standard lease vs. form 400

Information for landlords and renters

If you sign a lease on or after April 30, 2018, it must be a standard lease.

If you sign a lease on or after April 30, 2018 that does not use the standard lease, renters can ask the landlord for one in writing. The landlord must provide one within 21 days.

Renters cannot ask for a standard lease if they signed a lease before April 30, 2018, unless they and their landlord negotiate a new lease agreement with new terms on or after this date.

Additionally, renters cannot ask for a standard lease if they sign a fixed-term lease before April 30, 2018, and it renewed automatically to a month-to-month tenancy after April 30, 2018.

If a landlord fails to provide the standard lease within 21 days after a renter has asked for it in writing, the renter may withhold one month's rent.

If the landlord fails to provide the standard lease within 30 days after the renter has begun withholding rent, the renter does not have to repay the one month's rent. Please note, you cannot withhold more than one month’s rent and you must continue paying your rent for the term of your lease, even if your landlord never gives you the standard lease. However, if a standard lease is not provided, special rules allow you to end your fixed-term lease early.

Landlords and renters can choose to use the standard lease before April 30, 2018. However, the rules requiring the standard lease will only be in effect starting on this date.

Ending a tenancy early

If the landlord does not provide the standard lease within 21 days after the renter has made a written request, the renter may give 60 days' notice to terminate a yearly or fixed-term tenancy early.

If the landlord provides a renter with the standard lease after the renter has asked for it, but the renter does not agree to the proposed terms (for example, a new term is added), the renter may give the landlord 60 days' notice to terminate a yearly or fixed-term tenancy early.

To terminate a tenancy early in this case, the renter must give the 60 days' notice no later than 30 days after the landlord provided the standard lease.

In both cases, the effective date for termination must be the last day of a rental period (for example, the end of a month).

Comments on New OREA Form 400

OREA's old Agreement to Lease was a hybrid document; an offer document that turned into a lease upon acceptance by the landlord.  Most agreed it was awful but Realtors didn't have a choice but to use it.  Parts of it didn't comply with the Residential Tenancies Act (the "RTA") and didn't contain the detailed clauses that are needed to protect the landlord and give certainty to both parties. Many parts were illegal, and you can't contract out of the RTA's statutory protections.

So the new form 400 was created to bean offer to lease only, and anticipates the parties signing the mandatory government's standard form lease upon acceptance of the offer by the landlord.  A few things are confusing in the new Form 400:

The old document was called an Agreement to Lease, but was in effect, an offer to lease that became an agreement to lease once the applicant was approved.  This new document which is ONLY an offer to lease, is still called an Agreement to Lease.  That's just wrong.  The name is confusing and makes no sense at all.

While the parties to the offer will, if the landlord accepts it, enter into the Ontario government's new standard lease, the new standard form lease is woefully deficient.  It lacks any clauses to anticipate and protect the landlord based on contractual wording that is not contrary to the RTA, and therefore can be enforced if it was included.  Now it's true that OREA has a document full of standard residential lease clauses that Realtors are expected to select like entries on an all-you-can-eat sushi menu.  Realtors are trained to paste those into a lease schedule they call Schedule A.  However, the OREA standard clause document is full of illegal clauses that can't be enforced at the Landlord and Tenant Board (the "LTB").  These include clauses such as no pets, demands for post-dated cheques, tenant's responsibility for repairs, tenant's responsibility for shovelling and grass cutting, dictating who can reside in the unit with the tenants, entry for showings etc.

In fact there are some very harmful clauses, standard clauses for instance giving a tenant the automatic right to renew lease term in perpetuity.  This clause, if inserted by the Realtor, can prevent the landlord from EVER evicting a tenant for themselves or a family member to move in, or a prospective purchaser or their family member to move in.

So what will this mean for Realtors and their landlord clients for leases drafted by Realtors?  Let's look at the new Form 400 first.  Besides the name "Agreement to Lease" being confusing, it's not bad as an offer.  It includes the landlord's address which for years wasn't on their document, causing tenants to have their obligation to pay rent suspended because the RTA says in s.12 that if that information is not in the lease, they don't have to pay rent.  It contains most of the major details that govern a tenancy such as rent, deposit, lease term etc.

The new Form 400 asks for first and last months' rent up front when the offer is accepted.  It's illegal to take the first month's rent before the first month arrives, as the rent for the first month isn't due until the tenancy starts.  Notwithstanding that, everyone does it, and it's a good idea.  You don't want to have a brand new tenant move in and they haven't even paid rent for the first month.

The description of the Premises in section #1 is not sufficient.  It asks for the address of the premises, but no description of what they are renting.  For instance, there needs to be some detail of what is exclusive use versus shared use space.  If there is a shared yard, or laundry room, or driveway, this needs clarification.  Without specifics, litigation often results.

The description of the last month's rent deposit in section #4 is troublesome.  The last month's rent deposit under the RTA is not, as stated, a deposit as security against all terms and covenants.  The last month's rent deposit is security as rent for the last month of the tenancy.  Period.  And in fact, by OREA describing it incorrectly in Form 400, the Court may decide that it is an illegal deposit, and the landlord would have to return it if the tenant changes their mind about moving in even after you've accepted the offer. 

Section #5 of the new Form 400 again misstates the law, indicating that only people listed on the lease can live there.  Occupants are not tenants, and it's up to each tenant to decide who they love, sleep and live with, subject to property standards bylaws and condominium rules.

Most odd and not enforceable is the way OREA dealt with the commission payable to the brokerage in section #21.  The agreement (offer) is between the landlord and prospective tenant.  Yet it purports to bind the landlord and has them agree that brokerage's commission may be deducted from the deposit.  The brokerage is not a party to this agreement (offer) to lease, so who is the landlord agreeing with...the tenant?  The tenant is not a party to the issue of commission, and the Realtor or brokerage is not a party to the agreement (offer) to lease. 

Then in clause #14, OREA's Form 400 attempts to provide the landlord with a right to enter the unit for various reasons.  I would have thought this would be in the lease, not the offer.  But in any event, this clause is illegal as entry is only permitted in accordance with s.27 of the RTA and entry requires written notice, timing provisions etc.