Note:
This post is highly speculative and is here just to ask some questions.
The question on potentially limiting rent increases contractually is of common practical concern, since some tenants are afraid of renting units which are exempt from the Guideline and since some landlords want to reassure prospective tenants that rent increases will not be extraordinary (to attract a pool of quality applicants). However, is there any way at all to contract around this issue by limiting rent increases to no more than X%?
1.
We know that we cannot contract out of the RTA.
Specifically, RTA section 3 states that the RTA applies "despite any other Act and despite any agreement or waiver to the contrary" and RTA section 4 states that "a provision in a tenancy agreement that is inconsistent with this Act or the regulations is void".
And, as stated in Putnam v. Grand River Conservation Authority, 2006 CanLII 18526 (ON SCDC), <https://canlii.ca/t/1ng93>:
"[29] ... The courts have prohibited contracting out even if it is for the benefit of the tenant. (Crown Trust Co. v. Rosenberg, [1986] O.J. No. 2683 (H.C.J.) at para. 18; Pallagrosi v. Hrynyk, [1994] O.J. No. 2683 (Gen. Div.) at paras. 15-17)."
2.
Divisional Court ruling in 1086891 Ontario Inc. v. Barber, 2007 CanLII 18734 (ON SCDC), <https://canlii.ca/t/1rldv> addressed the issue of whether or not parties can agree to forgo rent increases altogether (in the majority decision, the Divisional Court's answer is a clear "no", but we will get to it later).
Unfortunately, the question about whether or not rent increase amounts can be limited contractually for units exempt from the Guideline was not really analyzed or tested in great detail.
E.g. the opportunity was missed in Louis Bourgon's TEL-15412-11 (Re), 2012 CanLII 28027 (ON LTB), <https://canlii.ca/t/frg5h>:
"Second, in the event that the Board determines that there was no residential occupation prior to November 1, 1991 within the meaning of section 6(2)(c) of the Act, the Tenants argue that the parties agreed, by their conduct, to be bound by the published rent control guideline as the benchmark for future rent increases. Such an implied agreement, the Tenants argue, is not tantamount to contracting out of the provisions of the Act, nor does it run afoul the Divisional Court’s ruling in 1086891 Ontario Inc. v. Barber 2007 CanLII 18734 (ON SCDC), [2007] O.J. No. 2046 284 D.L.R. (4th) 568.
[...]
Given my determination that the residential complex is subject to rent controls based on the historical use of the property, it is not necessary for me to consider the Tenants’ alternative argument regarding the existence of an implied contract governing rent increases in a non-rent controlled environment."
Original LTB ruling by Renee Lang:
"The effect, if any, of the provision limiting rent increases
6. As I stated at the hearing, s.3 of the Residential Tenancies Act, 2006 (the ‘Act’) provides that landlords and tenants cannot waive their entitlements under the Act. The rental unit is a condominium apartment and it was built well after November 1, 1991, so, pursuant to subs.6(2) of the Act, it is exempt from the rent increase guidelines. This means the Act entitles the Landlords to increase the rent in any amount that they choose (recent changes to the Act with respect to the partial exemption to rent increases were not in effect at the time that the Landlords served their notice or at the time the notice took effect). As per s. 3 of the Act the Landlords cannot waive their entitlement to raise the rent in any amount they choose. The provision in the lease that purports to limit rent increases is therefore not enforceable.
7. Further, subs. 4(1) of the Act provides that provision in a tenancy agreement that conflicts with a provision of the Act is void. The Act permits the Landlords to increase the rent to any amount that they choose. The provision of the lease limiting rent increases conflicts with the Act and so it is void."
Review Order (which upheld the original LTB ruling above) by Karen Wallace:
"14. The Member very reasonably concluded that any term in the tenancy agreement that limits the amount of the rent increase is void since it would be in conflict with the provisions set out in subsection 6(2) of the Act which (at the time) permitted a rent increase in any amount for units built well after November 1991."
3.
However, despite the adjudicator's statement above ("the Act ... permitted a rent increase in any amount"), RTA section 6.1 does not actually state that the landlord is permitted to increase rent by any amount if the unit is exempt from the Guideline. Instead, it JUST says that certain sections of the RTA (e.g. RTA section 120 about the Guideline) do not apply to units that are exempt under RTA section 6.1.
