I signed a fixed term lease with my tenants, but they have recently notified me verbally that they needed to terminate the lease by the end of this month. They prepaid the full term when they signed the lease agreement. Now, they are requesting a refund for the remainder of the rental period. The problem is that the Condo Board does not allow more than 1 rental within a 12-month period, meaning I am not allowed to rent out my unit to cover the remaining term of the lease. What can I do to handle the situation?
Collecting any amount of rent greater than the rent deposit equivalent to one month’s rent is unlawful under the Residential Tenancies Act, 2006. It is also considered an offence under the Act, for which a landlord may receive a fine.
As such, landlords are not within their rights to hold onto any amount greater than the last month’s rent, and any rent that has been paid (such as for June and July). Other amounts should be returned to the tenant.
If the tenants are leaving mid-lease, the landlord can explain that the tenant can attempt to assign the tenancy to someone else with the landlord’s permission, and that person will continue paying the rent if they are approved by the landlord.
LSHC does not give assistance on Condominium Act issues, and therefore, LSHC staff is not in a position to be able to tell landlords how to deal with Condo Board rules, while still being able to rent out the property within the year. For this, landlords may need to consult a lawyer or paralegal.
The interest owed to the tenant will be equivalent to the guideline increase amount for the year. The current annual rent increase guideline information is available here: http://www.sjto.gov.on.ca/documents/ltb/Brochures/2018%20Rent%20Increase%20Guideline%20(EN).html
Landlords must pay interest on the deposit annually*. If the landlord fails to pay the tenant interest owing, the tenant may deduct the amount of interest owing from a future rent payment. *The Residential Tenancies Act allows landlords to top-up the rent deposit by deducting the amount required to bring the deposit up to the current rate from the interest due to the tenant.
A landlord can request a top-up of the last month’s rent deposit when a notice of rent increase has been given. Since the landlord is required to pay interest on the last month’s rent deposit annually, instead of paying this interest to the tenant, the landlord can use it to top-up the last month’s rent deposit. Let your tenant know that this is what you will be doing or they may decide to deduct the amount of interest they are owed from their next rent deposit.
The last month’s rent deposit should be dated for the present date as you are supposed to have that deposit before the tenant takes occupancy. If you do collect a last month’s rent deposit you do have to pay interest on the deposit annually. The first month’s rent could be postdated for the day the tenant is moving in, however there is a risk that the cheque could bounce and you would not know it until after the tenant is already in there, the best practice is to ask for cash or certified cheque for the first month’s rent.
We have not collected last month’s rent (LMR) from some of the tenants that have been living in our units, and we would like to ask for it now. Are you aware of anything that may prevent us from requesting and insisting last month’s rent?
The Residential Tenancies Act does not permit the charging or collection of a last month’s rent deposit after the commencement of the tenancy. Section 106(1) of the Act states that, “a landlord may require a tenant to pay a rent deposit with respect to a tenancy if the landlord does so on or before entering into the tenancy agreement.” Even if an existing tenant were to “agree” to pay a LMR deposit, the Act does not allow contracting away one’s rights, so both the Landlord and Tenant Board and the Rental Housing Enforcement Unit would consider the payment to be in contravention of the Act under S. 234(d): 234. A person is guilty of an offence if the person, (d) requires or receives a security deposit from a tenant contrary to section 105. It is likely that charging LMR mid-agreement will result in the landlord being fined.
The landlord is required to pay the tenant interest on the last month’s rent annually. If the landlord fails to pay the interest on the anniversary, the tenant is permitted to deduct the amount owed from the rent if the landlord has failed to pay the interest when it was due.
Never apply the deposit held for last week/month’s rent as it is the only security you have. If the tenant is unable to pay the current rent, issue a notice of early termination for non-payment. The rent deposit is to be applied to the last rent period before the tenancy terminates.
My home has now been sold and the tenant has been given proper notification regarding termination. Instead of leaving at the end of the 60 days, the tenant moves out after 30 days. What happens to the last month’s rent, do they get it back?
Before assessing what to do with rent payments, you must first ensure that the notice you gave will be considered valid legal notice. From our correspondence, I still cannot determine if the property was sold to a buyer who expressly stated to you that they require the unit for their own personal use. If yes, then was an N12 served with a termination date falling on the end of a rental period? If rent is due on the first day of each month, then August 31st should be a valid termination date. If the tenant is leaving sooner than that on a minimum 10 day notice to the landlord (as their right as indicated on the N12 form), then the date they vacate would be the last day of the tenancy and the landlord may end up owing rent back to them on a per diem basis. If they vacate on July 31st, then the last month rent would be returned to them. On the other hand, the landlord may need to file an application for eviction (Form L2) with the Landlord and Tenant Board, if there is a chance that the tenant might not move out on or before the termination date on the N12. In that case, the L2 could be filed at any time or as late as 30 days after August 31st. An affidavit sworn by the purchaser (or their family member who requires the unit) should accompany the L2 application for termination.
The landlord is required to pay the tenant interest on the deposit held for last week/month’s rent. The amount of interest due for deposits held up to January 30, 2007 is 6%. Interest due for deposits held on and after January 31, 2007 is the rate equal to the amount of the annual rent increase guideline. The yearly guideline percentages can be found on our website at http://www.landlordselfhelp.com/RentIncreaseGuideline.htm or at https://www.ontario.ca/page/rent-increase-guideline
If a tenant tells me they want to continue renting on a month-to-month basis after the lease expires do I collect a new last month rent deposit?
If your tenant is not moving out at the end of the lease, you would still collect the rent for May and hold on to the initial last months’ rent deposit which is to be applied to the last month the tenant is in possession of the unit. However, the interest must still be paid at that point.
I rented to someone from Vancouver who didn’t have a job, references, or credit information. To compensate she gave me the last two months rent. She gave notice to move out, and is now taking me to the Board for illegal rent. What are my options?
As you are already aware, a landlord can only collect the last month’s rent deposit. If you collect anything above one month’s rent, that would be considered an illegal deposit even if the tenant offered. If she is taking the matter to the Landlord and Tenant Board to get the deposit back, then the Board will most likely order that you return it to her. There is no way to argue this.
I am confused about the last month rent deposit and interest. I have a one year lease and have collected first and last months’ rent. When do I pay the interest on the last month rent?
The interest on the last month’s rent deposit must be paid annually to the tenant. The interest amounts payable are set by the rental increase guidelines. You can get more information on our website at: http://www.landlordselfhelp.com/RentIncreaseGuideline.htm or at https://www.ontario.ca/page/rent-increase-guideline
I agreed to give the tenant extra time to pay the last months rent, it’s been 2 months and I’m still waiting.
Unfortunately since the tenant has already moved in, you don’t have any recourse if he does not pay pay up the last month’s deposit. The deposit should be collected prior to the tenant moving in otherwise they are no longer obligated to pay it once they move into the unit.
I agreed to allow my tenant to pay their last months rent in installments but the tenant has defaulted, what can I do?
Unless the landlord collects the deposit prior to the tenant moving in, the tenant is not obligated to pay it once they are already in possession.
Landlords may require a prospective tenant to pay a deposit BEFORE entering into a tenancy agreement. The maximum amount a landlord is entitled to collect as the deposit for the last week/month is the equivalent one rent period (either one week or one month depending on the tenancy agreement).
The interest rate that you have to pay on the last month’s rent deposit is the same as the rent increase guideline for the current year.
A damage deposit is illegal, you can only ask for the last month’s rent deposit. As for postdated cheques you cannot require that from the tenants, if they choose to pay the rent in that manner then you can accept it, otherwise they can just give you the payment each month.