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Background



Residential Landlord and Tenant Law (Ontario)
(01 March 2011)

Chapter 1 - Fundamentals

  1. Overview
    (a) General
    (b) Coverage of the Program
    (c) Sources and Conflict of Laws
    . Overview
    . Canadian Constitution - Division of Powers
    . Canadian Charter of Rights and Freedoms
    . Ontario Human Rights Code
    . Residential Tenancies Act, 2006
    . Contract Law and Common Law
    . Frustrated Contracts Act
    . Statutory Powers Procedures Act
    . Condominium Act
  2. Formation of a Tenancy
    (a) Overview
    (b) Licenses Distinguished
    (c) Commencement
    (c.1) 'Agreements' to Enter into Tenancy Agreements
    (d) Transfer or Sale of Rental Property by Landlord
    (e) Periodic v Term Tenancies
    . Basics
    . Automatic Renewals
    (f) Statutory v Contractual Tenancies
    (g) Negotiating a New Tenancy
    . Overview
    . Factors Which May be Assessed by Landlords
    . Rent Deposits Refunded if Not Applied
    . Information Package
    . "Serious Breach" Notice, if required
    (h) 'Illegal' Tenancies
  3. Landlords, Tenants and Their Legal Manifestations
    (a) Overview
    (b) Sole Proprietors
    (c) Partnerships
    (d) Corporations (also "body corporate")
    (e) Fiduciaries (of all types)
    (f) Mortgage Proceedings
    (g) "Landlord" Summarized
    (h) "Tenant" Summarized
  4. Spousal Assumption of Tenancy on Death or Abandonment
    (a) Overview
    (b) Death of Tenant
    (c) Abandonment by Tenant
  5. Subletting, Assignments and Similar Arrangements
    (a) Overview
    (b) Distinguish Sub-lets from Joint Tenancies and Shared Occupation
    (c) Sub-letting and Related Procedures
    . Overview
    . Tenant Right to Sub-let
    . Sublet Fees
    . Legal Consequences of a Subletting
    . Tenant's Application to Terminate and Evict a Sub-tenant for Cause
    . Application to Evict an Overholding Sub-tenant
    (d) Assignments and Related Procedures
    . Overview
    . Tenant Right to Assign
    . Request for General Consent to Assignment and Tenant's Right to Terminate on Refusal or Silence
    . Request for Specific Individual Consent to Assignment and Tenant's Right To Terminate on Refusal or Silence
    . Assignment Fees
    . Legal Consequences of an Assignment
    (e) Tenant Applications On Refusal of Consent
    (f) Unauthorized Assignments and Overholding Subtenants
    . New Tenancy Negotiation
    . Application to Evict
    . Deemed Assignment on Inaction
  6. Terminology Notes
    (a) Purpose
    (b) Abbreviations
    (b) "Residential Unit"
    (c) "Rental Unit"
    (d) "Residential Complex"
________________________________________

Note Re: Special and Exempt Premises:

Some residential rental premises - such as care homes, mobile home parks, land lease communities, student accomodation, superintendent's premises, social housing, premises under mortgage proceedings - and others - may be exempt from all or part of the Residential Tenancies Act (RTA), or may be subject to special RTA provisions. Readers should review Ch.2: "Special and Exempt Premises" to check if this is the case for their specific premises.

Note Re: Offences

Many breaches of the Residential Tenancies Act are also prosecutable offences. Readers may want to review Ch.17: "Offences" regarding specific breaches.

1. Overview

(a) General

Historically, landlord and tenant (L&T) law grew out of the old English feudal system that has had a huge impact on social ordering to this day. Today however, landlord and tenant law in all Canadian jurisdictions - including Ontario - is heavily codified in statute law.

Today's Ontario L&T law is governed by two main statutes: the Commercial Tenancies Act and the (new at February 2007) Residential Tenancies Act (RTA). The first of these is much closer to the old feudal form but has also undergone much modification. As well the trend in judicial interpretation is to impose modern contract law principles over the whole legal area.

On the other hand residential L&T law is so heavily modified from both the common law and the present commercial statute form as to be almost unrecognizeable, and has been for years. Predecessor residential L&T legislation has included (most recently) the Tenant Protection Act (TPA), the Residential Rent Regulation Act, the Rental Housing Protection Act, and Part IV of the Landlord and Tenant Act (Parts I to III are now the Commercial Tenancies Act) - and even a previous (now repealed) "Residential Tenancies Act, 1979". Both the TPA and the present RTA have merged general residential L&T law with the relatively new "rental control" laws governing and regulating the "legal rent" that may be charged a residential tenant.

The issue of residential L&T law is highly politically charged and full statutory revisions in the area have followed in consistent lock-step with changes in provincial governments for roughly the last 20 years.

Essentially now, modern residential L&T law in Ontario (ie. the Residential Tenancies Act, 2006 or "RTA") is consumer legislation - written to protect tenants from the natural imbalance of power that stems from the fact that the landlord's interest is almost invariably financial (and usually commercial), whereas the tenant's interest that of essential shelter - which in a country such as Canada can be tantamount to physical survival.