From RTA section 6.1:
"Buildings, etc., not occupied on or before November 15, 2018
(2) Sections 120, 121, 122, 126, 127, 129, 131, 132, 133, 165 and 167 do not apply on and after the commencement date with respect to a rental unit if the requirements set out in one of the following paragraphs are met:
[...]
Rental units in detached houses, semi-detached houses or row houses
(3) Sections 120, 121, 122, 126, 127, 129, 131, 132 and 133 do not apply on and after the commencement date with respect to a rental unit if all of the following requirements are met:
[...]"
From RTA section 6.1:
4.
This may be significant, because there is a difference between violating a rule that would state that a landlord can increase rent by any amount vs. violating a rule that just states that RTA section 120 does not apply.
So, on its face, would a clause limiting rent increases directly violate the RTA, when the RTA does *not* actually state that the landlord can increase rent by any amount?
What if a clause limiting rent increases might mean:
Non-applicability of RTA s. 120 (the Guideline) on the statutory levelPLUSWhatever they contractually agree to and which does not violate the RTA?
Perhaps a lack of a statutory cap does not imply that a cap cannot be negotiated?
5.
In 1086891 Ontario Inc. v. Barber, 2007 CanLII 18734 (ON SCDC), <https://canlii.ca/t/1rldv>, the MAJORITY of the Divisional Court ruled:
"[17] In the present case, the effect of the so-called agreement on which the tenant seeks to rely would be to forever prohibit the landlord from exercising his right to a rent increase as long as the tenant remained in possession. Because the so-called agreement would amount to a contracting out of the landlord’s right to increase rent in accordance with the TPA, it runs afoul of ss. 2(1) of the statute. [...]"
And this ruling was later relied upon in Roger Rodrigues' TST-74966-16 (Re), 2017 CanLII 60771 (ON LTB), <https://canlii.ca/t/h5zmg>, where it was ruled that the landlord could increase rent every 12 months despite the lease for a fixed lease term of 5 years which stipulated that "the Tenant will pay to the said Landlord monthly and every month during the said term of the lease the sum of Two Thousand Canadian Dollars (CDN) $2,000.00 payable in advance on the first day of each month during the currency of the said term…” [Emphasis added]".
6.
However, let's see if that clause actually runs afoul of the statute. Here is what RTA section 119 actually says:
"12-month rule
119 (1) A landlord who is lawfully entitled to increase the rent charged to a tenant for a rental unit MAY do so only if at least 12 months have elapsed, [...]"
7.
I believe that perhaps in order to run afoul of RTA section 119, the lease clause would have to impose rent increases that are MORE frequent than every 12 months, because RTA section 119 only says MAY increase only if AT LEAST 12 months have elapsed (i.e. thus giving *permission* to increase rent, but not more frequently than every 12 months), and it does not say "SHALL" increase rent every 12 months.
Indeed, some landlords don't increase rent every single year, nor as soon as they are allowed to (exactly at 12 months' mark), nor to the maximum allowable amount (usually the Guideline).
8.
The majority of the Divisional Court in Barber also relies on Pinheiro v. Bowes, 1994 CanLII 7479 (ON SC), <https://canlii.ca/t/1wc1r>, without drawing ANY attention to the big difference in Pinheiro: in Pinheiro, the lease stated that the tenant could terminate a month-to-month tenancy with a 30 days' notice. Now THAT lease clause would *indeed* run afoul of the Act (which sets out a MINIMUM notice), so I think the Pinheiro decision is raises fewer questions than Barber.
"[2] The parties entered a lease which contained the following provisions as to notice of termination:
[...]
(d) The Landlord and Tenant further agree that the monthly tenancy created by (c) may be terminated by giving written notice to terminate on or before the last day of one month of the tenancy to be effective on the last day of the following month of the tenancy."
Here is what the RTA requires as a *minimum* notice of termination for a month-to-month tenancy in RTA subsection 44(2), which is the same as in the (notice the use of the word "SHALL", unlike "may" in RTA section 119 above in regards to Barber):
"Period of notice, monthly tenancy
(2) A notice under section 47, 58 or 144 to terminate a monthly tenancy 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. 2006, c. 17, s. 44 (2)."
