there are negotiated terms respecting what the landlord will do vis a vis the guarantor.
SUMMARY
Guarantees have many technical aspects and the fundamental principles of contract law are important in determining respective rights and interests. However, technical arguments tend not to be effective when landlords sue guarantors if the circumstances of the guarantee are such that it is fairly and reasonably understood from the documentation what the guarantor was agreeing to do. Signing a guarantee is a serious matter and the liability for that signature can very quickly represent thousands of dollars in unpaid rent and/or damages.
Michael K. E. Thiele
www.ottawalawyers.com
A guarantor in the residential leasing context is understood to be a person who agrees to pay the rent for a tenant should the tenant fail to pay the rent owing to the landlord. Sometimes, it is also assumed that a guarantor is responsible for damage to the rental unit or complex and any other expenses arising out of the leasing arrangement. In the rental housing context, the word guarantor is often used interchangeably with the concept of a co-signer. Often enough, a residential lease contains a line at the end of the lease for the guarantor or co-signer to sign with the notation of "guarantor" or "co-signer" beside the line on which that person is expected to sign.
Some leases contain a line or paragraph about the co-signer or guarantor. I have seen a great many versions of so called "standard" clauses and generally find that these clauses are vague and often enough don't spell out the expectations of the guarantor or what the guarantee actually guarantees. As well, the lease clauses sometimes direct that the guarantor or co-signer who is being asked to sign the lease will also sign a separate document that is the guarantee and then, when you look for that document, you discover that no such document was ever signed or prepared.
The law of guarantee is quite complex and there are many aspects to the law that go well beyond the scope of a typical residential landlord and tenant law guarantee. That being said, there are certain basic requirements for any guarantee to be enforceable against a guarantor. The most important thing, I think, is the requirement for certainty of terms so that it is clear that there was indeed an agreement between the parties and that the nature of that agreement is clear. Where this is missing there is a willingness, with exceptions, in the Courts to find that a guarantee is void for vagueness.
As indicated, the technical side of guarantees are many. This article concerns itself with guarantees and the Residential Tenancies Act and what you need to know about the Landlord and Tenant Board's authority to deal with a guarantor, make findings respecting the guarantee, and make orders based on it.
It seems settled that a guarantor is not a tenant. The case of Kar v. Chung [2001] O.J. O.J. No 3817 (Ont. C.A.) speaks to this proposition and the same proposition is reflected in the Landlord and Tenant Board interpretation Guidelines on Eviction for Failure to Pay Rent. Guideline 11 states in part that the Landlord and Tenant Board will not make an order against a Guarantor even where the granting of the tenancy to the tenant was conditional on the tenant having a guarantor. As a result, a landlord may not expect to receive an order against a guarantor for unpaid rent even if the lease is drafted in such a way as to make it appear that the guarantor is a tenant. While a lease may provide for a right of occupancy on the part of a guarantor and hence they are arguably tenants no one actually expects the guarantor to occupy the premises as a tenant. Not being in occupation further limits the Board's jurisdiction to make an order even if the guarantor were considered to be a tenant.
The Kar decision referred to above provided an interesting explanation of the effect of a guarantee clause contained in a written lease. The decision is very short so the endorsement is reproduced below in its entirety:
E N D O R S E M E N T
Released Orally: September 25, 2001
[1] We disagree with the reasoning of both Mr. Justice Murphy and the Divisional Court.
[2] The lease was entered into on May 4, 1997 and it was to expire on May 4, 1998, subject to the tenant’s right to renew for another year on giving 60 days notice. The tenant did not give notice. The Landlord and Tenant Act R.S.O. 1990, C. L.7 was then in force. Section 104(1) of that act provided as follows:
Subject to subsection (2), upon the expiration of a tenancy agreement for a fixed term, the landlord and the tenant shall be deemed to have renewed the tenancy agreement as a monthly tenancy agreement upon the same terms and conditions as are provided for in the expired tenancy agreement.
[3] The legislation does not purport to affect or apply to guarantors. The guarantor in this case is not deemed to have done anything. There was no language in the guarantee itself dealing with renewals. In those circumstances it seems to us that the guarantee expired at the end of the first year.
[4] Part of the award of the Divisional Court was for damage to the premises. There was no evidence whether it occurred during the first year or after the guarantor’s liability had ceased.
[5] In these circumstances the order of the Divisional Court is set aside and the judgment of the trial judge restored. The tenant is entitled to her costs here and below. Those costs are fixed, on consent, at $5000.
What should be learned from this endorsement (which remains as the law today under the Residential Tenancies Act even though the case was decided under the Landlord and Tenant Act), is that the nature of the guarantee and the extent of it must be clearly expressed. The automatic renewal of a fixed term lease to a month to month lease does not renew a guarantee.
Another consideration in relation to guarantees is the circumstances under which a landlord may require a tenant to provide a guarantor. In my view, the circumstances under which a guarantee is required may indeed lead to arguments that the guarantee was illegally required and hence is not enforceable. A context in which this argument may arise is when a landlord automatically requires a guarantor for particular types of tenants. In a policy on Human Rights and Rental Housing, the Ontario Human Rights Commission discusses discrimination against young people by landlords. Discrimination against young people can take many forms but one of those ways is to require all young people to provide a guarantor as a matter of policy. People as young as 16 are entitled to rent and can not be refused because of their age. If a landlord responds to a young person's rental application with an automatic requirement for a guarantor I think a clear case of discrimination is made out as it is quite likely that a 16 year old is looking for an apartment of their own (and one their own) because they do not have people in their lives who are prepared to act as guarantors.
For people considering whether they are prepared to become a guarantor they should understand that a landlord may not act quickly in evicting for non-payment of rent or that a landlord may not take steps that seem reasonable to minimize the accumulation of rent arrears. The landlord may also not tell the guarantor about problems in the tenancy and the guarantor may feel that the lack of involvement in the tenancy and problems in the tenancy should disentitle the landlord to claim against the guarantor. For the most part, these concerns and arguments will carry little weight--unless of course there are negotiated terms respecting what the landlord will do vis a vis the guarantor.
SUMMARY
Guarantees have many technical aspects and the fundamental principles of contract law are important in determining respective rights and interests. However, technical arguments tend not to be effective when landlords sue guarantors if the circumstances of the guarantee are such that it is fairly and reasonably understood from the documentation what the guarantor was agreeing to do. Signing a guarantee is a serious matter and the liability for that signature can very quickly represent thousands of dollars in unpaid rent and/or damages.
Michael K. E. Thiele
www.ottawalawyers.com
Hi Michael,
ReplyDeleteFirst of all, I would like to thank you for your so helpful blog, and I started to read this from a long time ago. I am a tenant of an apartment in Waterloo, Ontario. My fixed term lease will end on September 31st and after that it should be a month to month tenancy. I want to move out and assign the apartment to my friend, so I talked to the management office. However, the staff told me I couldn't do that because I am in a month to month lease now unless my friend signs a new one-year lease. Because my friend just wants to live there until December 31st, so he doesn't want to sign a new lease. I know it is a special or weird situation, do you think if it legal for me to assign the apartment when I am in a month to month tenancy?
Thank you for your precious time and great help!
Hi: Your comment states that you wish to move out but it does not make clear whether you have given a Notice of Termination or not. Your lease end date of September 30 (not 31st) does not mean that your lease is ending unless you have given 60 days written notice to the end of term. If you haven't done that yet your earliest termination is November 30 at this point (as we are in mid-September).
DeleteThere is nothing stopping the landlord from taking your friend on as a month to month tenant on an assignment. It's not an impossibility to assign a month to month tenancy. That being said, a landlord may simply not want to assign the rental unit as the may believe they can get a higher rent by putting the unit back on the market. The landlord has the absolute right to refuse an assignment. The refusal gives you the right to terminate the lease earlier than your otherwise legally required notice date.
So yes, it is legal for you to seek to assign the lease--even on a month to month. However, it is also legal for the landlord to refuse the assignment thereby triggering your right to terminate the lease sooner.
Good luck
Michael K. E. Thiele
A few years late here but I just wish to reply that this is not completely correct. The landlord has a right to refuse assignment but under Section 95 subsection (5) A landlord shall not arbitrarily or unreasonably refuse consent to an assignment of a rental unit to a potential assignee.
DeleteHi: Thank you for commenting, this is the kind of debate I'd hoped for when I started this blog. I appreciate your correction but must disagree with the point you are making. There is indeed an absolute right to refuse an assignment of a tenancy. This is reflected in section 95(2)(b) and 95(3)(c). In any scenario dealing with an assignment request the landlord can always say "no" for any reason. This is because the refusal to allow an assignment to anyone triggers a right in the tenant to terminate the lease.
