Recent Changes to the Residential Tenancies Act that

Will Affect Your Practice

Joe HofferCohen Highley LLP

519-672-9330hoffer@cohenhighley.com

“Rental Fairness” Act, 2017

• Changes for Real Estate Lawyers to be aware of:

− Possession for “Landlord and purchaser’s own use” changes

− Possession for substantial renovation/conversion

− Mandatory “Prescribed Lease” Requirement

− Loss of “New Construction” exemption, Rent Controls

− Relevance of “Condo Status” re: Pets, Single Family Uses and remedies

− Changes to Rules for “Above Guideline Applications”

− Exemptions from RTA: New and Old

− “Luxury Rentals”: Special Rules? Not!

Landlord’s Own Use Changes (s. 48 RTA)• RTA amended to clarify that Landlord can give notice if

Landlord/family member in good faith requires possession for the purpose of “…residential occupation of at least one year” – must confirm in affidavit (s. 72 (1) (a)) if eviction applied for;

• Proposed occupant must be landlord, spouse, child or parent of either of them or a caregiver if care recipient lives in the residential complex

• A corporation cannot give the notice, regardless of corporate structure (sole shareholders and condos now prohibited although a “part owner” can) … “Landlord” must be “an individual” (s. 48 (5))

• Landlord must pay tenant 1 month’s rent compensation (or offer another unit “acceptable to the tenant”…can be at a different price), s. 48.1

• No eviction order can be granted by LTB unless Landlord has paid compensation s. 83 (4)

Onus Shift for T5 “Bad Faith “ Applications (s. 57 RTA) : “Information” for Your Clients

• Presumption that Landlord served Notice “in bad faith” if at any time, starting from the day Landlord gives the notice and ending one year after the Tenant vacates (ie: at least 14 months but could be longer), the Landlord:− advertises the unit for rent;− enters into a tenancy agreement for the rental unit with someone

other than the Tenant who moved out;− advertises the rental unit or the building for sale; or,− demolishes the unit or building; or takes any step to covert the

rental unit or building to a non-residential use

• Presumption of bad faith is “rebuttable”• Life (and death) happens: paper all activity from time of serving

notice to one year after the tenant vacates.

Liability for “Bad Faith” Notice?

• One year limitation for Tenant to apply (ie: from time Landlord lists the unit for rent, or takes another prohibited step, so can be over 2 years after Tenant vacates) s. 57 (3)

• Board can order 1 year of increased rent; moving and related expenses; and, administrative fine of no more than $25K

• The “bad faith” and liability rules apply to Notices given by the Landlord on and after April 20, 2017

• Note: the same liabilities apply if Landlord fails to “afford a tenant a right of first refusal” after substantial renovations, subject to 1 year limitation (s. 57.1 RTA)

Different Rules if Purchaser Requires Possession

• S. 49 RTA: If property is a “residential complex” with no more than 3 residential units, then a Landlord may give Notice of Termination on behalf of a purchaser of the rental unit or the residential complex

• Agreement of purchase and sale must be in place before Notice of Termination is given (and no fixed term lease beyond the 60 days)

• Notice is for occupation of rental unit or “residential complex” by same class of person per: Landlord’s own residential use

• If eviction applied for: affidavit from purchaser required s. 72(1) (b) • No requirement for 1 month’s rent compensation or for a minimum

occupancy of one year…BUT!...if• Landlord/family member/caregiver does not move in “within a

reasonable time after former tenant vacated”, then the vendor landlord is liable?? (s. 57 (1) (b)) No presumption of bad faith

• Before Notice is given under ss.48 or 49; read new LTB Guideline G12

Consider Terms in Agreement of Purchase and Sale Which Survive Closing?

• To provide affidavit confirming personal residential occupancy for designated person (need not occupy for full year( s. 72 (1) (b))

• To indemnify vendor if designated person fails to occupy at all and application brought by former tenant

• To indemnify if finding by the Board that purchaser’s designated person failed to move in within a reasonable time??

• To fully cooperate with application for Order terminating the tenancy, to be effective on the closing date

• Tenant has one year after vacating within which to apply for compensation s. 57 (2) RTA

Substantial Renovations: “Right of First Refusal”• New penalties and remedies if Landlord fails to allow Tenant to

exercise right of first refusal for re-entry after completion of renovations s. 57.1 (1)

• The Notice of Termination clearly articulates the right and the tenant must give notice of intent to exercise the right s. 50 (3) and 53 (2)

• Former tenant may apply to LTB if landlord fails to carry out renovations “within a reasonable time” after tenant vacated

• Same rule applies if landlord fails to “demolish or convert to another use” after tenant vacates on those grounds (s. 57 (1) (c))

• One year limitation from time tenant vacates s. 57.1• No “presumption of bad faith”, but still open to finding

Possession for “Conversion”, Demolition

• Conversion to “non-residential use” (see Sertic v. Mergarten, attached) and beware of “granny suite” situations where storage is implemented prior to sale

• S. 57 (1) (c): landlord remains open to finding of bad faith up to one year after tenant vacates. S. 57 (2)

• No order for termination or possession unless all necessary approvals are in hand

The “Standard Form of Lease”

• Mandatory for most (i.e. condos, houses, apt buildings, secondary suites) tenancies entered into on or after April 30, 2018 - s. 12.1 RTA and O. Reg. 9/18

• Must be signed on or before day Tenant is entitled to occupy the rental unit

• A “best practice” is to start using the Standard Form for all leases signed by all parties on or before April 30, 2018

• Not required for “lease term renewals” after Apr. 30 if lease grandfathered: s. 38 RTA

• Form is available from Government website

If Standard Form is Not Used?