Which is the same as subsection 99(1) in the predecessor Act that Pinheiro relies on:
"99(1) A notice to terminate a monthly tenancy shall be given not less than sixty days before the date the termination is specified to be effective and shall be specified to be effective on the last day of a month of the tenancy."
So a clause that permits a shorter notice runs afoul of the above (due to the word "shall" + "at least" in statute leaving no wiggle room to shorten that notice contractually), and that is indeed the court ruled in Pinheiro:
"[6] Mr. Schlemmer, for the tenant, argues that s. 99, which creates a notice period of 60 days for monthly tenancies, does not bind the tenant in this case because of the express provision in the lease which permits termination on notice for the lesser period of 30 days.
[7] Mr. Schnurr, on the other hand, argues that s. 80(1), in clear and unambiguous language, invalidates the shorter one-month notice period in the lease for all purposes and, in combination with s. 99(1), effectively requires the tenant, or landlord, to give 60 days notice.
[...]
[14] ... Section 99 provides a broadly gauged protective rule for landlord-tenant relationships and must be enforced as it plainly reads and provides. On its face, it invalidates the lease proviso in issue and makes the tenant liable for one month’s additional rent. ..."
9.
However, if we apply the same logic as in point (7) above (where we questioned majority decision in Barber), that would mean that while the landlord and the tenant could *not* contractually agree to a SHORTER notice of termination, they could indeed agree to a LONGER notice of termination contractually, since the RTA imposes ONLY a minimum notice of termination, not a maximum.
Was that really the intention of the legislation? Or would this clause requiring longer notices qualify as being "inconsistent with the Act" (RTA section 4) and therefore "void"? My hunch is probably the latter, because a contractual requirement of a longer notice would *constructively* require more from the tenant than the statutory requirement (which would be effectively just like an attempt at waiving tenant's statutory right to provide just a 60 days' notice for a month-to-month tenancy), but I haven't seen this particular aspect tested yet.
But what are your thoughts?
10.
Now, let's turn to the dissenting opinion in 1086891 Ontario Inc. v. Barber, 2007 CanLII 18734 (ON SCDC), <https://canlii.ca/t/1rldv> by J. Cumming: the dissenting opinion focuses on limitation on maximum rent *increases* while suggesting that parties are free to contract for less.
"[26] The TPA clearly imposes limits upon rent increases. However, the essential question for the unusual instant situation is – does any provision of the TPA state that a landlord and tenant cannot freely agree to a lesser rent than the landlord would otherwise be entitled to bargain for within the circumscribed limits to rent imposed by the TPA?
[27] Section 126(1) of the TPA provides:
A landlord who is lawfully entitled to increase the rent charged to a tenant for a rental unit may do so only if at least 12 months have elapsed,…[emphasis added]
[28] A landlord would not be “lawfully entitled” to increase the rent if either the TPA prohibited such increase or if the lease contract, i.e., tenancy agreement, itself so prohibited, as in the case at hand.
[29] Persons have the freedom to contract, i.e., the right to private-law making through enforceable contracts, unless and until that freedom is circumscribed by public statute.
[30] I do not find any provision in the TPA which mandates that the landlord has a statutory “right” to increase the rent in contradiction of a freely-negotiated tenancy agreement which fixes indefinitely a frozen rent. In particular, I do not read those sections of the TPA under the heading “General Rules Concerning Amount of Rent Charged”, being ss. 121-129, or under the heading “Agreements to Increase, Decrease Rent”, being ss. 130-134, as limiting the freedom of the landlord and tenant to freeze the rent so long as that fixed rent is itself in the first instance within the circumscribed quantitative limit imposed by the TPA. (I note that s. 135 – inapplicable to the tenancy agreement under consideration – as a transitional provision permits a limited increase to rent for the purpose of determining the “maximum rent” for those tenancy agreements moving from being under the previous Rent Control Act, 1992 to being under the ambit of the TPA).
[...]
