Summary:
1. When is the Ontario Standard Lease (OSL) mandatory, and which version?
2. What is tenants' recourse?
3. Should I demand OSL? If so, when and why?
4. What qualifies as compliance with RTA section 12.1?
5. What if the old version of OSL is used - does this count as non-compliance?
6. When not to use OSL?
1. Introduction
In our previous post we covered a scenario when tenants can withhold rent (until the landlord complies) if the landlord does not provide his legal name and *an* address for service of documents (see RTA section 12).
Now let's look at another scenario when rent can sometimes be withheld: i.e. landlord's failure to provide the Ontario Standard Lease when it is mandatory (see RTA section 12.1). These are different scenarios and should not be confused or conflated. In fact, RTA subsection 12.1(12) even states: "For greater certainty, nothing in this section affects the operation of section 12".
Under RTA section 12.1, the Ontario Standard Lease is mandatory for all RTA-covered tenancies of the "prescribed class" that were entered into on or after April 30, 2018 (see O. Reg. 9/18 section 2). According to O. Reg. 9/18 section 1, OSL requirement does not apply to care homes, sites in mobile home parts and land lease communities, rent-geared-to-income (RGI) housing / most social housing, certain other special tenancies or co-operative housing, as well as any other accommodation that is exempt from the RTA (see RTA section 5).
Moreover, if the tenancy agreement was entered into on or after March 1, 2021, the OSL must be in the new form. See O. Reg. 699/20 subsection 3(2) amending O. Reg. 9/18 section 2.
And if the tenancy agreement was entered into on or after December 2, 2020 and before March 1, 2021, the OSL can be in either old or new form. See O. Reg. 699/20 subsection 3(1) amending O. Reg. 9/18 section 2.
2. Tenants' Recourse
For the tenancies that qualify, tenants may demand once during their tenancy the Ontario Standard Lease in writing (RTA subsection 12.1(5)), and if the landlord does not comply within 21 days after the written demand, the tenants can begin withholding up to 1 month's worth of rent (RTA subsection 12.1(6)). If the landlord complies, the tenant must pay the withheld rent (RTA subsection 12.1(8)). But if the landlord doesn't comply within 30 days after the tenant started withholding up to 1 month's worth of rent, the tenant may keep it (RTA subsection 12.1(9)).
With that said, tenancies can be written, verbal or implied (see RTA section 2 - "Interpretation"), and non-compliance with RTA section 12.1 about the requirement to use the Ontario Standard Lease does not make the tenancy agreement void (see RTA subsection 12.1(11)).
3. Should the tenant demand the Ontario Standard Lease? And if so, when and why?
Demanding OSL (with all the perks that come with it) is a once-in-a-tenancy opportunity (see RTA subsection 12.1(4)), so it is important not to waste it unnecessarily.
1)
First, I think that it is often a bad idea to demand the Ontario Standard Lease before the tenant even gets the keys and moves into the unit, because demanding something under the RTA can potentially cause the landlord to decide to renege on his obligations altogether if the landlord views knowledge of the RTA and the determination to enforce one's legal rights as a "red flag".
2)
As well, if the tenant already knows which sections of their tenancy agreement violate the RTA, the tenant can ignore them and follow only the valid and enforceable clauses and the RTA, since parties cannot contract out of their statutory rights and obligations under the RTA anyway (see RTA sections 3 and 4).
3)
Besides, one of the perks is that the landlord's failure to provide the Ontario Standard Lease gives the tenant an opportunity to terminate the tenancy agreement early under RTA section 47.0.1, despite a fixed lease term, which means it can be used strategically just to get out of a fixed lease term early. Here is the process:
1. The tenant demands the Ontario Standard Lease in writing.
2. The landlord responds by either providing the Ontario Standard Lease or not providing the Ontario Standard Lease.
3. If the landlord does not provide the Ontario Standard Lease within 21 days after the tenant's written demand letter OR if the landlord provides the Ontario Standard Lease (and the tenant doesn't sign it), the tenant then has up to 30 days since the landlord provided the Ontario Standard Lease to potentially decide to issue 60 days' N9 tenant's notice of termination, despite any fixed lease term (even if they are bound by a multi-year fixed lease term). If the tenant wants to exercise this option of vacating early, the tenant must not sign the OSL. Or the tenant may decide to remain in the unit instead, in which case the tenant may choose whether to sign the OSL or not to sign it but just to remain in the unit (the choice would be completely up to the tenant).
Why is this ability under RTA section 47.0.1 important?
Sometimes issues with the unit become apparent only after moving in, e.g. some cases of extremely noisy neighbours, extensive pest control infestations, etc, and perhaps the landlord's response is inadequate or insufficient, and the tenant just wants out, but the landlord won't sign an N11 agreement of termination (especially if the landlord believes that he won't find other tenants for the same rent due to the same issues that are causing *this* tenant to want to leave). The tenant would still be early into his fixed lease term (if applicable) at that time, and tenants are on the hook for the duration of the fixed lease term.