That said, other than the insertion of basic natural justice hearing principles into the process, termination and eviction for non-payment of rent and other tenant-'caused' problems is available to landlords who move promptly and competently through the procedures established under the RTA and its predecessors. No fundamental concession has ever been made, in either statute or judicial law, to the ultimate paramountcy of the landlord's financial interest other than discretionary [see Ch.9, s.5(b)] and mandatory [see Ch.9, s.5(b)] granting of relief to defaulting tenants, and conditional ex parte orders (see Ch.8, s.3). The latter of these are - due to their conscious procedural violations of natural justice - only a mixed blessing.

(b) Coverage of the Program

This program addresses all major areas of Ontario residential landlord and tenant law in detail, including:
  • basic concepts and terms [Ch.1];
  • special and RTA-exempt categories of premises [Ch.2];
  • tenant rights and remedies [Ch.3];
  • termination procedures for both tenants and the numerous different termination and eviction procedures for landlords - including the tenant defences [Ch.4-9];
  • basic rent proceedings, including numerous rent applications as well as the primary and complex landlord application process for "above-guideline" rent increases [Ch.10-12];
  • practice and procedures before the Landlord and Tenant Board [Ch.13-14];
  • Board Reviews of Orders, Court Appeals, Civil Court Remedies and Related [Ch.15-16];
  • prosecutable RTA offences [Ch.17];
  • rules governing the transition from the previous Tenant Protection Act to the present Residential Tenancies Act [Ch.18].
(c) Sources and Conflict of Laws

. Overview

While the Residential Tenancies Act largely codifies all the law applicable to residential L&T in Ontario, it is not exhaustive. Other sources that can occasionally impact on the area of law include:
  • the Canadian Constitution;
  • the Ontario Human Rights Code;
  • the common law;
  • contract law;
  • the Frustrated Contracts Act;
  • the Statutory Powers Procedures Act (SPPA).
Any time several laws influence one legal subject area the potential for conflict arises. Below I discuss such conflicts as they relate to each of the above-listed "sources" of law - in rough order of their "paramountcy" (it's not a simple matter of ranking).

. Canadian Constitutional Division of Powers

The Canadian Constitution can be roughly divided into the "old" constition and the "new" Canadian Charter of Rights and Freedoms that Pierre Trudeau led us to in 1982.

The "old" constitution deals primarily with the division-of-powers between the federal and provincial governments, the establishment of the court systems and other such fundamentals of Canadian society. While these basic allocations can give rise to questions regarding Ontario residential L&T law, such issues are rare.

The most recent substantial activity in this area was in two court references Reference re Residential Tenancies Act (Ontario) [1981] 1 SCR 714 and Reference re Amendments to Residential Tenancies Act (Nova Scotia) [1996] 1 SCR 186. The latter of these cases clarified that the establishment of administrative tribunals to exclusively govern residential L&T matters did not offend the historical jurisdiction of the superior courts of Canada.

. Canadian Charter of Rights and Freedoms

It is slightly more likely in future that the Charter portion of the Constitution will be engaged to challenge RTA law. As the Charter is part of Canada's Constitution it has paramountcy over "regular" federal and provincial legislation, regulations and - generally - government actions:

Charter s.24

Charter s.52

While the Charter lists a wide range of rights and freedoms (expression, association, against discrimination, numerous criminal law procedural protections), also contained within it is its own 'balancing' provision [s.1]. Before a 'regular' statute law can be overridden by the Charter, the court (or Tribunal) hearing the issue is required to assess the purpose of the allegedly infringing law or behaviour, whether the law achieves this purpose in the 'least drastic' manner possible, and (less frequently) to determine whether it is a justifiable government purpose in light of the rights infringed.
Case Note: R v Conway (SCC, 2010)

Due to the courts' view that the relationship between landlord and tenant is primarily one of private law, and thus not likely to involve the state action that is necessary to trigger the Charter's protections, it is unlikely that there will be many Charter cases before the Landlord and Tenant Board. However it seems certain that the Board does have jurisdiction to consider Charter law if the need arises.

On the general question of when an administrative tribunal has Charter jurisdiction, the Supreme Court of Canada in the 2010 case of R v Conway (SCC, 2010) had to decide whether the Ontario Review Board, established under the Criminal Code to decide custodial issues respecting persons declared not criminally responsible ("NCR") by the courts, was a "court of competent jurisdiction" for the purposes of considering Charter law and granting Charter remedies under s.24(1) of the Charter. The court took the oppourtunity to clarify and summarize the law with respect to when any administrative tribunal could apply Charter s.24(1). The court held that the primary question was (similar to that discussed in Tranchemontagne regarding the Human Rights Code) whether the tribunal generally had jurisdiction to decide questions of law. Unless that was expressly restricted by statute, then the tribunal had Charter s.24(1) jurisdiction, but could only grant remedies within it's conventional remedial jurisdiction:
[78] The jurisprudential evolution leads to the following two observations: first, that administrative tribunals with the power to decide questions of law, and from whom constitutional jurisdiction has not been clearly withdrawn, have the authority to resolve constitutional questions that are linked to matters properly before them. And secondly, they must act consistently with the Charter and its values when exercising their statutory functions.