DeleteThe section you are citing (s. 95(5)), does say what you indicate but it applies only in very specific circumstances. S. 95(5) is triggered if the tenant asks the landlord to assign the tenancy agreement and the landlord says "yes" you may assign (and no, I am not refusing an assignment). Because there is no "refusal" to the assignment request (generally or specifically), the tenant if they wish to "get out" of the lease must find an assignee. When the tenant finds an assignee, it is only then that the landlord may not arbitrarily or reasonably refuse to consent to an assignment of that potential assignee.
The premise of this requirement is that the landlord is holding the tenant to the requirements of the lease term. The landlord is not letting the tenant out of the lease nor agreeing to terminate. Hence, if the tenant wants out they need to find an assignee. It is only then that the landlord can't become ridiculously picky or unreasonable so as to make an assignment of the lease impossible. If the landlord were entitled to be arbitrary and unreasonable then the tenant would be stuck in the lease without any option.
Michael K. E. Thiele
www.ottawalawyers.com
Hi there,
DeleteQuick question. I was asked to co sign or be guarantor for my 21 yr old son. He is looking to move in August 1 with two other people. All three will be on the lease, and the parents of the other two will co sign.
My issue us two fold. As a tenant are they all not jointly responsible for the full rent? Not just 1/3 in their case? And just because three parents are signing, would we not be responsible for all, not just our child's portion.
Is it possible to arrange a schedule A for the standard lease agreement stating that each parent is only responsible for the rent portion of thier child?
If not, how can I protect myself if the two others break the lease on my son?
Thanks so much.
Hi: The answers are likely what you fear. If there is one lease the liability is most likely joint and several. Any one tenant is liable for the entirety of liability flowing from the lease. This includes rent, damage to the unit, and all obligations under the lease. If you sign as guarantor you would be understood to be guaranteeing the obligations of your son for the duration of the guarantee (which now sometimes is drafted to extend beyond the first term of the lease and into the month to month period).
DeleteCan you limit the scope of a guarantee? Yes, it is a matter of negotiation. However, in circumstances where landlord's are renting to young people the entire point of the guarantee is to get protection for a collective or individual breach. The chance of a landlord making your guarantee less than the obligation of your son is unlikely. Yes, it is possible for your obligation to continue even after your son vacates the premises.
This is one of those things that the harder you look at it the scarier it becomes. Look at the roommates and look at the parents of the roommates. Are they decent respectable people? If so, and there is a problem, can you rely on them to take responsibility? More importantly, if there is a problem can you sue them and reasonably expect them to have assets to satisfy a judgment? If yes, then this might be the security you need to sign. If not, you may wish to think twice about this.
Michael K. E. Thiele
www.ottawalawyers.com
Sorry for the '31st' mistake... and I haven't given the notice to the landlord yet. Thank you very much for your quick and valuable response! I'll negotiate with the landlord again.
ReplyDeleteMy parents have co-signed a tenant agreement for a family member. The original fixed agreement expired in 2014, however the agreement appears to have reverted automatically to a month-to-month lease arrangement. The tenant is not responding to calls from the co-signer or landlord. Can you please advise if the co-signer is still obligated financial to cover the rent if the original agreement is now month-to-month; If the tenant cannot be reached can the eviction process begins, if a co-signer needs to pay the rent at what point do their obligations cease and what would occur if the co-signer cannot pay.
ReplyDeleteHi: Very seriously, the answer can be "yes" or "no". The wording of the guarantee is critical to the answer. Most "guarantees" are not properly drafted and technically the obligation ceases after the fixed term of the tenancy. However, there are exceptions and increasingly landlord's are incorporating guarantor language in the lease term that survives the expiry of the lease term. The updated language makes the guarantors liable right until the lease expires--including month to month.
DeleteYour parents can only know the extent of their legal liability by having a their guarantee reviewed by an experienced lawyer or paralegal.
Good luck
Michael K. E. Thiele
www.ottawalawyers.com
I wish to opt out as being a guarantor for a tenant. what is the procedure
ReplyDeleteHi: You need to look at the terms of the guarantee to see if it provides a way to terminate the guarantee. If not, then the guarantee is likely to continue for the length provided by the guarantee. If it is a serious issue for you then you should see a lawyer to have the guarantee reviewed to determine if it is still valid and what can be done to terminate it. The key lies in having the guarantee document itself available to be reviewed.
DeleteMichael K. E. Thiele
Hi Michael, I was living in Minto TOWNHOUSE. I am the co-signer and my friend is main lease holder. however i moved out of that place on December 1st 2015. Now i am trying to remove my name from the lease but Minto management says i need main lease holder to sign that he is ok with me leaving the premises and he can afford it by himself. But main lease holder is not willing to sign the papers so i am stuck in to this situation. i am not living to that minto townhouse anymore but my name is still on the lease as a guarantor. is there a way i can take my name off from the lease. please guide me through this. thanks.
ReplyDeleteHi Gagandeep: Guarantor clauses are actually quite tricky. I hope I understand you correctly. You were never a tenant on the lease or in the premises but just a co-signer or guarantor? This can be unclear from lease documents so it would be worthwhile to check. If you were a tenant under the lease and the lease term has expired you may have the right to terminate the lease and serve a notice of termination. If you never were a tenant then of course you have no right to terminate the tenancy.
DeleteYour obligations under an guarantee need to be closely looked at. Do the guarantee obligations survive the fixed term of the lease? You can tell this by looking at the lease and guarantee language. The landlord you name does have a fairly broadly worded guarantee document so it would be important to see what exactly you signed. If your guarantee does continue during the term of the tenancy it will take a termination of the tenancy to terminate the obligation or the cooperation of the tenant as the landlord describes.
Michael K. E. Thiele
www.ottawalawyers.com
Hello,
ReplyDeleteI enjoy your blog immensely and hope you could point me in the right direction.
What is the extent of a guarantor’s liability when the tenancy agreement fails to specify the details of the liability (ie: damage, rent) and the agreement points to a phantom collateral agreement that was never delivered?
Hi: Good question. I wish the answer was readily apparent. You have competing arguments about how to resolve these issues and competing legal principles come into play. Generally, a guarantee is required to be clear and detailed with respect to its terms in order to be enforceable. Combined with a contra proferentem argument (which I presume you know) the guarantee becomes worth less and less. I have had the very issue of the lease referring to a collateral agreement to be executed in relation to an intended guarantee and that collateral agreement never being drafted. My position was that in the absence of the collateral agreement the guarantee never came into being. That position was successful in that the counsel for the landlord decided not to proceed with the case. After that time, I had the same issue arise again with a similar result.
DeleteAll that being said, I've also been to trial on a guarantee where notwithstanding lack of details and specificity that you would expect the Court determinate that both parties knew what they were contracting about and to focus now only on the documents would be to disregard what they actually intended. Hence liability was found.
There are a great many cases interpreting the responsibility of guarantors and there are entire and sizeable legal texts dedicated to the topic. Doing the impossible and distilling it all down to a sentence or two, I'd say the absence of detail, specifics, and execution speaks against the existence of an enforceable guarantee with the caveat that an imperfect guarantee in the written form can be overcome with collateral evidence of the parties' intentions.
Michael K. E. Thiele
www.ottawalawyers.com
Thank-you for taking the time to respond, it was very helpful.
DeleteHi, Michael!! I have a situation that involves a guarantor of an apartment that I want to move into, and I could really use your help!
ReplyDeleteMy boyfriend moved into his apartment 8 months ago. His income is well enough to afford the place on his own, but his credit wasn't so they asked his grandfather to sign on as guarantor. We've been dating for a few years and want to move me into the unit. I have provided them with a signed version of his lease and my income information, but they are asking us to have his grandfather write a letter of permission to allow me to live in the unit. His grandfather knows we're dating, and approves of me moving in because he wants his own name off of the lease (from what I understand, he will no longer continue as guarantor once the 1 year lease is completed anyways). His grandfather is currently unavailable in general, so we can't get the letter from him right away.
What I am wondering, is does the landlord have the right to tell me that I can't move into his unit if I don't have the letter right away? Or at all? From what I understand from your other blog posts, landlords do not have the right to restrict or ban girlfriends, boyfriends, guests, etc from living in the unit with the listed tenant. An since his grandfather is not listed as a tenant, I'm assuming the same protection applies to us. We are considering moving me in on the down low, but what I am afraid of is whether or not they would have grounds to evict me. What little I was able to find said that they can't evict me if I move in unless his rent stopped being paid OR they could prove that I was interfering with the reasonable enjoyment of other tenants in the building. But since I've been living there part time for 8 months already, and that hasn't happened yet, it's not likely at all. And once his 1 year lease is over, his grandfather is no longer guarantor anymore anyways.