[33] I conclude with the following observation. It would not seem uncommon in a period when the vacancy rate for residential rental housing is significant (given increased supply) for landlords and tenants in the competitive marketplace to negotiate and agree upon increases of rent on lease renewals that are less than the maximum rent allowed under the TPA. In my view, it would be contrary to the TPA, its underlying policy, and the reality in practice, to conclude that a landlord would have the statutory “right” (because of s. 2(1)) to later renege upon this agreed-upon rent (if the market later changed such that a higher rent- up to the maximum rent allowed under the TPA-could now be obtained from a prospective new tenant) within the still continuing renewal term at the agreed-upon fixed rent."
11.
Now, let's look at tenancies that are NOT covered under the RTA.
We know that tenancy agreements that fall under the Commercial Tenancies Act should specify rent increases in the contract simply because the CTA does not mention rent increases at all and does not impose any caps for increasing rent or maximum frequency for increasing rent.
Obviously, this means having to use contract "to fill the gaps" where the statute is silent. Stipulating rent increases in the contract certainly does not run afoul of the CTA.
One might argue that when RTA section 6.1 states that RTA section 120 (about the Guideline) does not apply to exempt units, it effectively achieves the SAME result as silence in the CTA about any guideline, i.e. there is simply no statutory cap or guideline for these tenancies. But such a cap can be imposed contractually. Since the silence in the CTA does not mean that you can't limit rent increases contractually for CTA-covered tenancies, why can't the same reasoning apply to scenarios of non-application of RTA section 120 (about the guideline) for RTA-covered units which are exempt from the Guideline?
What are your thoughts?
12.
Other examples that raise questions on what might constitute being "inconsistent with the Act".
1)
The Divisional Court in Wrona v. Toronto Community Housing Corp., [2007] O.J. No. 423 (Ont. Div. Ct.) said that notice provisions cannot be waived.
RTA section 25 ("privacy") states that the landlord can enter the unit only in accordance with the Act. If it did not state so, there could be other things the parties could agree to, however, the RTA only allows room for agreement where it allows entries on consent at the time of entry (RTA ss. 26(1)(b)), entries for housekeeping as specified in the tenancy agreement (RTA ss. 26(2)(a)), entries with 24-hour notice "for any other reasonable reason for entry specified in the tenancy agreement" (RTA ss. 27(1)5). Other reasons for entry must be listed on the exhaustive list in RTA s. 26 or RTA s. 27 in order to be lawful.
Notice that this language in the Act, explicitly permitting to agree to other entries, is necessary here, because of the statutory rule set out in RTA section 25 ("privacy") ("entries only in accordance with the Act").
An example:
Roger Rodrigues' ruling in TST-74966-16 (Re), 2017 CanLII 60771 (ON LTB), <https://canlii.ca/t/h5zmg>
"42. As Member Pilon pointed out, the Landlord’s MRF in that case, like the form(s) at issue in this case, contains the following in capital letters:
“I/We give permission for the landlord or a representative of the landlord to enter the aforementioned suite for the purpose of carrying out the repairs requested. I/We acknowledge that due to difficulties in scheduling it may not be possible to have the work done exactly the date shown above.”
43. It is settled law that notice provisions cannot be waived: Wrona. It is further settled that parties cannot bargain away or waive their statutory rights: Crown Trust Co. v. Rosenberg, [1986] O.J. No. 2683, 1086891 Ontario Inc. v. Barber, 2007 CanLII 18734 (ON SCDC).
44. Sections 25 to 27 of the Act outline when a Landlord is permitted to enter a tenant’s unit. The Act makes it clear that tenants have a right to privacy in their rental unit and the prescribed requirements of a notice of entry make it clear that the Legislature intended the notice of entry to be an instrument central to ensuring that tenants’ privacy rights are protected vis a vis landlords’ legitimate right to, on occasion, enter a tenant’s home. In the end, a rental unit, albeit owned by a landlord, is still fundamentally the tenant’s home. Individuals reasonably expect that their homes will be private spaces or places of sanctuary. As such the statute prescribes that landlords respect a tenant’s privacy by giving written notice of entry in accordance with the legislation—without exception."
________
2)
We see the same thing going on with RTA section 37 ("security of tenure"). If RTA section 37 did not exist, the parties would be able to set out all sorts of termination grounds and notices of termination, termination at the end of the fixed lease term, etc, none of which are in the Act, but RTA s. 37 makes it impossible to contract this way.