.....

[82] Once the threshold question has been resolved in favour of Charter jurisdiction, the remaining question is whether the tribunal can grant the particular remedy sought, given the relevant statutory scheme. Answering this question is necessarily an exercise in discerning legislative intent. On this approach, what will always be at issue is whether the remedy sought is the kind of remedy that the legislature intended would fit within the statutory framework of the particular tribunal. Relevant considerations in discerning legislative intent will include those that have guided the courts in past cases, such as the tribunal's statutory mandate, structure and function ('Dunedin').
The law prior to this was quite similar, though it focussed on requiring that the tribunal have jurisdiction over the parties, the subject-matter, the law, and the remedies sought.
In the few instances where the Charter has been brought to bear on L&T law they have been unsuccessful: Haddock v Ontario (1990) 73 OR (2d) 545 (HC), with rare exceptions Dartmouth/Halifax (County) Regional Housing Authority v Sparks (1993) 30 RPR (2d) 146 (NSCA). Landlord challenges such as Haddock are generally unsuccessful because the Charter does not protect property rights as such.

The new RTA-established "Landlord and Tenant Board" (the "Board") - like many Tribunals - has jurisdiction to consider the Charter in it's proceedings - as long as proper and prompt "Notice of Constitutional Question" is served on all parties and the Attorneys-General of Ontario and Canada (A-Gs), and filed with the Board, "as soon as the circumstances requiring it become known and, in any event, at least fifteen days before the day on which the question is to be argued, unless the court orders otherwise". If Notice is served late, you should expect the Board to be both annoyed (which can result in negative cost awards) and to seriously consider whether it will even hear your constitutitional arguments. At best you can expect the Board to adjourn the proceeding to give the Attorney-Generals and other parties time to consider the constitutional issues. In the case of a bar on constitutional issue being raised, the court would still continue to hear the case on the non-constitutional issues, if any [CJA s.109(2)].

Notice of Constitutional Question

Charter law is complex in both procedures and substance. Anyone considering a Charter challenge to any aspects of Ontario residential L&T law should consult a lawyer, or at least engage in an extensive study of that law themselves well before the need to use it arises.

. Ontario Human Rights Code

Similar in scope to the anti-discrimination provisions of the Charter [s.15] is the Ontario Human Rights Code. The Code expressly includes provisions relating to discrimination in the provision of "accomodation":

Human Rights Code, s.2: "Accomodation"
.
For years the Ontario Human Rights Commission has been an ineffectual body, more of an impediment to the advancement of human rights arguments than an aid. In 2008 the entire Act was re-written in an attempt to ameliorate this absurd situation. That new legislation is analyzed and explained in this Isthatlegal.ca Legal Guide:

Human Rights Law (Ontario)

Case law, and recently the Supreme Court of Canada (see below) has confirmed that the L&T Board has jurisdiction to consider Human Rights code law in its proceedings.
Case Law: Walmer v Wolch (Div Ct, 2003)

This was an early termination and eviction case (presumably based on interference with reasonable enjoyment of other tenants) which ground of termination gave the schizophrenic tenant a 'remedial oppourtunity' after the first notice. Despite evidence (upon which no fact-findings were made) that the behaviour complained of apparently continued unabated through both the first and a subsequent notice the landlord applied to evict on the basis of the second notice. The court held that the second notice should only have issued had the first notice been remedied by the tenant's behaviour, which it was not. As such the second notice should not have issued and could not form the basis of the application:
[15] The TPA is remedial legislation intended to regulate landlord & tenant relations in a summary way. We hesitate to base ourselves upon 'technical' readings of the statute. But in our view this is no mere technicality. The right to rectify and remain is an important right for tenants. The provision for the second notice, where there is no longer such a right, must be carefully followed by landlords who wish to take advantage of it.
Further, the Board declined to countenance the tenant's argument that the (then) Tenant Protection Act should be applied in light of the Ontario Human Rights Code (HRC) imposition of a duty to accomodate on the part of the landlord, which the tenant argued should inform the Board's relief from forfeiture jurisdiction under TPA s.84(1) [now RTA 83(1)]. The court held this to be an error of law:
While the direct enforcement of the Code by the making of an order is reserved to the Commission, the Code is the law of Ontario and its provisions must inform any Ontario decision maker in its deliberations. Therefore, the appellant submits that the ORHT ought to refuse to grant the order to evict the tenant where a reasonable accommodation to her needs can be made without undue hardship to the landlord. Such a reasonable accommodation to the tenant's needs might be an arrangement whereby the landlord informs the tenant's relatives at the first sign of trouble, so that they can intervene to get her back on her medication.
In reaching this conclusion to court referred to what is now RTA s.3(4), which makes the TPA paramount over all statutes except the HRC, and this provision of the HRC:
Human Rights Code s.47(2)
Where a provision in an Act or regulation purports to require or authorize conduct that is a contravention of Part I, this Act applies and prevails unless the Act or regulation specifically provides that it is to apply despite this Act.
On evidence that remedial efforts were afoot - the court allowed the tenant's appeal and - substituted it's own decision for that of the Board - dismissed the landlord's application.