Please let me know if what I think is right, and if they really can or can not evict me if they find out etc thank you!!
Hi Naomi:
DeleteYou're bang on! Good luck with the move in.
Michael K. E. Thiele
www.ottawalawyers.com
i am a tenant in a highrise building..over the weekend my exboyfriend handed over a 60days notice to my landlord.he is only a co-signer not a tenant.my landlord(superintendant) refuses to show me the letter..i did call the head office and they stated that he can not hand in a 60 days notice due to him being a co-signer...what are my rights as a tenant
ReplyDeleteHi Shannon: If you are the only "tenant" on the lease then only you are in a position to terminate the lease. Your ex-boyfriend has not right to terminate your tenancy. The use of the word co-signor is sometimes confusing. It often means the same thing as guarantor. If your ex-boyfriend's only role was to be a guarantor for the rent and otherwise he was only an occupant of the unit (or not), then whether his attempt to terminate his guarantee is successful or not will depend on the wording of the guarantee that he signed. If there is no separate guarantee and he only signed on the lease as a "co-signor" without anything describing the obligations of a co-signor then it is arguable that he has no liability at all. Ultimately though, a co-signor is not a tenant and only tenants and landlords have the right to terminate or seek to terminate the landlord and tenant relationship.
DeleteMichael K. E. Thiele
www.ottawalawyers.com
Hi Michael! First I want to thank you for your time, I learned a lot from your blog!
ReplyDeleteMy wife and I are living in Montreal and moving to Toronto in a month. We are both self-employees. Our credit score is excellent and incomes more than enough. Still the listing agent is asking for a guarantor based on the fact that we are self employees, isn't it a little discriminatory?
Hi Rene: This is a nuisance for sure. However, a landlord may require a guarantor. The key to the discrimination puzzle is whether the reason for the demand for the guarantor breaches the Human Rights Code. With the details you have provided I have nothing to go on to say it is discriminatory and contrary to the Ontario Human Rights Code. "Self employed" people do not have Human Rights Code protections because of their self employed status--- as far as I can see. This means that nothing in the Human Rights Code prevents discrimination against the "self employed". If you want to see the protected grounds and see whether any of those capture you--take a look at the Ontario Human Rights Code on www.canlii.org. It is a free search.
DeleteGood luck
Michael K. E. Thiele
www.ottawalawyers.com
Hi there again! I commented above a couple of weeks ago and had another question! Thank you for answering!
ReplyDeleteI found the guidelines for landlords, tenants, occupants and residential tenancies on the website for the Social Justice Tribunal of Ontario. My boyfriend finally ended up finding a copy of the lease that he signed for his apartment unit. I'm having doubts about the legitimacy of it, and how much control they have over whether or not I can live there as an occupant. The SJTO guidelines state that occupants can live in the unit so long as they have the permission of the tenant that lives there, to live with them. That occupants don't have to sign a contract with anyone, or necessarily get landlord permission either, just tenant permission.
Our issue is that we were told that his grandfather was the guarantor. But when we found his lease, his grandfather was listed as both a tenant, occupant AND guarantor. The lease has nothing about guarantor or co-signer responsibilities listed in it, too. They literally just hand wrote "guarantor" underneath his grandfather's signature. His grandfather has never been a tenant or occupant of the unit, or paid rent for the unit, so I'm confused as to how they are allowed to list him on the lease in that way. Either way, though, my boyfriend is also listed as a tenant and occupant, so I'm assuming I'm still allowed to move in with his permission either way?? The way they even had them both sign the lease is questionable. My boyfriend's signature is on 3 of the 4 witness and agreement lines, and his grandfather signed the last line and they wrote "guarantor" under it. The landlord was trying to get me to a) sign the lease as a tenant and b) saying that I had to have the grandfather's permission to live there at all. Even though as an occupant I don't have any contract, and I'm not responsible for the rent, damages, complaints, etc. so he wouldn't be liable for me anyways.
Hi: I think you have the right sense of it. If your boyfriend is fine with you moving in you don't need to have any else's permission. The landlord can not insist that you sign on as a tenant and can't interfere with you being there with your boyfriend. The issue with the grandfather is likely a red-herring (i.e. meaningless). It sounds like the intention with the grandfather was that he is a guarantor and not a tenant. Without any clauses extending his liability as guarantor beyond the first fixed term his obligation is likely over if your boyfriend is on a month to month tenancy now.
DeleteMichael K. E. Thiele
www.ottawalawyers.com
Hi, I have a question on lease renewal.
ReplyDeleteMy first year term is finishing in October. Renewing clause of my lease reads "the tenant reserves the right to have first option of renewal of the lease for a further 1 year term with any increase to be governed by the rent control board. The tenant will give the landlord written notice of intention to exercise his right to renew no latter than 3 months prior to termination date of lease. Otherwise the right of the renewal shall be null and no effect".
Personally I want to live for a couple of years but I don't want to stick to Oct renewal date (due to school year). Would my lease be renewed for an year in case I give intent to renew? Would it be renewed as month-to-month keeping in view Residential Tenancies Act clause 38 if I don't give intent to renew? What could be the best strategy to get a renewal on month-to-month basis?
2nd part of my question is if rent goes up every year by the amount set by rent control board?
Thanks in advance for your guidance
Hi: I'm presuming of course that you are in Ontario. In Ontario you do not have to do anything at all to continue your tenancy on a month to month basis. You simply continue on living in the unit and paying your rent. When you want to terminate you will give a Notice of Termination (use a form N9). If the landlord wants to increase the rent then the landlord will have to serve a Notice of Rent Increase in Form N1. If the landlord asks you if you are staying you can, of course, simply say yes. I think what the renewal clause is trying to get at is to give you a fixed term of 1 year--so that you are not on a month to month. Fixed terms can be useful in small buildings where landlords may decide to move in or where significant repairs are expected---for a fixed term like a year the tenancy can not be terminated earlier than the end of the year for non-cause grounds. On a month to month the tenancy could be terminated on proper notice.
DeleteThe amount of the yearly rent increase is set by the government. You can see the annual amount on the Landlord and Tenant Board website. This will apply unless your unit is exempt from rent control.
Michael K. E. Thiele
www.ottawalawyers.com
Thank you very much for your guidance. I have gone through your others posts as well. Your blog is are very useful.
DeleteP.S Yes, I am in Ontario.
Hello .. My boyfriend is a guaranteeing
ReplyDeleteOn a place for my daughter. My daughter moved out after many fights with a exboyfriend and police called. The superof the builed told her that is the best thing to do and also but the elevation on hold for her to move out ... So now the builed mangment is calling my boyfriend after 3yrs for the rent that she didnt pay .she has hit rock bottom and lost her kids. So she dont have money to pay .dose he still have to pay this and can they take it from his pay .. Please help
Thank you Debbie
Hi: It is important that your boyfriend get legal advice before admitting or acknowledging any aspect of this alleged debt. There are some technical defences here including an argument that any debt is statute barred--so long as the debt is not acknowledged as owing. The full answer to your question can only be provided after meeting with your boyfriend and reviewing the guarantee clause. Many guarantee's expire after the first full year term of the lease unless specifically renewed. Also, many guarantee clauses are vague enough that one has no idea what the guarantee refers to. It is also unclear whether your daughter's ex boyfriend continued to occupy the rental unit after she moved out. If so, there may indeed be a claim against him. If he didn't stay and your daughter simply moved out it is arguable that the landlord agreed to terminate the tenancy by conduct. If the rent being claimed is for a period after your daughter moved out then arguably there is nothing owing. As you can see there are a lot of variables. Your boyfriend should not deal with the landlord until he gets legal advice. If money is an issue, try a local community legal clinic.
DeleteGood luck to you
Michael K. E. Thiele
www.ottawalawyers.com
Just wondering, after the first year of a lease where you have a cosigner. Once the lease has ended, and the renter has had a good record/standing with the landlord is a cosigner still required for the renter? Can the cosigner be released from their responsibility and no longer associated with the lease? Or is that up to the landlord/property management?
ReplyDeleteThanks,
C
Hi Clayton:
DeleteA co-signer is generally understood to be a guarantor of the tenant's obligations under the lease. Most often that is understood to be for payment of rent in the event that the tenant does not pay the rent. There is some discussion about co-signers being responsible for all of a tenant's obligations--which may include liability for damage caused wilfully or negligently by anyone allowed on the residential complex by the tenant.
