N13 Ontario Terminate Tenancy for Construction

[InvestagainInc]

Hi,

I am considering this option of an N13 to renovate a tenant unit in Ontario. I have heard that the tenant can move back in at the same rate they rented at before. Is this accurate? Anyone been down this road?

Ideally after the unit is renovated I want to rent at market rent.

 

[REQRentals]

Hi,

The tenant has to notify you in writing before they move out pursuant to the notice or they lose the right to come back at the same rent.

Also need a building permit etc.....

 

[InvestagainInc]

good to know. can I still raise the rent at all?

 

[3canctheayr]

If the tenant leaves and doesn't want to come back, you can raise the rent as much as you want. If they want to come back, you can't raise the rent except by a very small amount, which you are supposed to get LTB approval for.

On the other hand, if the tenant offers to pay you significantly higher rent in return for renovations, you can raise it as much as you both agree to. Almost no tenants are aware of this, or would take the initiative on it though.

This is one of the screwed up aspects of our system: once a tenant is in place, the RTA & LTB makes sure you can't afford to ever renovate or upgrade the unit, until that tenant leaves. That's partly why much of the housing stock becomes so decrepit.

 

[InvestagainInc]

Good tip. Thanks!

Yes, don't get me started on this system. I wish we had the rules of Nevada or Alberta.

 

[REQRentals]

[quote user="3canctheayr"] If the tenant leaves and doesn't want to come back, you can raise the rent as much as you want. If they want to come back, you can't raise the rent except by a very small amount, which you are supposed to get LTB approval for.

On the other hand, if the tenant offers to pay you significantly higher rent in return for renovations, you can raise it as much as you both agree to. Almost no tenants are aware of this, or would take the initiative on it though.

This is one of the screwed up aspects of our system: once a tenant is in place, the RTA & LTB makes sure you can't afford to ever renovate or upgrade the unit, until that tenant leaves. That's partly why much of the housing stock becomes so decrepit. [/quote]

That is not entirely true. You cannot agree to any increase in excess of the guideline except in accordance with the rules relating to agreements to increase rent (s. 121). The maximum allowable increase is the guideline plus 3%.

Generally the rules relating to increasing rents above guideline are not useful for smaller landlords and are quite technical. If you have a building and are looking to recapture major capital repairs they are OK.

[quote user="InvestagainInc"] Good tip. Thanks!

Yes, don't get me started on this system. I wish we had the rules of Nevada or Alberta. [/quote]

After 20 years representing Ontario landlords I run a rental business in Florida.

3 days notice and the Sheriff comes with a gun.

 

[Seeley]

That is not correct. A tenant and landlord can mutually agree to any amount of rent increase, it must be in writing and clearly state that the tenant is knowingly agreeing to a increase above the LTB guideline.

 

[REQRentals]

link did not work

Agreement

121. (1) A landlord and a tenant may agree to increase the rent charged to the tenant for a rental unit above the guideline if,

(a) the landlord has carried out or undertakes to carry out a specified capital expenditure in exchange for the rent increase; or

(b) the landlord has provided or undertakes to provide a new or additional service in exchange for the rent increase. 2006, c. 17, s. 121 (1).

Form

(2) An agreement under subsection (1) shall be in the form approved by the Board and shall set out the new rent, the tenant’s right under subsection (4) to cancel the agreement and the date the agreement is to take effect. 2006, c. 17, s. 121 (2).

Maximum increase

(3) A landlord shall not increase rent charged under this section by more than the guideline plus 3 per cent of the previous lawful rent charged. 2006, c. 17, s. 121 (3).

 

[REQRentals]

[quote user="Seeley"]That is not correct. A tenant and landlord can mutually agree to any amount of rent increase, it must be in writing and clearly state that the tenant is knowingly agreeing to a increase above the LTB guideline. [/quote]

just out of curiosity where did you hear that ?

The reasoning behind the agreement is to allow the parties to agree to an otherwise allowable increase that the landlord could apply for.

That is why the grounds for the increase are the same and the same limit of 3% above the guideline applies.

Even then the tenant can apply to say that the work was not done or as represented.

 

[3canctheayr]

[quote user="REQRentals"][quote user="Seeley"]That is not correct. A tenant and landlord can mutually agree to any amount of rent increase, it must be in writing and clearly state that the tenant is knowingly agreeing to a increase above the LTB guideline. [/quote]

just out of curiosity where did you hear that ?

The reasoning behind the agreement is to allow the parties to agree to an otherwise allowable increase that the landlord could apply for.

That is why the grounds for the increase are the same and the same limit of 3% above the guideline applies.

Even then the tenant can apply to say that the work was not done or as represented.

[/quote]
REQ-

A tenant can offer a big increase in rent in exchange for renos etc. The key is that it has to be initiated by the tenant and should be put in writing (and ideally prepped by a lawyer) & signed by a witness. The landlord can't demand it.

There is a recent higher court legal precedent in this regard that has overruled both the RTA and the LTB. One recent case was concerning a large prepayed rent deposit offered by a tenant. The higher court ruled that a tenant can offer something out side of the RTA and the landlord is legally allowed to accept the offer if they choose to, without repercussions.