Case Law: Tranchemontagne v Director (ODSP) (SCC, 2006)

Confirming the principle established in Walmer (above), and much like it did in Conway (above) regarding the Charter, the Supreme Court of Canada in the important 2006 case of Tranchemontagne v Director (ODSP) held that, absent express statutory direction to the contrary, administrative tribunals that could decide questions of law were assumed to be able to consider all laws of the land, not just ones central to their mandate. In this case the Ontario Human Rights Code (OHRC), which was raised by the appellant, should have been applied by the Social Benefits Tribunal (SBT) in assessing whether an exclusion from eligibility for income support for persons whose only restrictions in the activities of daily living were due to alcoholism, was illegally discriminatory. Further, the court held that the SBT had no discretion in the matter so that if the Code were raised the argument had to be considered, and that in this case the tribunal should have considered it. It is important to note that - as is the case with Charter arguments - having jurisdiction to consider human rights law does not expand the remedial jurisdiction of any tribunal, so that even a successful human rights argument can only be provided with remedies conventionally available to the tribunal in question. In Tranchemontagne the result, after re-litigation at lower levels, was that the appellant's ODSP eligibility was granted.
Further, the RTA itself provides that:
RTA 3(4)
If a provision of this Act conflicts with a provision of another Act, other than the Human Rights Code, the provision of this Act applies.
Like Charter (particularly s.15 anti-discrimination) law, human rights law can be complex and parties are well-advised to consult a lawyer, or at least engage in an extensive study of that law themselves well before the need to use it arises.

Where raised by the initiating party, the human rights issue should first be raised in the application. Where this is not possible then it may be necessary to formally amend the application [see Ch.13, s.4(g): "General Board Procedures: General Application Procedures: Amendment of Applications"]. Where the human rights issue will be raised by the respondent, they should provide written notice of that intention to both the other parties and the Board as soon as this intention is known.

Human rights issues are the subject of Interpretation Guideline 17: Human Rights.

. Residential Tenancies Act, 2006

The Residential Tenancies Act ("RTA") and the Regulations made under it are of course the main "workhorse" pieces of legislation that apply to Ontario residential L&T situations, and they are the main subject of this Isthatlegal.ca Legal Guide. Generally - the RTA prevails over other laws (the main exceptions being the Charter and Human Rights Code [RTA s.3(4), quoted above]):
RTA s.3(1)
This Act applies with respect to rental units in residential complexes, despite any other Act and despite any agreement or waiver to the contrary.
Determinations of whether the RTA applies to any given fact situation are available either in the course of normal proceedings before the Board, or on special application to the Board:

See Form A1: Application About Whether the Act Applies

The general purpose of the RTA is stated as:
RTA s.1
The purposes of this Act are to provide protection for residential tenants from unlawful rent increases and unlawful evictions, to establish a framework for the regulation of residential rents, to balance the rights and responsibilities of residential landlords and tenants and to provide for the adjudication of disputes and for other processes to informally resolve disputes.
The RTA regime is under the general administration of the Ministry of Municipal Affairs and Housing" [Act s.2(1)] and - for adjudicative purposes - its arm's length administrative Tribunal, the "Landlord and Tenant Board". The role and procedures of the Board are discussed at greater length in Ch.13: "General Board Procedures".

Some complete and partial exemptions to the application of the RTA are discussed in Ch.2: "Special and Exempt Premises", but the RTA covers most residential rental situations.

Specific 'regulation-making' powers are set out in RTA s.241, linked below. This provision provides the legal authority for the Regulations which support the RTA, and which are referred to throughout this Legal Guide. This linked 'regulation-authority' is seldom referenced in day-to-day L&T practice, as it usually only comes up when considering whether a regulation that has been made is "ultra vires" (beyond the jurisdiction of) the Cabinet (the executive committee of the party in power that makes regulations), and thus possibly subject to legal challenge.

RTA s.241: Regulation-Making Authority

. Contract Law and Common Law

There has been a trend in the courts for years to relocate commercial L&T law within the more expansive realm of contract law, which itself is almost entirely grounded in the common law. For example, in Highway Properties v Kelly, Douglas & Co. [1971] SCR 562 a common law contractual measure of damages was introduced to allow landlords to sue for the full balance of a defaulted lease. Comments of the Supreme Court in that case opened the way generally for the introduction of the common law of contract into L&T law.

This makes sense. "Contract law" in its most basic form is simply the law governing private bargains between two or more parties (ie. people, corporations, partnerships, governments, etc), and there is no pressing reason to continue isolating tenancy situations from those larger principles just because the 'deal' is about possession of real estate.