The problem with many "co-signer" agreements is that there is no actual agreement. Often enough, the lease simply has a separate line for the co-signer to sign and the words "co-signer" are written after their name. When this is the case what has the co-signer agreed to? It is a mystery and as you begin to try to answer the question you end up trying to figure out what was in the minds of the parties when the document was signed. I think it is fair to say that most co-signers think that they might be on the hook for rent arrears by signing but equally, I think most co-signers would be surprised to think they could be on the hook to pay for wilful or negligent damage of anything in the residential complex caused by the tenant or any of his or her guests.
When you look at the law of guarantee one sees that the law requires the terms of the guarantee to be clearly set out in order for it to be a valid guarantee. A lease which only uses the word "co-signer", "guarantor", or other such word with nothing else would not seem to meet the requirements of a valid guarantee. That being said, the reality is that guarantors are often successfully pursued in Small Claims Court with vague written agreements or effectively one word agreements based on the presence of the word "co-signer" or "guarantor". The inquiry, in many cases, seems focused on what the parties had in their minds when they signed the lease document.
Specifically to your question. We have relatively recent appellate authority that makes it clear that a guarantee or co-signer agreement in the nature of a guarantee expires at the end of the fixed term of the lease. Hence, once the lease goes month to month, the guarantee expires and is unenforceable against the co-signer. The tenant can not be required, as a condition of maintaining the tenancy , to get another co-signer--even if the payment history was poor or there were other problems.
Due to the clarity of the appellate authority on guarantees not automatically renewing or continuing with the statutory month to month tenancy after the expiry of the fixed term you do now see landlords preparing guarantee clauses that purport to continue until the tenancy is terminated (i.e. the guarantee continues into the month to month all the way to the end of the tenancy). The law suggests that the terms of the guarantee are important and that the landlord and guarantor can choose the contract language and be bound to it. Hence, wording that continues the guarantee after the expiry of the initial fixed term (usually one year), is presumptively enforceable subject only to other defences afforded in this area of the law.
Michael K. E. Thiele
Quinn Thiele Mineault Grodzki LLP
www.ottawalawyers.com
My sister was the guarantor on a town house. After the year she sent a registered letter to remove herself. She received a text not long after from the tenant my daughter stating she had to move by april as she was no longer the co signer and did not have another one. On june 26th in the mailbox there was an order stating arrears of 955.73 from february plus compensation of 6237.20 . my sister was never notified of any of this also they have her named as a tenant on the lease. She was only ever a guarantor not a tenant.
ReplyDeleteHi Lorraine: It is difficult if not impossible to comment on the rent arrears and the compensation (is the compensation rent arrears or damage at $6237?--that is a lot of money for a one year lease). Your daughter did not have to move simply because your sister sought to terminate her guarantee. This is not a ground for termination of the tenancy by the landlord. Hence, as long as your daughter continued to meet the obligations under the tenancy she would have the legal right to continue the tenancy. Of course, meeting the obligations appears to be the problem with an order for $955.73 plus $6237 (roughly $7200) being made against your daughter.
DeleteI presume that the order that arrived in the mail was from the Ontario Landlord and Tenant Board? If so, your sister has recourse and you've identified the issue---your sister was never a tenant and did not occupy the premises. On this basis she could file a Request to Review with the Landlord and Tenant Board to have her name removed from the Order. If the facts are as you describe she will win that almost automatically. Given the passage of time she will likely need to file an extension of time request with the Request to Review. The forms are on the Landlord and Tenant Board website. Once she gets her name removed from the Order it is no longer an Order against her.
While this solves the problem in the short term, the question really turns on what this $7200 is? Can I assume your sister has a bit of an issue with your daughter? Have they spoken about the legitimacy of the landlord's demand? Anyway, I'll leave that dispute to your family.
Once your sister gets her name removed from the Order the landlord could decide to make a demand of her for what is owed. Your sister can ignore it and then the landlord could sue her--likely in small claims court. Your sister, can defend the claim and at the same time sue your daughter to indemnify her for anything that your sister has to pay to the landlord.
Whether your sister has a defence to the landlord's claim against her is something that needs to be reviewed in a lawyer's office. There are many defences and you might be surprised what is available. Of course, if it is pure rent, the defences will be rather limited and you might be looking for defences based on the nature of the guarantee. Again, something that needs to be reviewed with a lawyer.
Good luck to you and the "stress" that I'm sure this has caused in your family.
Michael K. E. Thiele
www.ottawalawyers.com
Quinn Thiele Mineault Grodzki LLP
Hello Michael. Great site thank you for all your information.
ReplyDeleteCan retired seniors be guarantors to their daughter and husband who are trying to live and rent in Ottawa.
Thanking you in advance
Keith
Hi Keith: There is no legal test for who may or may not be a guarantor. Retired seniors may certainly be guarantors--and in fact often are. Whether a person is acceptable as a guarantor has more to do with the pocketbook than anything else. It will be the landlord who determines whether the guarantee offered by the proposed guarantors is acceptable or not.
DeleteCheers
Michael K. E. Thiele
www.ottawalawyers.com
Hello Michael:Further to your above response to Keith, can an Ontario landlord require that a guarantor provide proof of income? I have already voluntarily provided a full credit report.
ReplyDeleteThank you in advance.
Guy
Hi Guy: I can't find anything that would prohibit such a requirement. I think a problem may arise where the requirements on the guarantor exceed requirements that can be used to select a tenant as you then get into human rights grounds. Query if a demand or criteria required of a guarantor, that could not be required of a prospective tenant on Human Rights Code grounds, not be argued to be discrimination under the HRC? I don't see a problem with proof of income per se, but how that is used as a tenant selection criteria can be a problem.
DeleteMichael K. E. Thiele
www.ottawalawyers.com
Hi Michael: I have signed a lease as a guarantor for my son and his room-mate. There did not seem to be much choice in the matter as my son needed a place to live. He is on ODSP. I believe his room-mate is also on same. ODSP pays the landlord directly as per my son. He has never defaulted. His room-mate has defaulted but then paid up so has no outstanding owing. I believe the room-mate is now setting up third party payments as well. The lease terminates September 1, 2016. They intend on continuing to occupy the apartment month to month or, if required, perhaps sign another lease. I wish to terminate my responsibility. The guarantor clause is worded thus: "The Guarantor agrees with the landlord that this Guarantee shall remain in force so long as the Tenant remains in possession of the premises, whether under this lease or any renewal or extension thereof, or under operation of law."
ReplyDeleteMy question is this therefore: Can I submit my intent to terminate my guarantee even if my son and his room-mate extend their stay after the expiration of the lease; ie., Sept. 1)?
Hi: This is a difficult question to answer. For many years the wording of guarantees were vague about what happened after the expiry of a fixed term. As the article above indicates, the law generally found those guarantees to expire with the term and not continue on into the month to month portion of the lease that automatically continues beyond the expiration of the usual one year term. The key, according to the caselaw was the clarity of the terms of the guarantee.
DeleteIn your situation the guarantee clause contemplates the expiration of the one year fixed term and the extended month to month. It purports to continue so long as the tenancy continues. Clearly, it is the intent that your responsibility continues until the tenancy ends. There does not appear to be any "opt out" clause or limitation to the duration for your guarantee. I don't have any particular expertise in the law of guarantee and perhaps there are ways to "cancel" a guarantee. However, I am not aware of any ways to unilaterally cancel a guarantee that is being relied upon by the person benefitting from the guarantee. Some research is needed and I can tell you that this area of the law (Guarantee) is incredibly complex.
If it is an issue of important for you and it seems unlikely that you will be able to cancel the guarantee I'd explore the question of why you were required to provide a guarantee in the first place. As your son is on ODSP his income is guaranteed and about as stable as it can get. The same is true of his roommate who is on ODSP. Was their credit terrible? Or was the requirement for a guarantor premised on the fact that he was on ODSP? Depending on the answers to this you may have a way of challenging the guarantee as having been improperly required. Take a read through the article above again to see what I'm thinking.
Good luck
Michael K. E. Thiele
www.ottawalawyers.com
Thanks Michael: My son came up with an idea. He wants to sign another lease at the end of the current one which expires as mentioned above in September 2016. This shifts the whole question so to speak. If he signs another one I won't guarantee it. So the question now becomes: "Can he insist on signing another lease upon termination of the first one now in effect?" In other words; does he have that prerogative? Thanks Michael!!!
DeleteHi is there a way to transfer the responsibility of a cosigner to another person through a lawyer that is separate from the initial agreement with the landlord? Using some other legal agreement that would be recognized by the landlord and a court of law or does the initial agreement with the landlord have to be amended and a new cosigner added?