The tenant can request assignment (and if the landlord says "no" or doesn't reply within 7 days, can issue a 30 days' N9 notice of termination). But if the landlord agrees to assignment and the tenant has trouble finding assignees for the same rent amount (perhaps due to the same issues with the unit that are causing the current tenant to want to vacate in the first place), the tenant might feel the need to look for other termination methods.
As discussed in one of our previous posts, there can be certain risks associated with terminating a tenancy early. If the tenant issues a short notice of termination, the landlord can sue for loss of rental income as long as the landlord can prove that he minimized his losses (RTA section 16, RTA subsection 88(4)) by trying to re-rent the unit immediately and did not double-dip (i.e. did not collect rent more than once for the same period of time, RTA subsection 88(3)).
And if the tenant wants to request early termination of the tenancy agreement as one of the remedies on a T6 application about maintenance or on a T2 application about tenant rights, he must have pretty compelling reasons, the Board still may not necessarily order early termination, and the Board can have significant delays (though tenants can vacate and backdate the requested termination date on a T6 or T2 to the date when they actually vacated). There is a risk of being denied there, especially if the landlord hasn't had a chance to fix the issues and the issues are seen as something that can be fixed. As stated by Member Pilon in TST-55019-14 (Re), 2015 CanLII 22363 (ON LTB), <https://canlii.ca/t/ghdr7>, para. 25: "Terminating a tenancy early is an extraordinary remedy that is appropriate when a rental unit is uninhabitable or where a landlord’s behaviour is such that continuing to live in the rental unit is impossible."
As you can see, there are some risks in the above scenarios, and some tenants would prefer a potentially longer but 100% "safe" 60 days' N9 notice that won't require any filing with the LTB or any litigation risks.
(But, of course, the above discussion about some advantages of a 60 days' N9 notice is moot if the landlord simply agrees to sign an N11 agreement of termination (which they often would, especially if they think the tenant is likely to become problematic and/or to file T2, T6 or any other applications at the Board).)
Demanding the Ontario Standard Lease without a need might cause unnecessary strife and might be better suited for later, if the relationship has already deteriorated and the tenant considers filing at the Board about other issues anyway.
What is best for landlords?
As for landlords, they essentially win nothing by refusing to use the Ontario Standard Lease for tenancies for which the Ontario Standard Lease is mandatory, but they can lose a bit, including signalling lack of knowledge of the RTA to applicants and tenants, risk of early termination by a tenant (mentioned above) and even up to 1 month's worth of rent, if the tenant demands the Ontario Standard Lease in writing (as per RTA subsection 12.1(5)) and the landlord does not comply within 21 days plus the next 30 days after the tenant starts withholding up to 1 month's worth of rent (see RTA subsections 12.1(6) and 12.1(9)).
4. What qualifies as compliance with RTA section 12.1?
From RTA subsection 12.1(5):
"(5) The tenant of a rental unit who is a party to a tenancy agreement described in subsection (4) may, once during the tenancy, demand in writing that the landlord provide to the tenant, for the tenant’s signature, a proposed tenancy agreement that,
(a) complies with subsection (1) [i.e. the Ontario Standard Lease form];
(b) is for the occupancy of the same rental unit; and
(c) is signed by the landlord. 2017, c. 13, s. 5."
5. What if the tenancy started on or after March 1, 2021, and you use the OLD version of the Ontario Standard Lease form?
Perhaps O. Reg. 699/20 section 3 (which amends O. Reg. 9/18 section 2) seems to imply that it would be equivalent to non-compliance with RTA section 12.1, i.e. it's as if the landlord did not provide the mandatory Ontario Standard Lease, and the above-mentioned rules about early termination and withholding (and eventually even keeping) up to 1 month's worth of rent should apply to such scenarios, as well. However, we haven't seen rulings addressing these issues (yet) and perhaps the LTB would side with the landlord based on the idea of "substantial compliance" (RTA section 212) with form? What do you think?
6. What if the tenancy is not under the RTA or if I am not sure if it is covered under the RTA? Should I still use the Ontario Standard Lease?
In these situations, you really need to get legal advice to figure out whether the tenancy would be covered under the RTA and which contract to use. A tenancy that is not covered under the RTA should not use the Ontario Standard Lease because it would not be protective enough and because there would be a risk that the tenant could try to claim that the agreement is covered under the RTA, relying on the OSL form. Of course, parties cannot just agree to be covered under the RTA or not be covered, i.e. the RTA either actually applies or it doesn't "despite any agreement or waiver to the contrary" (see RTA section 3), and "the Board shall ascertain the real substance of all transactions and activities and ... may disregard the outward form..." (see RTA section 202). However, ad idem / "meeting of the minds" is extremely important when a contract is being formed, and perhaps there might be some argument about the intention of both parties if the wrong form is used.