That said, both of these sources of law are overridden by the RTA in the event of conflict:
RTA s.4
Subject to section 194 [mediated settlement exception], a provision in a tenancy agreement that is inconsistent with this Act or the regulations is void.
. Frustrated Contracts Act

There is an infrequently-invoked doctrine of contract law called "frustration". It holds that when the subject-matter of a contract is destroyed then the contract itself thereby ends. The classic case of this in the L&T context would be where the building housing the rental unit burns down (historically some leases have held that a tenant's duties to pay rent contine ). The Frustrated Contract Act, which essentially acknowledges and codifies some procedures regarding the operation of this rule, is expressly adopted into residential L&T law:
RTA s.19
The doctrine of frustration of contract and the Frustrated Contracts Act apply with respect to tenancy agreements.
. Statutory Powers Procedures Act

The Statutory Powers Procedures Act (SPPA) is a generic administrative tribunal procedural statute that applies to most Board and Tribunal bodies in Ontario. It addresses numerous issues such as evidence, hearing procedure, notice and service requirements and more. Whenever a body (such as the Landlord and Tenant Board) is required to hold a hearing for the exercise of a "statutory power of decision", SPPA procedures apply unless expressly excluded by the other legislation (typically by the parent legislation of the tribunal in question) [SPPA s.32].

With a few exceptions, noted throughout this program when they occur, the Board is governed by SPPA procedures, and it is those procedures primarily that are explained in Ch.13: "General Board Procedures".

The Statutory Powers Procedures Act is the subject of its own Isthatlegal.ca Legal Guide:

Administrative Law (Ontario)(SPPA)

. Condominium Act

For the most part, when tenants rent condominiums they and the owner are are subject to normal RTA rules [Condominium Act, 4(2)], including those respecting termination and eviction [Condominium Act, s.4(3)].

However in some situations they can be subject to special rules. One of these is where a purchaser/tenant has interim possession of the condominium pending the completion of their purchase [see Ch.2, s.10: "Special and Exempt Premises: Interim Possession of Proposed Condominium by Purchaser Pending Title Transfer"].


2. Formation of a Tenancy

(a) Overview

The terms "tenancy", "lease" and "tenancy agreement" are used here interchangeably. In the typical case of a negotiated tenancy there are no necessary special formalities required to establish it. I have often found clients to be quite insistent that they 'do not have a lease' if they do not have a written lease. However, this is quite wrong as the applicable legislation reads:
RTA s.2(1)
"tenancy agreement" means a written, oral or implied agreement between a tenant and a landlord for occupancy of a rental unit and includes a licence to occupy a rental unit;

Note:
There is a little-used potential argument that any lease purporting to transfer possession for a period of a year (perhaps three) or more must be in writing [Statute of Frauds, s.1,3], but the Statute of Frauds is antiquated law inconsistently interpreted by the courts and it is rarely advanced in argument. Both courts and tribunals resist legal arguments that render substantive relationships void for lack of technical compliance, and any such argument would likely be met with the counter-argument that RTA s.2(1) above supercedes the Statute of Frauds. Alternatively, (and at its highest) such an argument might only result in the arrangement being held to establish a monthly periodic tenancy, which is typically more advantageous to a tenant anyway.
In any event, both written and "oral" agreements are typically effective in law to ground a lease. As well, tenancies are often acknowledged by the ongoing behaviour of the parties. This latter situation commonly occurs where another person moves in with the existing tenant and the landlord later accepts a rent cheque from the new occupant or otherwise deals with them as though they were a full tenant - thus creating a 'tenancy by estoppel' which the landlord would be hard-pressed to deny. Situations of shared accomodation, sub-let and assignment [see s.5: "Subletting, Assignments and Similar Arrangements", below] often require close examination of the behaviour of the parties before the legal arrangement can be definitely categorized.

Readers should also be aware of the creation of "statutory tenancies" [see s.2(f), below: "Statutory v Contractual Tenancies"?], which are brought about by operation of law in various circumstances.

(b) Licenses Distinguished

The above-quoted definition of "tenancy agreement" [Act s.2(1)] includes within it "a license to occupy a rental unit".

The common law views the landlord and tenant relationship as a possessory interest in real estate sufficient to exclude all others from possession and entry (ie. "exclusive possession"). It views a tenancy in land in the same general legal family as ownership, liens or holding a mortgage over land. A "license" on the other hand provides the "licensee" only with a right to use the subject premises - a contractual privilege of occupation.

The classic forms of a license are the "boarder" (receiving shelter and food) and the "lodger" (just shelter) who have rooms but share kitchen and bathroom facilities with others, be they fellow licensees or the owner. While formally these are distinct from tenancies in that they do not allow for the licensee to exclude the landlord from the occupied premises, practically privacy is usually respected in the main rented room - if only for market reasons.

That said, the RTA includes and governs such boarder and lodger arrangements as though they were "regular" tenancies - with an important exemption for when there is "sharing" of bathroom or kitchen facilities with the landlord or their immediate family: see Ch.2, s.2(j): "Special and Exempt Premises: Fully-Exempt Premises: Owner-Shared Accomodation"].

With necessary modification due to the slightly different nature of such arrangements, all provisions of the RTA apply to persons living in non-exempt boarding or lodging arrangements.

That said, the common law of "license" will have continuing application to some of the numerous fully and partially RTA-exempt categories discussed in Ch.2 where "exclusive possession" is not granted [again see Ch.2 "Special and Exempt Premises"], which - despite RTA s.2(1) above - are expressly excluded in whole or part from coverage under the RTA. It is beyond the scope of the present program to explore the law of "license" in great detail, but it is essentially contract law.