• Tenant may demand “in writing” a signed copy that complies with RTA from the Landlord (only once during tenancy)

• If Landlord does not give a signed copy within 21 days, the Tenant may withhold rent payments “that become due” after expiry of 21 days (ie: the next month’s rent). Tenant may withhold a maximum of one month rent.

• If Landlord complies within 30 days of date rent is withheld, then Tenant must repay withheld rent; after 30 days the Tenant can keep the withheld rent.

If Standard Form is Not Used?

• If Landlord does not provide lease within 21 days, Tenant has 30 days to give 60 day notice to vacate regardless of the lease term

• After Landlord produces the signed Standard Form Lease, Tenant has 30 days to decide whether to sign it back to the Landlord or give notice

• If 30 days passes without Tenant giving notice, Tenant is bound by non-compliant lease.

Traps for the Unwary Landlord and “Additional Terms and Conditions”

• Contra Proferentem applies to the interpretation of the landlord’s completion of the prescribed lease

• Your landlord clients should be advised to get training or advice before filling out the prescribed lease

• “services and facilities” should not include “visitors’ parking”• Do you seriously want to “agree to give notices” via email? No

LTB Rules permit this• The insurance assertion of the province: hmmmm…..?• Smoking, Cannabis, Rules and Regulations: all in s. 15• See excerpts of “Prescribed” Standard Lease Agreement,

attached

Relevance of Condo Status of Rentals

• Enforcement of Condo Declaration, By-laws and Rules is available

• “No Pets” and “Family Status” provisions “if provided to the tenant”. A best practice is to attach relevant provisions as a schedule to the “Standard Lease Agreement”

• Enforcement available against the owner under the Condo Act but possession against a tenant must be pursued under the RTA

• For condo building operated as a rental: enact new Rules? May give a practical edge but LTB can “look behind” pattern of activities (s. 202 RTA) and always has discretion to refuse eviction (s. 83 (1) (a) RTA)

Removal of “New Construction” Exemption from Guideline Rent Control

• Units that were formerly exempt units because they were in a building not occupied for residential purposes before November 1991 are now subject to the rent control guideline.

• Changes apply to Notices of Rent Increase given on or after April 20, 2017

• Does not affect exemptions under ss. 6 and 7. For example, RGI units continue to be excluded from rent control as per s.7.

AGI Changes

• AGI based on “Capital Expenditures” remains• Cabinet was given the power to make new rules about

when a capital expenditure would be “eligible” for an AGI• Cabinet has not made any new rules yet• Ability to recover “extraordinary operating cost increases”

for utilities is gone• Recovery of extraordinary cost increases for property taxes

and “municipal charges” remains: ie: Waterloo Licensing Charges (see Bulletin in materials)

Elevator/Work Order Issues: s 126 RTA

• Landlord must file with their AGI application evidence of status of any pending elevator orders under the RTA or the Technical Standards and Safety Act about elevators regardless of whether compliance period remains open, and regardless of whether the work is being claimed on the application

• If, as of the hearing date, compliance period for elevator work order is expired, no AGI will issue until work is done, regardless of whether the cost of such work is claimed in the application

• Elevator requirements are not retrospective to affect applications filed before the sections came into force

New Exemption for “Transitional Housing”

• S. 5.1 RTA: Statutory terms of tenancy• Policy goal is transition from street to permanent

housing• Transition from shelters to permanent housing• Provides exemption from rent controls and permits

termination and possession without resort to Landlord and Tenant Board

• Imposes numerous protections for residents• Not the same as 1 year exemption for “therapeutic”

and rehab services

Student and Youth Rentals

• The 19’th Century called…it wants its statute back!• Be aware of the tenancy in common v. joint

tenancy v. an RTA “hybrid” form of tenancy• “Household” leases avoid rigid Fire Code and

Lodging House licensing obligations• See JDN case attached, for hallmarks of “joint” v.

“tenancy in common” agreements

Are there Special Rules for “Luxury” Rentals?• No, but as a practical matter, less likely to be

reliance on RTA rights• If rent is in arrears, requires swift action (LTB

jurisdiction maxes out at $25K)• Short term luxury rentals of a home: can be

problematic if RTA applies:• Cannot agree at commencement to a termination date• If tenant refuses to vacate, 120 day notice for

“Landlord’s own use”: pay one month rent penalty!• Consider a “sublet” strategy

Attachments

1. Paper2. LTB “Guideline 12”: A roadmap for Landlord’s

own use and for giving notices on behalf of prospective purchasers

3. Sertic v. Mergarten, 2017 ONSC 2634. Excerpts of Standard Lease Agreement5. Rent Control Bulletin: “Municipal Charges”6. JDN v. Edmond et. al [2018] SWL-02916-17-RV

Questions ?