ReplyDeleteHi Michael,
ReplyDeleteI am owed past due rent from my former tenant. He had a co-signor on his lease. Unfortunately, I had to go with legal proceedings to remove him for non-payment. In the contract that the co-signor signed included the following clause, "I/We understand that this co-signer agreement will remain in force throughout the entire tenancy even if the tenancy is extended or changed in its terms." Is the co-signor obligated to pay to pay beyond the fixed terms due to this clause? I'm looking into filing small claims to collect on the rent owed to me.
Thank you!
Hi: The question you ask is the ultimate question that is for the judge to answer. I can offer that in my opinion you're likely covered and have co-signor on the hook. Of course, the co-signor may have other ideas and may have defences to try or a legal angle not presently contemplated. Certainly, it seems to me that it would be reasonable for you to sue and beyond that you have to go with how the litigation unfolds. That you would adjust your position as the litigation unfolds is exactly how litigation works--it is quite rare for anything to be 100% clear the entire way through.
DeleteGood luck
Michael K. E. Thiele
www.ottawalawyers.com
Hello. Is it legal for my rent co-signer (my parents) to demand their own key to my place? Did one year lease now second year month to month. Waterloo, Ontario.
ReplyDeleteHi: This is not an issue that the Residential Tenancies Act deals with. As between you and your co-signor it is something for you to agree upon. This has very little to nothing to do with the landlord and tenant relationship between you and your landlord. What if the co-signor demanded a key to the unit from the landlord? I think that if the landlord provided a key to the co-signor that the landlord would be facilitating an illegal entry and a breach of privacy of the tenant. The landlord does not have a landlord & tenant relationship with the co-signor and hence it is very difficult to see the legal basis for the landlord to give the co-signor a key. Of course, there may be written terms dealing with access and keys and information that may qualify my general view that it is illegal to provide a co-signor with keys, access, or information. An immediate example that comes to mind is a situation where a tenant is being accommodated for a disability and the accommodation plan has the landlord providing information to the co-signor, access to the co-signor, etc., to facilitate compliance with the RTA.
DeleteThat being said, if the co-signor is a typical co-signor who is just guaranteeing the rent then I don't see how they could get a key.
Lastly, if you are in year two--take a look at your co-signor agreement. A typical co-signor agreement expires after the fixed term unless it explicitly provides that it continues in the month to month portion of the lease. Hence, your co-signors may no longer be co-signors depending on who the co-sign (guarantor) clauses are drafted. A co-sign/guarantee does not renew on a statutory basis.
Good luck
Michael K. E. Thiele
www.ottawalawyers.com
My girlfriend and I are thinking of moving in together. Both of us have terrible credit and my agent is asking us to get co-signors. I have one, but she doesn't. Can a landlord force us to BOTH have co-signors. My co-signor is willing to accept that he would be the only co-signor for the both of us. In other words, can a landlord force us to have two co-signors if my girlfriend is also on the lease? Or is one co-signor enough by law? And how would I enforce this through my agent?
ReplyDeleteJames: The number of co-signors that a landlord may require is not covered by the RTA. The issue of co-signors is frankly how comfortable does your co-signor make the landlord? Will your co-signor also co-sign the liability of your girlfriend? Your co-signor is likely already co-signing (i.e. agreeing to be responsible for the entirety of the rent and for any damage caused by your, your girlfriend or your guests)--but is that explicitly set out. If your co-signor is very strong the landlord may accept just one.
ReplyDeleteMichael K.E. Thiele
www.ottawalawyers.com
Hi....your blog is the best info about landlord tenant issues available. Thank you.
ReplyDeleteI was wondering if there is an official document available for a guarantor to sign, along with the new official required lease agreement, or can I just add the details to the lease?
Also, is it preferrable for me as the landlord to have the parent of a young couple added to the lease as a tenant although she will not live there, or have her sign ss a guarantor for the full term of tenancy? Thanks in advance.....Linda
Hi Linda:
DeleteThe new standard Form lease is awkward I think for inserting guarantor clauses and properly indicating the obligations of the guarantor within the document. You would need to attach additional clauses at the end of the document and I just don't think it works very well. My inclination would be to draft a Guarantee setting out clearly what the guarantor is guaranteeing and for what period of time. I would set out in the guarantee that the guarantor is guaranteeing rent for the initial term and for any continuation beyond the original term and throughout the time that the tenant(s) remain in possession and are found liable for the rent. Further, I would eliminate the need to evict or terminate immediately for non-payment of rent and do away with any requirement to notify the guarantor of any breach of the tenancy agreement. Further, I would emphasize that the guarantor is guaranteeing the performance of the payment of rent as well as all of the obligations of the tenants including damages caused to the rental unit and individuals through negligence, wilful conduct or accident.
Once you have that guarantee drafted I would refer in the guarantee to the fact that the tenancy agreement for the tenants for whom the guarantee is offered (which tenancy agreement would not be offered but for the guarantee), is attached. Then, sign and date etc., and provide copies all around.
Should you name the guarantors as tenants? That is an interesting proposition and I would simply say--go ahead. You will never be able to get an Order against those persons as tenants through the Landlord and Tenant Board as the Board requires the persons against whom it gives orders to be in occupation. However, the fact of signing as tenants can still make them liable as tenants in Superior Court (small claims or otherwise).
Good luck
Michael K. E. Thiele
www.ottawalawyers.com
Micheal,
ReplyDeleteI was wondering if a guarantor/co-signer agreement has an expiry.
The tenants were removed for non-payment from my property back in May 2015 by a landlord tenant board order. At the time we did not proceed legally with collection from the cosigner as they made a verbal agreement to make monthly payments of the balance. The cosigner stopped paying this past April 2018 but still owes me a good amount of money. Can I still use the original cosigner agreement and the landlord tenant board order to collect my money?
Thanks for your time.
Ali
Hi Ali: There are a few things going on here and I don't think I have enough information. You should see a lawyer or paralegal very soon as there is a time limit (statute of limitations) and you should take action before that time limit expires.
DeleteSome of my concerns are whether you have an actual Order that is binding on the guarantor/co-signor. You mention getting the property back for non-payment and by that I presume you got an Order from the LTB. If you did, was the guarantor also named in that Order? If so, I would be cautious about that Order as it is possible that the guarantor is not a proper party to that Order and could move to have it set aside. The LTB only has jurisdiction as between landlord and tenant--and then only as against tenants who are in possession at the time that the application is issued.
The standard limitation period in Ontario today is two years (for most causes of action). However, there are most definitely shorter limitation periods and one of those is one year for claims by tenants under the Residential Tenancies Act. The 2015 date is worrying because you are well beyond two years now--however, the date of April 2018, is possibly reassuring because a debt owed that is being acknowledged and paid typically (but not necessarily always) restarts the limitation period with each payment--meaning the payment in March or April of 2018 started a two year clock running. If you have a binding Order against the guarantor then there isn't the same limitation concern but as indicated, I'm not so sure that you can assume that to be the case.
My recommendation to you is that you collect all of the paperwork--lease, notices, Application to LTB, Order, guarantee or co-signer documents, communication with the guarantor (letter's, texts, etc.), and book a consultation with a lawyer or paralegal. They should be able to tell you exactly what you have (on reviewing the documents) and steps that you should take.
best of luck
Michael K.E. Thiele
www.ottawalawyers.com
Hello Michael,
ReplyDeleteMy daughter is a 3rd year university student in Peterborough, Ontario. She has been in an apartment for 2 years but will be moving at the beginning of May to a new place with 3 friends. The new landlord is requesting each of the 4 to have a parent sign as guarantor. The tenancy agreement states that the rent is $2200/month. It is not broken down per person. The page I am to sign states “I agree to act as guarantor of this lease and assume responsibility for all obligations herein agreed to for the tenant of the corresponding number above”. I take that to mean that that I am responsible for my own child, however I am concerned because the agreement states that the tenants will be responsible for any damages caused by themselves or their guests. How would a situation like this work if there were 4 guarantors? The other 3 parents have already signed the lease. My daughter has paid her own rent for 2 years but I would help her if she needed it. I just don’t want to sign a legal document that could make me responsible for damages or non-payment of rent by the other 3 tenants. Should I be concerned?
Thank you for your time.
Karen
Hi Karen: I can't say whether you should be concerned or not. The degree of risk is certainly dependent on the credit worthiness of the other tenants and their guarantors. Quite arguably--and I think it most likely--if you sign you are responsible for the liabilities of your daughter. Your daughter's liability is for the entire rent and for the entire unit. You would not be limiting your liability to some notional lease/4.