________
3)
Another example might be a landlord and a tenant agreeing to terminate a tenancy agreement early in exchange for tenant buyout / "cash for keys" settlement. It is not explicitly prohibited anywhere in the RTA (there isn't an equivalent of RTA section 134 for landlords, i.e. there is nothing prohibiting additional payments from landlords to tenants), therefore it is allowed.
________
4)
Paying additional charges to the landlord is not allowed (RTA section 134) unless those charges fall under any of the exemptions listed under O. Reg. 516/06 section 17.
________
5)
Another example would be illegal deposits. If RTA sections 105 and 106 did not exist, parties could agree to any deposits, but these sections limit amounts to last's month's rent (and a refundable key deposit for up to expected direct replacement cost - under O. Reg. 516/06 subsection 17(3)).
More information about deposits: https://residential-tenancies-ontario.blogspot.com/2021/08/which-kinds-of-deposits-and-advance.html
________
6)
Another example is a clause requiring tenant liability insurance or prohibiting smoking. While these items are not specified anywhere in the RTA, they do not run afoul of the RTA (the RTA does not mention them) and would be enforceable under RTA section 64 about substantial interference with landlord's lawful right, privilege or interest, much like what we see in the Divisional Court ruling in Stanbar Properties Ltd. v. Rooke, [2005] O.J. No. 6363, 2005 CarswellOnt 10519 (unlike, say, tenant contents insurance requirement, which is in the tenant's interest and is, therefore, an unenforceable requirement, since it would be up to him and would not engage the landlord's interest).
More about enforceability of lease clauses requiring insurance: https://residential-tenancies-ontario.blogspot.com/2021/08/how-enforceable-is-tenant-insurance.html
________
7)
Another example is ability to sign a new fixed lease term after the first lease term expires. There is explicit language in RTA section 38, effectively allowing "renewal" (alternatively, if the parties do not renew, the tenancy becomes periodic automatically). Parties would probably be able to renew without explicit language in the Act permitting it, since lack of prohibition works just as well.
"Deemed renewal where no notice
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. 2006, c. 17, s. 38 (1)."
________
8)
A recent ruling by the Court of Appeal for Ontario in White v. Upper Thames River Conservation Authority, 2022 ONCA 146 (CanLII), <https://canlii.ca/t/jmggb>, which overturned the decision by the Divisional Court in White et al. v. Upper Thames River Conservation Authority, 2020 ONSC 7822 (CanLII), <https://canlii.ca/t/jc650> provides additional insight into what might be considered "inconsistent with the Act", stating at para. 16:
"It does not necessarily follow from the specific prohibition of some things in an act that other things not specifically prohibited must be permitted. Whether this sort of negative implication can be drawn depends on context and common sense – as Scalia and Garner note, whether the thing specified “can reasonably be thought to be an expression of all that shares in the grant or prohibition involved: see Reading Law: The Interpretation of Legal Texts (St. Paul, MN: Thompson/West, 2012), at pp. 107-111."
For greater context:
"[14] Regardless of the provenance or utility of the occupancy limitations, the operation of the Act is clear: if the limitations are inconsistent with the Act they are rendered void by operation of s. 4.
[15] Plainly, occupancy limitations are not specifically permitted by the Act, but nor are they specifically prohibited. The Divisional Court considered that the absence of a specific prohibition was determinative, given the parties’ agreement to the limitations. In an apparent application of the expressio unius est exclusio alterius maxim, the court reasoned that because the Act includes some specific prohibitions – for example, the Act prohibits “no pet” provisions – the absence of a specific prohibition of occupancy limitations means that they must be permitted. The court reasoned that “[i]f there was a limitation regarding limiting access or occupation of a residential unit, the court would expect there to be a specific section of the Act dealing with this issue.” The court added: “It can hardly be said that when a party voluntarily agrees to a provision of the residential agreement that is not specifically provided for by the Act, this leads to a determination that the provision is inconsistent with the Act.”