(c) Commencement

At common law a tenancy did not "commence" in law until actual possession of the "demised premises" (ie. the unit) was taken (this was called "interesse termini"). This doctrine is abolished by the RTA so that now:
Act s.13(2)
A tenancy agreement takes effect when the tenant is entitled to occupy the rental unit, whether or not the tenant actually occupies it.
Like much of the RTA this provision brings the residential L&T relationship more in accord with contract law, where enforceable rights arise at a time specified by the terms of the contract.

Due to RTA s.13(2), the dates at which a tenancy agreement are "entered into" (ie. executed either by signature, oral agreement or behavioural implication), and which it becomes "effective" (at the date the tenant is entitled to take possession) are now usually distinct. As will be seen in the rent control chapters [Chs.10-12], the "effective" date of a tenancy usually establishes the rent increase anniversary date for rent control purposes.

(c.1) 'Agreements' to Enter into Tenancy Agreements

There is an unfortunate practice in commercial tenancy practice ('offers to lease'), which at times spills over into residential tenancy practice. Landlords, by way of a preliminary 'rental application', 'offer to lease' or 'agreement to lease' - purport to bind tenants unilaterally (ie. without any further negotiation of terms) to sign a later-presented full tenancy agreement which is typically undisclosed to them at the time that they execute the initial document. Essentially the initial agreement is one to 'agree' further later, or an 'agreement to agree'. The practice is commonly an attempt to impose lease terms unilaterally on the tenant, as invariably the terms set out in the tenancy agreement add to or conflict with those set out in the initial 'agreement to agree' (indeed, if they didn't then the two documents would be identical and the two stages unnecessary).

Tenants should exercise great care when asked to sign any preliminary document in a tenancy negotiation, however it is described. True and equal negotiation calls for all terms to be on the table at the same time, and a tenancy agreement requires only one signature from the tenant. When faced with such requests, tenants are well-advised to require the landlord to present their final, full tenancy agreement for review before *anything* is signed by the tenant (in which case negotiation might just as well be based on that one primary document) - or if that is refused to simply walk away.

Some unscrupulous landlords and agents will attempt to defuse tenant suspicion by saying that it's 'only a standard-form lease' - which is legal nonsense. There is no such thing as a standard form lease in residential tenancy practice, and attempts to convince a tenant otherwise are attempts to avoid true, informed negotiation between the parties.

(d) Transfer or Sale of Rental Property by Landlord

There is a general real estate law adage that "things run with the land". This means that duties and liabilities associated with the land generally accrue to any subsequent owners.

For example, if I buy property that has a mortgage without insisting that it be paid off, the mortgagee's (ie. the lender's) right to repossess the property upon default in payment of the mortgage survives, leaving me vulnerable to loss of the property for someone else's debt. Numerous other interests in land also "run" with it, such as liens, most restrictive covenants, easements, etc. Nowadays most such interests are required to be registered on title under either the Registry Act or the Land Titles Act. This is why lawyers do "title searches" before a house purchase, to ascertain whether title is clear from such "encumbrances".

The "running with the land" principle applies to residential tenancies, and to legal duties related to them (both in existence and promised), including those related to common areas associated with such rentals:
Act s.18
Covenants concerning things related to a rental unit or the residential complex in which it is located run with the land, whether or not the things are in existence at the time the covenants are made.
Thus a residential tenancy survives sale of the property to a new owner, and the tenant simply finds themselves with a new landlord who has 'stepped into the shoes' of the old landlord with no other change in mutual liabilities between them. That said, the "new" landlord may at this time wish to avail themselves of specific "personal possession" or "purchaser possession" termination and eviction procedures [see Ch.5, s.2: "Regular Terminations: Personal and Purchaser Possession"].

The special situation where the rental unit becomes subject to mortgage-grounded foreclosure or power of sale proceedings - and how those proceedings impact the tenant - is discussed in Ch.2, s.9: "Special and Exempt Premises: Mortgage Proceedings".

Further, the situation where a tenant's rights are transferred either permanently (assignment) or temporarily (sublet) is specifically dealt with below in s.5: "Subletting, Assignments and Similar Arrangements".

(e) Periodic v Term Tenancies

. Basics

A "periodic" tenancy is one that is agreed (expressly or by the behaviour of the parties) to automatically renew itself after the expiry of a fixed period of time - typically (though not always) - a month (for boarders and lodgers it is often a week). Partly due to the terms of "automatic renewal" rules contained in the RTA (discussed below), monthly periodic tenancies are quite common with smaller non-professional landlords.

A (fixed) "term" tenancy is one that is agreed to run for a specific fixed period of time, after which (at least at common law - see "Automatic Renewals", below) it expires and the relationship ends. As a matter of landlord practice, term leases tend to be required in writing. However, due to the automatic renewal rules the main implication of having a "term" tenancy is to determine the extent of a tenant's civil liability for abandonment of the premises (aka 'lease-breaking') [see Ch.16: "Civil Remedies"], and when certain types of landlord Notices of Termination may be served [see Ch.4, s.2(d): "Termination Basics: Notices of Termination: Notice Periods for Regular Terminations"].