DeleteSome people out there might want to argue that the guarantee clause is vague and then certainly you can find cases and authoritative texts supporting the idea that a vague guarantee clause is worth very little. However, I have seen enough cases where the words are determined to be irrelevant and the inquiry is to what was reasonably intended. This guarantee is clearly intended to cover your daughter's responsibility. Interestingly, the clause appears to be silent as to the term of the guarantee. Unless the clause extends the guarantee beyond the term of the lease--the law generally expires the guarantee at the end of the term--even if the tenancy continues on a month to month after the expiry of the term.
Michael Thiele
www.ottawalawyers.com
Hey mike,
ReplyDeleteAwesome blog with tons of info, thanks for the effort!
I’ve got a question for you. I started renting a unit in December 2015 with another tenant. When we moved in we were asked to get a garenteer and my dad agreed to do it. Now it’s march 2019 and I’d like to move out. Is my dad still the garenteer of the lease? If I leave he doesn’t want to garenteer the apartment anymore. What’s going to happen with my roommate? Will he be allowed to stay on the month to month lease? Or will he need a new garenteer? Or will he have to reapply alltigether for the apartment again? (His credit is quite poor, collections and income tax debt)
Hi:
DeleteI understand your concern about your father getting stuck on a possible guarantee for your roommate with financial problems. However, bigger than that, I think is a potential problem in getting your tenancy legally terminated so that you are not also responsible for your roommates failure to meet his obligations on the lease. Simply moving out does not terminate your responsibility--regardless of whether your roommate agrees or not.
You need to serve a Notice of Termination of the lease in Form N9 and/or get agreement from the landlord that your tenancy is at an end and that you have not liability after your move out date. This may be more difficult to get than you imagine. Why would the landlord let you off the lease if the roommate is still staying. The lease does not end automatically on you moving out.
Ideally, you and your roommate give a Notice to Terminate the lease in Form N9. Then your roommate can reapply to occupy the unit. Perhaps the landlord will simply agree and enter into a new lease with him. You can't control that. If your roommate refuses to sign off and your landlord refuses to let you off the lease--then it is possible that the landlord will chase you for arrears if your roommate ever defaults. Hence, at a minimum, serve a Notice of Termination in form N9 (that you sign). Be able to prove delivery to your landlord and keep it forever (scan it to the cloud and keep it somewhere that you can access for a couple of years). If your roommate ever defaults the landlord might try to chase you--in which case you will want proof of having given notice to terminate the tenancy with your roommate. The argument you will make at that time is that the tenancy ended and the lease with the roommate was assigned to him alone after your Notice of Termination (N9) was given to the landlord.
As for your dad's guarantee. I would have to see it to know. Some guarantees only apply for the term of the lease--some continue on after the end of the term and into the month to month period. Wording is key to this. Follow up with the landlord (after reviewing the actual written guarantee) to be clear that your father has not guaranteed the rent for quite some time and is certainly not guaranteeing anything after you move out. Whether that notice has legal effect or not is a fight for another day--but at least your position is clear. Your father is not clearly off the hook unless the tenancy (that is of you both) is clearly terminated.
Hope that helps
Michael K. E. Thiele
www.ottawalawyers.com
Hello Michael, thank you for your fantastic blog. I have a question. I am looking for new tenants and have found a fairly nice family. The mom does not work and the dad does not have employment income; he runs his own small company. Can his company be a guarantor? Can "Prospective Tenant Welding" guarantee a lease? If so, where can I find a suggested verbage? Thank you! Petra
ReplyDeleteHi Petra: Any legal entity can be a guarantor---so yes, the company may sign as guarantor. Note, however, that a guarantor is only as good as their credit and assets allow. What you are describing sounds to me like a person guaranteeing themselves--hence what is really the value of that? Your tenant has a legal obligation to pay the rent. If he does not pay, you plan to chase a small company that he runs for the rent that he is refusing to pay. That doesn't really add much to your security. While the company may own assets and have its own accounts etc. (which are accessible if you have a Judgment against the company on the guarantee), I would expect that if the tenant could not pay the rent then the company is unlikely to have assets or cashflow that could pay the rent.
DeleteAs for "guarantee" language there is no standard form (as there is for a lease), hence you need to get a custom draft from your lawyer/paralegal or see if you can find one online that complies with Ontario law and takes into account the unique circumstances of residential tenancies continuing beyond the term of the original lease on a month to month (i.e. incorporate language to continue the guarantee beyond the lease term into the statutory month to month).
Michael K. E. Thiele
www.ottawalawyers.com
Hey Micheal. Hoping you might know the answer to my question. I've been looking everywhere.
ReplyDeleteCan a Canadian father be a guarantor for his son in ontario while the father is living in Florida USA year round ?
Any insight is greaty in appreciated. Thanks.
Hi: Anyone can be a guarantor. Whether or not the landlord will accept the particular person who is offered up as a guarantor is another question. An acceptable guarantor is normally determined by credit worthiness and the likelihood of the landlord being able to collect from the guarantor if the tenant breaches.
DeleteMichael K. E. Thiele
www.ottawalawyers.com
Recently one of my friends who is an international student was told they must provide a guarantor who is a Canadian Citizen or they will be asking for 2 months of additional rent deposit. They had already taken the maximum allowed 1 month of deposit. Upon telling them that it is discrimination to have that requirement they informed her that the RTA endorses this. However, I can't seem to find anywhere in the RTA that proves this.
ReplyDeleteHi: You can't find it in the RTA because it's not in there. There is nothing in the RTA that allows for additional security deposits. There is some caselaw that allows prospective tenants to offer advance payments to secure a tenancy that they do not otherwise qualify for--but that has to come entirely from the tenant and not the landlord.
DeleteMichael K. E. Thiele
www.ottawalawyers.com
Hi MIchael,
ReplyDeleteMy daughter and her friend are looking to sign a lease for a 2 bedroom apartment. However, their building does not do joint leases, nor do they do separate leases for each bedroom. They require for just one of them to sign the lease for the entire unit. Their advice was for one of the girls to sign the lease and the other girl's parents to sign on as guarantor. What is your advice on this? Is it advised against to sign on as the guarantor?
Hi: I must say this is an odd one. I haven't heard of any landlord refusing multiple signed on tenants on a lease. The more tenants there are the more security for performance of the lease obligations there is. Based on what you're saying, either your daughter is the tenant or her friend is the tenant. Not a problem if everything goes well. It's hard to say what side you want to be on if it goes poorly. If you're the "tenant" then the other person is just a roommate and you can kick them out. However, they also don't have any direct liability to the landlord for rent or anything else. The roommate could, in theory, just move out and have no liability for the unit. From another perspective though, the roommate could be asked to leave when she isn't ready to leave. To deal with this unequal relationship you might want to consider drafting a roommate agreement that sets out, contractually, what is expected of each party (i.e. the non-tenant and the tenant). Deal with everything from rent to guests to damage to the unit (including by guests). The easiest roommate agreement is perhaps to draft an agreement act says the girls agree to treat the place as if they are joint tenants, that they agree to enjoy the same benefits as joint tenants and that they share the risk as if they were joint tenants. Then add something in for how they will agree to terminate their renting relationship with the landlord.
DeleteAs for being the guarantor of a stranger's legal responsibilities---never. It's just not a good idea. You technically (legally) have no control over the unit (even with the roommate agreement--you only have a good lawsuit), though the guarantee makes you liable for what happens there even after your daughter moves out.
Good luck
Michael K. E. Thiele
Hi Michael. I've got a question about whether guarantor can must stay in Canada during the time of my lease contract. So far my lease contract has no statements about limiting where my guarantor can stay. And my guarantor is a Canadian, but he wants to stay in HK for several months during the time of my contact. Would there be legal complications if my landlord finds out my guarantor is not staying in Canada even though there isn't any statements about it in the contract? My guarantor can still pay any defaults or damage that may happen through his Canadian bank account, though it's very unlikely defaults will happen.
ReplyDeleteAny help would be greatly appreciated!
Hi: The law of guarantee is not a particular focus of my practice. While residency, could in theory be a required characteristic of a guarantor, I would see that as a qualifying factor for accepting the person as a guarantor. I have never seen anything requiring the guarantor to maintain a particular residency during the period of the guarantee. Frankly, I don't see how such a clause would be legal. However, if one were to try to impose such a condition that condition would have to be explicitly spelled out in the guarantee itself. If the guarantee is silent on the point, as you indicate, then your guarantor can reasonably expect to travel freely (inside and outside of Canada).
DeleteMichael K. E. Thiele
www.ottawalawyers.com
Hello Michael,
ReplyDeleteI am a landlord from Toronto. I am currently listing my condo for rent and one of the offers I got is from a young couple from another country with no credit history, not currently employed, providig just 2 passports and a letter for a future employment.
There is a third person listed as a guarantor with an excellent credit/income/employment etc.