[16] This reasoning is untenable. It does not necessarily follow from the specific prohibition of some things in an act that other things not specifically prohibited must be permitted. Whether this sort of negative implication can be drawn depends on context and common sense – as Scalia and Garner note, whether the thing specified “can reasonably be thought to be an expression of all that shares in the grant or prohibition involved: see Reading Law: The Interpretation of Legal Texts (St. Paul, MN: Thompson/West, 2012), at pp. 107-111. In this case, there is no reason to suppose that the Legislature’s decision to prohibit “no pet” provisions has anything to do with tenants’ right to occupy the units they rent.
[17] The Divisional Court’s reasoning begs the question at issue. Voluntary agreement to a provision is irrelevant if that provision is not otherwise permitted. In the absence of specific authorization or prohibition, the legality of occupancy limitations must be determined by consideration of the provisions of the Act as a whole.
A court interpreting a statutory provision does so by applying the “modern principle” of statutory interpretation, that is, that the words of a statute must be read “in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament”: Rizzo & Rizzo Shoes Ltd. (Re), 1998 CanLII 837 (SCC), [1998] 1 S.C.R. 27, at para. 21, and Bell ExpressVu Limited Partnership v. Rex, 2002 SCC 42, [2002] 2 S.C.R. 559, at para. 26, both quoting E. Driedger, Construction of Statutes (2nd ed. 1983), at p. 87. Parliament and the provincial legislatures have also provided guidance by way of statutory rules that explicitly govern the interpretation of statutes and regulations: see, e.g., Interpretation Act, R.S.C. 1985, c. I-21.
[19] The modern approach to statutory interpretation is now referred to as “text, context, and purpose”: see the helpful discussion by Miller J.A. (dissenting) in R. v. Walsh, 2021 ONCA 43, 154 O.R. (3d) 263, at paras. 133-150. In my view, the text, context, and purpose of the Act confirm that it contemplates only non-temporary, non-conditional, unlimited occupancy arrangements. In short, occupancy limitations in residential leases are not permitted.
THE SECURITY OF TENURE
[20] The intervener Advocacy Centre for Tenants Ontario and the Board made helpful submissions highlighting the security of tenure provisions of the Act – provisions that the Divisional Court failed to consider. These provisions are premised on the notion that the Act establishes ongoing tenancies that may be renewed following completion of the initial fixed term. The circumstances in which a landlord may take possession of a rental unit from a tenant are strictly limited to lawful termination, abandonment, death, assignment, eviction, or a Board order – in other words, the end of a tenancy in accordance with the Act. Nothing in the Act authorizes a landlord to take possession of a residential unit during an ongoing tenancy or assists the landlord in doing so.
[21] None of this is surprising in the context of an Act that is designed to redress the imbalance in bargaining power between landlords and tenants. Occupancy limitations are at odds with the very scheme of the Act. This is confirmed by the core concepts in the Act – tenant and tenancy agreement – both of which are defined in s. 2(1) in terms of tenants’ right to occupy the units they rent.
[22] The respondent sought to defend occupancy limitations by drawing a distinction between tenants’ right to occupy their rental units, on one hand, and the right of the landlord to take possession of those units on the other, asserting that the landlord does not take possession of the rental units or occupy them itself during the term in which occupation by the tenant is not permitted. This purported distinction is illusory. The denial of a tenant’s right to occupy the unit he or she has leased is the problem, and it is irrelevant whether the landlord has in some sense taken possession of the unit or simply denied the tenant access to it; in either case, the continuity of the tenancy has been broken in a manner inconsistent with the Act.
[23] The Act specifically enumerates the forms of living accommodation that are exempt from the Act on the basis of seasonal or temporary occupation, and it is common ground that the land lease situation in this case is not included. Section 5(1) provides:
5 This Act does not apply with respect to,
(a) living accommodation intended to be provided to the travelling or vacationing public or occupied for a seasonal or temporary period in a hotel, motel or motor hotel, resort, lodge, tourist camp, cottage or cabin establishment, inn, campground, trailer park, tourist home, bed and breakfast vacation establishment or vacation home;
[24] In other words, rather than address seasonal or temporary accommodation arrangements in the context of leases covered by the Act, the Legislature exempted them all together.