Care must be taken when distinguishing periodic from term tenancies to not confuse periodic tenancy "periods" with rent-payment "periods" for a term tenancy (which are also typically monthly). A term lease of one year normally calls for monthly rent payments, but this does not make it a "periodic" tenancy.

Legally, both the period of a "periodic" tenancy and the "term" of a term tenancy commence when the tenant's right of occupancy commences, despite possession not yet having taken place [Act s.13]. This is consistent with the abolition of the doctrine of "interesse termini" [discussed above in s.2(c)].

. Automatic Renewals

As noted above, the significance of having a "term" tenancy (say one year) is limited by the operation of "automatic renewal" provisions of the RTA:
s.38(1)
If a tenancy agreement for a fixed term ends and has not been renewed or terminated, the landlord and tenant shall be deemed to have renewed it as a monthly tenancy agreement containing the same terms and conditions that are in the expired tenancy agreement and subject to any increases in rent charged in accordance with this Act.
Essentially this means that residential tenancies no longer terminate merely by the expiry of any agreed time periods, as they can do in the commercial law situations. Landlord-initiated terminations under modern Ontario residential L&T law are only allowed for listed reasons or "causes" [see Chs.4-7] (and expiry of a term lease is not one of these listed reasons). Subject to the landlord's regulated right to increase rent, such tenancies otherwise automatically renew under the same terms as the original tenancy.

Similarly - daily, weekly and monthly periodic tenancies are automatically renewed for daily, weekly and monthly periods (respectively) [Act s.38(2)] - though this would have been inferred under the common law anyway. Note however that "periodic" tenancies of any other "period" (ie. other than daily, weekly or monthly) duration renew as monthly periodic tenancies [Act s.38(3)].

As alluded to above, a major implication of the conversion of a term tenancy into a periodic tenancy is that the landlord has a broader range of termination "reasons" [see Ch.5: "Regular Landlord Terminations"] available to terminate a tenancy at the end of each period. These causes tend to be less pressing than the other "causes for early termination" [see Ch.6: "Early Termination for Cause"] (eg. illegal activities, damage to premises) that can be used DURING the running of a period or term (ie. anytime).

(f) Statutory v Contractual Tenancies

While most tenancies are created through some conscious act of both landlord and residential tenant, this is not always the case. The extensive regulation of the relationship has created several instances where it, or at least it's option, is established by operation of law. These are sometimes referred to as "statutory tenancies".

'Automatic renewal' (discussed above) after expiration of a term lease is one such situation. Another is the assumption of a tenancy by the spouse of a deceased tenant [see s.4: "Spousal Assumption of Tenancy on Death or Abandonment", below].

A further example of a "statutory tenant" is the overholding occupant who - after the unchallenged expiration of 60 days of known 'illegitimate' occupation - is converted to a 'legitimate' tenant [see s.5(f): "Subletting, Assignments and Similar Arrangements: Unauthorized Assignments and Overholding Subtenants", below].

A line of case law developed under previous legislation struggled with whether such "statutory tenants" had the full rights granted to contractual tenants: Lifshitz v Forest Square Apartments Ltd (1982) 36 OR (2d) 175 (Div Ct) (there they were denied the right to assign the tenancy), though the distinction has been questioned by Lamont Residential Tenancies, 5th ed (Carswell, 1993) and later cases. Given the extensive efforts in the present RTA to establish and accomodate the status of such "statutory tenants" (this is not a term used regularly in the legislation) there appears to be no further purpose in maintaining "statutory tenancies" as a separate, vague and inferior class of tenancy.

(g) Negotiating a New Tenancy

. Overview

The RTA establishes the following rules and procedures relating to the negotiation and commencement of a tenancy.

. Factors Which May be Assessed by Landlords

Firstly, when selecting prospective tenants, "landlords may use, in the manner prescribed in the regulations made under the Human Rights Code, income information, credit checks, credit references, rental history, guarantees, or other similar business practices as prescribed in those regulations." [Act s.10]:

Human Rights Code, Reg 290/98: Business Practices Permissible to Landlords in Selecting Prospective Tenants for Residential Accomodation

These factors would also generally apply to the decision of whether to consent to a sublet or assignment as well [see s.5: "Subletting, Assignments and Similar Arrangements", below].

These provisions try to ensure that decisions to deny accomodation to people are not based on any Human Rights Code-prohibited ground of discrimination.

Human rights law and Ontario tenants are discussed in more detail at this Isthatlegal.ca link:

Human Rights Law (Ontario) Guide: Ch.2, s.3: Protected Actvities: Accomodation

. Rent Deposits Refunded if Not Applied

Where the landlord takes a rent deposit from a prospective tenant and subsequently "vacant possession of the rental unit is not given to the prospective tenant" [Act s.107(1)], the rent deposit must be refunded (ie. it must not be retained as some sort of non-refundable "application fee").