I told them I am willing to rent the unit to them only if I have an official guarantee/contract signed by the guarantor. Their answer was that I should prepare whatever document I want the guarantor to sign. Is this something I have to provide to the guarantor for signing? I believe they should have included such signed guarantee along with the other application papers. Thanks for your time.
Kind Regards,
Sonya
Hi Sonya: While the Ontario Government now provides a mandatory standard form lease (for the vast majority of tenancies), there is no standard form guarantee. In normal circumstances it should be the landlord who prepares the guarantee as the point of the document is to bind a guarantor to the obligations of the tenant. It is a strange circumstance where you allow the guarantor to craft the language of their own obligation.
DeleteYour hesitation I suspect arises from not having easy access to a "guarantee". To that end, the only reasonable solution is to retain a lawyer or paralegal and have them draft a custom one that works for you and provides you with the security you are seeking. Unfortunately, many landlords in your position simply google "guarantee" and print off the first thing that pops up. For this to actually be useful--you will need to get lucky. I think part of the reticence in retaining a lawyer or paralegal to draft the guarantee is 1) cost, and 2) an optimistic outlook that there won't be any problem that would require you to use the guarantee. In my experience, #2 is in fact the likely course, as the vast majority of tenancies proceed as they should and don't end up in Court/LTB.
Good luck
Michael K. E. Thiele
www.ottawlawyers.com
Hi Michael,
ReplyDeleteIs the guarantor liable for a new tenant taking over a lease?
Thank you.
Hi: The question doesn't give a lot of context. However, I will say this. The law respecting guarantees is not part of the Residential Tenancies Act. Hence, you will not find any guidance in the RTA about the legal implications of any particular guarantee. Further, the form of a guarantee is not set out in the legislation and there is no standard form guarantee---meaning, the wording of most guarantees is unique. Lastly, I'll say this, a guarantee (for the most part) gets its validity from contracting principles. As a result, the wording of the guarantee is very important as the parties are free to contract. Beyond that, the law of guarantee is surprisingly complex and detailed. If you have a particular document or are wondering whether to sign or have signed, see about getting a consult about the specific document (i.e. have it reviewed.).
DeleteMichael K. E. Thiele
www.ottawalawyers.com
I hopefully have a fairly quick question that you can resolve with respect to co-signing. I co-signed for my son for a student residence building. He gave notice (appropriately), he moved out on the appropriate date (June 30, 2019), he even changed over all of his finanical information to the new address. As a co-signor I feel my obligations ceased as of the 30th of June. However, during the course of the next week (1st week of July), my son had some issues with his new residence and he attended back as the student residence and worked out a deal with stay a little longer with the landlord (nothing to do with me). He departed the residence mid July and has not returned. Well the landlord is now writing me stating that unfortunately in July damage was done to the apartment to the tune of $2,800 and that I am responsible for same. I do not believe that legally I am responsible for the occurrings in July as this side deal was made between my son and the landlord (I was of the belief that he was at his new residence at that point in time). Prior to me writing the landlord back with my response, I just wanted confirmation that I am correct in my responsibilties. I look forward to hearing from you.
ReplyDeleteHi: If the unit is a student residence it is possible (likely even) that the Residential Tenancies Act does not apply. In these circumstances a close look at the contract is needed because the Residential Tenancies Act does not provide the legal framework of the relationship. With respect to "co-signing" this is often confusing on contracts because there is a line on the contract that simply says "co-signer" beside which a person signs their name. The contract says nothing further about the obligations of the co-signer and you end up just making assumptions about what it means. Alternatively, the "co-signer" actually signs a guarantee or guarantor agreement. That separate piece of paper spells out what exactly the guarantor is agreeing to do and for how long they are prepared to do it. This is the logic of the Court's reasoning in the article above.
DeleteFrom how you describe it, it seems to me that the agreement you "co-signed" or "guaranteed" ran it's course and ended on June 30, 2019. Without seeing the documents and relying just on what you say, it would make sense that you agreed to be responsible (either explicitly or impliedly given your signature) for things that happened in the unit until June 30, 2019. Absent any language in the agreement that allows the agreement to end, have your son move out, then change his mind and move back in for while, and you agreeing that if this happens you will still be liable---I'd say your obligation has expired.
It would, in my view, take explicit language in the agreement for you to agree to assume financial responsibility in these circumstances. In short, I think you are correct in your analysis of the situation. The key, though, is to closely read the documents to see what you agreed to.
Instead of telling them how you are not liable (i.e. the letter you are intending on writing), consider first writing to them stating that you don't believe you are responsible and ask them to please explain the legal basis of charging you for the damage for a period of time after the lease you co-signed had ended and your son had vacated.
Good luck
Michael K. E. Thiele
www.ottawalawyers.com
I wanted to thank you for starting this blog and keeping up with it over all of these years. This is truly a great dialogue and resource for so many people. Thank you!
ReplyDeleteHi Michael, thanks for this service. My question is regarding a guarantors rights, if any. when my dad took an apartment 4 years ago the landlord asked that I act as guarantor for my dad. We both signed the lease, he as tenant and i as guarantor. My father is moving to a seniors residence and i asked the superintendent if I could keep the apartment? I was told i could put in an application and that the rent would be $1,000 per month higher. Does this sound right to you? Would it be helpful for you to review the lease? Thanks!
ReplyDeleteHi: This question can't really be answered without looking at the lease. If the lease reflects that you are only a guarantor and that your father is the only tenant and there is no ambiguity in that then it becomes less likely that you have occupancy rights (i.e. that you may be a tenant). Whether you are a tenant or not or whether you have occupancy rights or not will take a bit of exploring. Many guarantor clauses are vague and unclear and do not contain any limiting language. Some leases and some separate guarantor clauses explicitly spell out that the guarantor has no right to occupy the space as a tenant. The leases and/or guarantor agreements that explicitly spell out that the guarantor is not occupying the premises are indeed anticipating exactly the situation you are describing where you would like to move into the unit and continue the same terms and conditions as have been in place to date.
DeleteThe landlord, of course, is likely quite pleased that your father is moving. Once you father's tenancy ends (and a Notice of Termination has been given by him) then the landlord can re-rent the unit at current market rents. The $1000 increase for a new tenant, after your current tenancy is terminated, is completely lawful. The law allows the landlord to charge whatever amount that the landlord wishes. Of course, the landlord does not have to increase the rent--i.e. it is not mandatory to charge market rent.
As for a file review/consultation, you should contact a local lawyer or paralegal with experience in residential landlord and tenant law (there are not that many of us). The key is "experience" as there is a significant amount of case law exploring the nuance of who is a tenant and who isn't. The mere words of the lease are not actually determinative of the question as the LTB is empowered to disregard the outward form of any document and determine what is actually going on. Hence, a lease review and conversation would be worthwhile. While people certainly retain me as a result of reading this blog, I make it a point not to explicitly solicit clients on this blog as the point is to share legal information and set out some options that readers may wish to explore. For this blog I don't actually review documents from readers as this is a legal information site and not actually legal advice. Actual legal work is done privately offline.
Good luck
Michael K. E. Thiele
www.ottawalawyers.com
I am a co-signer for my son who goes to university and rooms with 4 other boys in a house. Their 1-year lease is up in May and they would like to continue renting on a month-to-month basis. The management company is trying to let on they don't have to continue to rent to them after their lease expires. I wrote the management company and copied all the boys and asked them to stop threatening the boys with eviction when they haven't served them with any paperwork to back up an eviction and they can't evict them simply because the lease expired. They just continue to state they can't communicate with me unless all the boys sign a consent form allowing them to do so. Can I not respond to this situation on behalf of my son?
ReplyDeleteHi: You appear to be a very inconvenient presence for a landlord that is trying to take advantage of a group of young men. Good for you! The "consent form" business is nonsense. With each of the boys on the email chain get them all to hit reply all and inform the landlord that they are in agreement with what you've said. There is no "consent form" under the RTA. Of course, they don't need to speak with you and can simply say that they aren't in a contractual relationship with you so please go away. An email from your son to the landlord simply saying "Please talk to my dad" is enough to bridge any perceived "privacy" issues. If the landlord has instructions not to speak with you (from the tenants--all or some) they can simply state that they will not communicate with you about the tenancy.
DeleteMichael K. E. Thiele
www.ottawalawyers.com
Hi!
ReplyDeleteWow what an amazing resource your posts are for landlords and tenants alike. As a new landlord I refer to them often. Thank you so much!
I am currently looking to rent to a group of students. They have a guarantor willing to sign the guarantee that I have, which seems to be comprehensive according to the recommendations I have read in the post and your comment responses. My question is more basic and perhaps naive.