[25] Thus, the Divisional Court’s concern that the Board’s order would preclude the owner of a cottage and a tenant from including a term in a lease permitting the owner to occupy the cottage during certain limited times of the year, such as at Christmas, is misplaced. Cottage rentals are exempt from the Act by virtue of s. 5. Put another way, there is no need to interpret the Act to protect seasonal or temporary arrangements for living accommodations. The Legislature has adverted to the matter and determined the sorts of seasonal and temporary arrangements that are not covered by the Act.
[26] In summary, the Act establishes security of tenure. Occupancy limitations are inconsistent with the Act and are rendered void by s. 4. The parties’ agreement to such limitations is simply irrelevant: freedom of contract values cannot be invoked to limit the protection the Act provides.
[27] This is sufficient to dispose of the appeal, but because of the way in which the matter was argued, both before the Board and Divisional Court, I will discuss briefly the concept of reasonable enjoyment under s. 22 of the Act."
_______________
As stated at the beginning of the post, this post is really here to ask questions on what could potentially constitute "being inconsistent with the Act" and to draw attention to some areas which might have gaps and might require clarification. For example, can a clause that is not "inconsistent with the Act" still be unenforceable?
We see that with clauses that attempt to prohibit appliances, guests, occupants, etc - i.e. while the RTA does not talk about these items, these clauses are generally unenforceable and may be covered under RTA section 22 (substantial interference with tenant's reasonable enjoyment of the unit).
Another example which raises questions is a lease that states that the landlord agrees to pay higher interest on Last Month's Rent deposit than the Guideline.
This does not sound like it would be counter to the RTA (since RTA subsection 106(6) sounds like it's about minimum statutory requirement), since the RTA does not say that greater interest cannot be agreed to and since there is no equivalent of RTA section 134 for landlords (i.e. nothing prohibiting additional payments from landlords). But the question is about enforceability. Would the Board have the jurisdiction to enforce this agreement? If we follow the reasoning in the Divisional Court ruling in Stanbar v. Rooke, a valid clause in an agreement is enforceable (in that case it was via RTA section 64 about substantial interference with landlord's lawful right, privilege or interest). And perhaps the same can work the other way around for tenants in the case of interest on Last Month's Rent deposit via RTA section 22 (despite the noticeable difference in the language talking about specifically "reasonable enjoyment of the rental unit" rather than "lawful right, privilege or interest").
________
9)
Update: this LTB ruling by Member Jitewa Edu suggests that the tenant would only be entitled to the interest rate equal to the guideline, as per RTA ss. 106(6), not to the contractually agreed upon 6%:
Dupuis v Fluter, 2021 CanLII 106930 (ON LTB), <https://canlii.ca/t/jk1zp>
"8. The Landlord testified that the previous Landlord did not pay interest on the last month's rent deposit and argued that the agreement to pay interest at 6% annually on the deposit is unenforceable.
9. The Landlord collected a rent deposit of $550.00 from the Tenant and this deposit is still being held by the Landlord.
10. Interest on the rent deposit is owing to the Tenant for the period from June 27, 2014 to December 22, 2020.
Analysis
11. Section 106 (6) of the Residential Tenancies Act, 2006 (‘the Act’) provides that a landlord of a rental unit shall pay interest to the tenant annually on the amount of the rent deposit at a rate equal to the guideline determined under section 120 that is in effect at the time payment becomes due.
12. Section 3 (1) provides that the Act, except Part V.1, applies with respect to rental units in residential complexes, despite any other Act and despite any agreement or waiver to the contrary.
13. Read together and applied to this case, the above sections demonstrate that interest on the last month's rent deposit is to be paid according to the guideline in effect each year and the parties cannot waive that provision. Hence, interest on the last month's rent deposit has been calculated in this order based on the yearly guidelines from July 2014."
Lots of questions. Let us know if you have any thoughts on this.
Disclaimer:
You should not act or rely on any information provided in this blog. It is not legal advice, and the content is provided for general discussion and general information purposes only and to help encourage further research. To ensure your interests are protected, retain or formally seek legal advice from a licensed legal professional.
Never disclose details about your specific legal matters outside of situations when you have established solicitor-client relationship with a qualified legal professional. By using this blog, you acknowledge and accept this warning and agree to waive all liability for use of any information contained in this blog.
No comments:
Post a Comment