Such rent deposit may however be applied towards the rent deposit for any replacement unit provided, presuming of course that the tenant has agreed to this [see Ch.10, s.5(d): "Rent Basics: Non-Rent Charges and Security Deposits: Security Deposits: Where Possession Not Taken or Tenancy Transferred"].

. Information Package

As discussed in Ch.3 [see s.2(b): "Tenant Rights and Remedies: General Rights and Responsibilites: Documentation on Commencement of Tenancy"], the landlord must provide certain documentation to tenants at the commencement of a tenancy, as follows:
  • an information package regarding "the rights and responsibilities of landlords and tenants, the role of the [Landlord and Tenant] Board and how to contact the Board" "in a form approved by the Board", at or before the date the tenant is entitled to take possession [Act s.11];

    Information for New Tenants

  • where there is a written tenancy agreement, a copy of it within 21 days after it is signed and given to the landlord [Act s.12(2)];

  • where there is no written tenancy agreement, "written notice of the legal name and address of the landlord to be used for giving notices and other documents under this Act." [Act s.12(3)].
Case Note: Houle v Hayes (Div Ct, 2010)

In what may be one of the most bizarre rulings I have ever read, the Divisional Court quashed a tenant's appeal which was grounded on the landlord's providing of a false name in the tenancy agreement. Section 12(1) of the RTA requires that any written tenancy agreement "set out the legal name and address of the landlord" and s.12(4) allows the tenant to withhold rent until such time as the landlord is in compliance, at which time the withheld arrears as well will come due. Despite the use of the false name in the written tenancy agreement, the court found that the tenant knew of the landlord's real name, and concluded that the tenant's reliance on s.12(4) was a "technicality" only because the error could have been corrected (but wasn't) easily by the landlord. On this basis the court not only quashed the appeal as non-meritorious but found the tenant's litigation efforts to be frivolous and vexatious.

A further ground relied on by the court was that the appellant should not be allowed on appeal to raise issues (the false name issue) that he did not raise below. This conclusion is patently against an admission by the landlord, quoted from their affidavit by the court itself, that the tenant did raise the issue but that the Board held it to be irrelevant.

In addition to the overtly erroneous treatment of evidence by the court, and the glossing over of a plain violation of statute, the court gave no consideration to difficulties the tenant would face in obtaining an enforceable order had they sought some remedy from the LL [the clear policy target of s.12(1)], or the public policy consideration of the court assisting a fraudulent enterprise.

The reasoning and result in my opinion are quite absurd.
. "Serious Breach" Notice, If required

If the premises are under a "serious breach" Order [see Ch.3, s.5(c): "Tenant Rights, Responsibilities and Remedies: Tenant Rights Applications: Serious Breach Orders"], a serious breach Notice as explained in Ch.12, s.6: "Other Rent Proceedings: 'Serious Breach' Rent Increase Restriction Orders and New Tenants" is required for a new tenant.

(h) 'Illegal' Tenancies

The effect of 'illegality' on a tenancy's status under residential landlord and tenant law was considered directly in the case of Fraser v Beach (Ont CA, 2005). While decided under the old Tenant Protection Act (TPA), it's result is equally applicable under the present RTA.

In the case the court was faced with an appeal, by the tenants of an illegal rooming house, against a common law Superior Court injunction which ordered the landlords to close it down. The tenants were not party to the original proceedings and a subsequent Tribunal application brought against them to terminate and evict was dismissed. The neighbours, the moving parties in the original injunction, then sought and obtained an order within the original Superior Court proceedings - on notice to the tenants - that the tenants must vacate. It was this order that the tenant's appealed to the Court of Appeal.

In granting the tenants' appeal the court dismissed several arguments from the neighbours, including one that the 'illegality' of the tenancies undermined their status as tenants under the TPA. This argument was firmly rejected by the court as follows:
[10] There is no doubt that the Tenant Protection Act applies to the rooming house and the relationship between its inhabitants and the landlords, despite the fact that it is operated contrary to the city's bylaw. Subsection 2 (1) specifies that the Act "applies with respect to rental units in residential complexes, despite any other Act and despite any agreement or waiver to the contrary." The Act defines "rental unit" as "any living accommodation used or intended for use as a rented residential premises." The definition specifically includes, in subparagraph (b), a room in a rooming house. A "tenant" is defined to include "a person who pays rent in return for the right to occupy a rental unit" and "tenancy agreement" means "a written, oral or implied agreement between a tenant and a landlord for occupancy of a rental unit ..." The rooming house itself falls within the definition of "residential complex" as it is a "building in which one are more rental units are located."

[11] These definitions, which are clear, do not exclude an illegal rooming house from their application. Not only does the text of the Act provide no basis for holding otherwise, it would be inconsistent with the purpose of the Act to withhold the protections it provides from residents of the illegal residential units leaving them at the mercy of landlords. I conclude that the Act applies to the relationship between the landlords and the tenants in this case.
There is little doubt that the reasoning used in this decision is broadly applicable to a range of other 'illegalities', particularly zoning, licensing and other municipal by-law violations. Note that more serious issues of illegal tenant behaviour are addressed as termination and eviction matters in Ch.6, s.2: "Early Landlord Termination for Cause: Illegal Acts".

Chapter Continues
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