Get legal advice and use a well-worded agreement by a legal professional (covering notices of termination, rent increases, deposit(s), etc) to protect your interests well.
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Notes:
"Tenancy agreement in respect of tenancy of a prescribed class
12.1 (1) Every tenancy agreement that is entered into in respect of a tenancy of a prescribed class on or after the date prescribed for that class of tenancies shall comply with the following requirements:
1. The tenancy agreement shall be in the form prescribed for that class of tenancies.
2. The tenancy agreement shall comply with the requirements prescribed for that class of tenancies. 2017, c. 13, s. 5.
Time of signature
(2) Every tenancy agreement referred to in subsection (1) shall be signed by the landlord and the tenant on or before the day the tenant is entitled to occupy the rental unit under the tenancy agreement. 2017, c. 13, s. 5.
Non-application
(3) This section does not apply with respect to a tenancy agreement entered into in respect of a tenancy of a prescribed class referred to in subsection (1), if the tenancy agreement is entered into before the applicable prescribed date referred to in that subsection, and even if the tenancy agreement is renewed or deemed to be renewed under section 38 on or after that date. 2017, c. 13, s. 5.
Application of subs. (5) to (10)
(4) Subsections (5) to (10) apply with respect to a tenancy agreement referred to in subsection (1) that does not comply with that subsection. 2017, c. 13, s. 5.
Demand for proposed tenancy agreement that complies with subs. (1)
(5) The tenant of a rental unit who is a party to a tenancy agreement described in subsection (4) may, once during the tenancy, demand in writing that the landlord provide to the tenant, for the tenant’s signature, a proposed tenancy agreement that,
(a) complies with subsection (1);
(b) is for the occupancy of the same rental unit; and
(c) is signed by the landlord. 2017, c. 13, s. 5.
Withholding of rent payments
(6) If at least 21 days have elapsed since the day the tenant made the demand and the landlord has not complied with the demand, the tenant may, subject to subsections (7) and (8), withhold rent payments that become due after the expiry of that 21-day period. 2017, c. 13, s. 5.
Same
(7) The maximum total amount of rent payments that a tenant may withhold under subsection (6) is an amount equal to one month’s rent. 2017, c. 13, s. 5.
Same
(8) The tenant may not withhold rent payments under subsection (6) on or after the day the landlord complies with the demand. 2017, c. 13, s. 5.
Requirement to pay withheld rent payments
(9) The landlord may require the tenant to pay to the landlord any rent payment withheld under subsection (6) only if the landlord complies with the tenant’s demand for a proposed tenancy agreement no later than 30 days after the date of the first rent payment withheld under that subsection. 2017, c. 13, s. 5.
Same
(10) The landlord may require the tenant to pay withheld rent payments under subsection (9) even if the tenant does not enter into the proposed tenancy agreement provided to the tenant by the landlord. 2017, c. 13, s. 5.
Tenancy agreement not void
(11) For greater certainty, a tenancy agreement is not void, voidable or unenforceable solely by reason of not complying with subsection (1) or (2). 2017, c. 13, s. 5."
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"Notice to terminate before end of period or term, tenancy referred to in subs. 12.1 (1)
47.0.1 (1) Despite subsections 44 (3) and (4) and section 47, a tenant may terminate a tenancy referred to in subsection 12.1 (1) that is a yearly tenancy or a tenancy for a fixed term by giving notice of termination to the landlord in accordance with this section if,
(a) the tenant has made a demand for a proposed tenancy agreement under subsection 12.1 (5) in respect of the tenancy; and
(b) either one of the following applies,
(i) at least 21 days have elapsed since the day the tenant made the demand and the landlord has not complied with the demand, or
(ii) the landlord has complied with the demand and the tenant has not entered into the proposed tenancy agreement provided to the tenant by the landlord. 2017, c. 13, s. 6.
Limitation
(2) A tenant may give a notice under subsection (1) no later than 30 days after the day the landlord has provided the proposed tenancy agreement to the tenant. 2017, c. 13, s. 6.
Period of notice
(3) A notice under subsection (1) to terminate a yearly tenancy or a tenancy for a fixed term shall be given at least 60 days before the date the termination is specified to be effective and that date shall be on the last day of a rental period of the tenancy. 2017, c. 13, s. 6.
Form of notice
(4) A notice under subsection (1) shall comply with subsection 43 (1). 2017, c. 13, s. 6.
Application of subs. 44 (5)
(5) Subsection 44 (5) applies with necessary modifications with respect to a notice given under subsection (1). 2017, c. 13, s. 6."
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