The guarantee letter I have suggests the guarantor agrees to the collection of information for credit worthiness etc. I am wondering how this information is collected from the guarantor. Do they complete an application form or something similar? Maybe I am overthinking it. The tenants in question have no credit or tenant history and no income. Thanks again for your help!
Vero
Hi Veronica:
DeleteThe guarantor would sign an "application" form or whatever document you have for the collection of information along with a consent to release information and a consent for you to obtain information from third parties for the purpose of a credit check. The process of a credit check is often (if not always) referred out to a third party company. Checking references and employment status is sometimes done "in house". You will of course require the information to know who to call and the guarantors permission to request and receive the information. The people you contact may also require you to provide a signed consent before they tell you anything.
Doing credit checks and background investigation can be time consuming. While I have no personal experience with them, I have various landlords who claim to use screening services and credit check services on line. A google search pops up many of them. Whether they are any good or not I don't know. There is also the option of opening an account and working directly with one of the credit reporting agencies (like Equifax).
I hope that helps a bit. It is a tough situation to do credit checks, especially for a limited number of annual applications. The best approach is probably to retain a third party and learn from the third party what information is required.
On a side note, consider that the information gathering stage is important also in the event that you do have to sue the guarantor for breaches. Having verified identification information, addresses, work addresses, etc., is very valuable when it comes to enforcement action through court.
Good luck
Michael K. E. Thiele
www.ottawalawyers.com
Hello Michael,
ReplyDeleteWhen i applied for my apartment i was told i needed a cosigner, i had one and they sent the paperwork via email. Before my cosigner sent paperwork back we signed the lease. My cosigner now is refusing to sign because we have lived there for 3 months and they have never brought it up.
Can my landlord kick me out over this and is my lease now legal?
What should i do if this becomes something they are going to bring up?
Hi: Whether the landlord has sufficient security for the performance of your obligations under the lease is not really a question for you to answer. It is up to the landlord to get whatever "guarantors, co-signers" that the landlord feels is necessary for your tenancy. Presumably, the landlord satisfied itself in this respect, as the landlord signed a lease with you and gave you possession of the rental unit. There are a number of possibilities here, including, 1) the landlord waived the co-signer requirement, 2) the landlord considers the co-signer bound, 3) the landlord forgot about it, and 4) the landlord changed its policy on requiring co-signers at all. I suppose there are other possibilities as well Ultimately, I don't think it matters what the reason is as the landlord moved beyond the application and co-signer stage and entered into a tenancy agreement, signed it, and gave you possession without requiring anything or anything further from you. I interpret that as you having provided to the landlord whatever it needed to enter into the tenancy agreement.
DeleteCan your landlord kick you out over this? It is very difficult (if not impossible) to see how. If the landlord wanted to make an issue out of it the landlord would have to allege that you are in breach of your lease agreement or in breach of the RTA. Presumably, the alleged breach is that "you don't have a co-signer". I don't think that this is actually true because you had a co-signer at the required time. Your co-signer now, apparently, refuses to sign papers. That doesn't necessarily mean that the co-signer isn't still a co-signer. Lots of co-signer's change their minds over time but that doesn't mean they are off the hook.
DeleteThe condition of needing a co-signer was likely fulfilled when the tenancy agreement was put to you by the landlord. The landlord was satisfied with what it had and the form of what they had--otherwise you wouldn't have gotten the lease and possession of the unit. You've had quiet enjoyment for three months it seems to me that re-visiting the issue of co-signer now is simply impossible.
Then of course, there are the possible reasons listed above (some unknown to you) that you were granted the lease in the circumstances that you were. You can only presume that the landlord was satisfied with your application because it wouldn't have signed a lease with you and granted you possession of the unit otherwise. It would hardly be fair for the landlord to now try to resile (backtrack from) the tenancy it entered into with you because the landlord has changed its view (from satisfied to unsatisfied). Maybe your application was strong enough that the landlord was prepared to rent to you without a co-signer. Maybe, asking for a co-signer was a little bit of overkill that the landlord wouldn't refuse but didn't really need. Perhaps signing the lease with you without the signed co-signer agreement was fine with the landlord because it was prepared to rent to you without a co-signer at all. Maybe, the fact that you could indeed offer a co-signer was all the comfort that the landlord needed (because you can get a co-signer I don't need you to--but if you couldn't get a co-signer then I definitely need you to have one) to rent to you without the need for the co-signer paperwork.
In answer to your questions, I don't see how the landlord can kick you out over this. The requirement for a co-signer is not a requirement in the Residential Tenancies Act. I'd be surprised if your lease contained a co-signer clause--i.e. that you must provide one. If the lease contained such a clause (frankly I've never seen one), I imagine that the clause would be satisfied by the fact of possession being granted to you.
With respect to "what to do" if the landlord brings it up I think it really depends on how they bring it up. I'd make sure not to pretend and make sure not to promise something you can't deliver (i.e. a signed co-signer document).
So, imagine that the landlord writes to you saying: "On review of our files, we note that the co-signer has not returned the co-signer agreement. We require it to be signed and returned within 10 days or "else"". I think I'd respond to such a letter firstly objecting to the threat and advising that this constitutes a threat contrary to the RTA (section 23) and that if such threats continue you would bring a T2 application against the landlord seeking an abatement of rent. Then I'd say that the co-signer you had, and offered to the landlord, is no longer willing to sign paperwork given the executed tenancy agreement and possession being granted for over XX months. I'd then refer the landlord to the co-signer for any follow up they desired.
The landlord then has a choice to make, either let it go or file an application to the LTB based on a Notice of Termination. The notice is likely an N5 (lawful right interest privilege). When you don't "correct" the notice the landlord can choose to file with the LTB. If the landlord files with the LTB (on the facts I have here from you), I expect the landlord to lose badly. This is especially the case if your rent is paid given that any obligation (to be triggered for the guarantor) isn't even operative because you are meeting your obligations.
Ultimately, I don't see you having much to worry about.
Good luck
Michael K. E. Thiele
www.ottawalawyers.com
Hello,
ReplyDeleteDoes a Landlord have the right to refuse to talk to or work directly with a guarantor on a lease and only communicate with the tenants on the lease?
Hi: I suppose the answer is "yes" because there is no requirement for anyone to speak or deal with anyone. If the landlord is pursuing legal recourse then the landlord must comply with the Residential Tenancies Act (RTA). The RTA has certain mandatory requirements for proceedings--i.e. service of notices but otherwise, even in that context, the landlord can't be forced to communicate with anyone specifically.
DeleteOf course refusing to communicate is short-sighted and silly. If the communication is respectful (it doesn't have to be pleasant) then there is really no reason not to communicate professionally. The landlord will obviously be wanting money at some time from the guarantor and clearly the guarantor is a party to the agreement. It is short sighted to refuse to communicate with the guarantor as the guarantor is likely the one who can bring some resolution to the issues (whatever they may be).
Make sure to communicate clearly with the landlord, send emails a letter advising of your willingness to communicate and that in the event legal proceedings are required that you will rely on the fact that you have sought to communicate and resolve whatever the outstanding issues might be and that the landlord has refused to communicate with you.
Good luck
Michael K. E. Thiele
www.ottawalawyers.com
Hello,
ReplyDeleteI was asked to be a Guarantor for a friend. When I went into the rental office they gave me an application form and stated I would be added to the lease as a tenant but not listed as an occupant. Are they allowed to do this?
What you are describing is very odd--and if this is what the "office" told you it frankly makes no sense. If a person is listed as a tenant on a lease they are not also listed as an occupant. Perhaps what the office was trying to "set up" was a circumstance where your liability arises as a tenant but that it is recognized that you do not live there. That isn't crazy and frankly describes an actual "guarantor". I don't think, however, that signing an application to be added as a tenant but not as an occupant accomplishes this. If you are not going to live in the unit but are prepared to guarantee the obligations of the tenant then a simple document to that effect can be drafted. Take note if the guarantee document continues beyond a fixed term (i.e. into the month to month) and whether it intends to continue until the end of the tenancy no matter how long that might be (in theory it could be indefinite). Note also that the guarantee can be for not only the rent but also for damage and any other liabilities that the tenant incurs for whatever happens in the rental unit and complex. Guarantees are a big deal and should not be entered into without a clear consideration of what you are doing. The most common misunderstanding or regret that I get from Guarantors consulting me is that they did not put their mind to an escape clause--i.e. insisting that there be a way to terminate the guarantee obligation. You may not always get along with your friend. The relationship may end. The friend may turn out to have problems that create unexpected liability. You should have a way to cap that liability or to terminate your guarantee.
Delete