 

[REQRentals]

Have you read the decision

http://www.canlii.org/en/on/onscdc/doc/2014/2014onsc985/2014onsc985.html?searchUrlHash=AAAAAQAgOTAsMDAwIHJlc2lkZW50aWFsIHRlbmFuY2llcyBhY3QAAAAAAQ

Has nothing to do with other provisions of the Act and certainly not the section that specifically deals with agreeing to increase the rents. Deals only with the meaning of "requires"

Security deposit section prohibits landlord "requiring" deposit.

Agreement to increase rent section deals specifically with situation where the tenant agrees.

Are you saying if the tenant volunteers the payment and you agree there is no agreement ?

 

[Seeley]

The section of the act referenced is only for the purpose of avoiding a board hearing for above guide line increase. This in no way suggests any other mutual agreement between tenant and landlord can not exist. Not sure where anyone thinks the board can dictate to those having a mutual agreement to set the rent anywhere they both agree to. The boards power is not so far reaching as to over ride individual decisions.

In the real world outside of the quasi judicial realm of the RTA any agreement between tenant and landlord is allowed. Even the no pet rule that the RTA states is not allowed. If both sides agree it is defiantly allowed. The same goes for rent increases. Both sides can agree to anything they chose as long as it is fully understood. The stumbling block is in trusting your tenant to not be lying and be willing to not at some future date go back on the agreement.

eg: It is a landlords responsibility to clear snow. A tenant may agree to be responsible for snow removal and it may be included in the lease agreement.

Trust is the big stumbling block as I do not believe any tenant can be trusted.

However worse case if a written agreement is very clear in that both sides fully agree and further put in writing there was no cohesion involved a landlord may at worst be forced to refund some money. The act threatens fines but this is very rare and is unlikely if the written agreement is clear. The tenant has only 12 months to file so you should know quickly that they are not a trustworthy tenant and one to be targeted for eviction.

 

[REQRentals]

[quote user="Seeley"]

The section of the act referenced is only for the purpose of avoiding a board hearing for above guide line increase. This in no way suggests any other mutual agreement between tenant and landlord can not exist. Not sure where anyone thinks the board can dictate to those having a mutual agreement to set the rent anywhere they both agree to. The boards power is not so far reaching as to over ride individual decisions.

In the real world outside of the quasi judicial realm of the RTA any agreement between tenant and landlord is allowed. Even the no pet rule that the RTA states is not allowed. If both sides agree it is defiantly allowed. The same goes for rent increases. Both sides can agree to anything they chose as long as it is fully understood. The stumbling block is in trusting your tenant to not be lying and be willing to not at some future date go back on the agreement.

eg: It is a landlords responsibility to clear snow. A tenant may agree to be responsible for snow removal and it may be included in the lease agreement.

Trust is the big stumbling block as I do not believe any tenant can be trusted.

However worse case if a written agreement is very clear in that both sides fully agree and further put in writing there was no cohesion involved a landlord may at worst be forced to refund some money. The act threatens fines but this is very rare and is unlikely if the written agreement is clear. The tenant has only 12 months to file so you should know quickly that they are not a trustworthy tenant and one to be targeted for eviction.

[/quote]

That is just plain wrong. The whole purpose of the act is to protect tenants and you can no more make these type of agreements than you can make an agreement to pay less than minimum wage.

One of the prime features of the legislation is that it prohibits parties from contacting out of their rights.

BTW an agreement to clear snow has to be in a separate agreement as the legislation requires the landlord to do it. Only by creating a seperate obligation can you escape that. There was a recent case on that as well.

In the real world if you want to put forth a legal position you support it with authorities such as statutory references and decisions.

Where do you go in the real world to evict a tenant or determine your rights as the Board has the exclusive authority to do so ?

Regrettably this is just misinformation.

 

[3canctheayr]

[quote user="REQRentals"]Have you read the decision

http://www.canlii.org/en/on/onscdc/doc/2014/2014onsc985/2014onsc985.html?searchUrlHash=AAAAAQAgOTAsMDAwIHJlc2lkZW50aWFsIHRlbmFuY2llcyBhY3QAAAAAAQ

Has nothing to do with other provisions of the Act and certainly not the section that specifically deals with agreeing to increase the rents. Deals only with the meaning of "requires"

Security deposit section prohibits landlord "requiring" deposit.

Agreement to increase rent section deals specifically with situation where the tenant agrees.

Are you saying if the tenant volunteers the payment and you agree there is no agreement ?

[/quote]

This is not the court decision I was thinking of. I don't see anything in those links that appears to relate directly to this issue.
The case I'm thinking of involved a person that wanted to prepay about 1 years rent for an apartment. The landlord accepted and then somehow later the case ended up before the LTB(I don't recall the details on this part of it).
The gist of it is that the landlord eventually took took the case to a higher court and won, as the judge determined that as long as the tenant offered the extra large deposit completely of their own volition, the LL was perfectly within his rights to accept the deposit.
This same reasoning applies exactly to a hypothetical issue of a tenant(of their own volition) offering an above guideline rent increase(or one time payment) in exchange for renovations.
If a tenant offer this, it is legal for the LL to accept. The LL should protect themselves by ensuring the offer is done in such a way that the tenant can't change their mind after the fact.

 

[REQRentals]

The case you are describing is exactly the one I linked above and the reasoning is exactly as you describe.

Hopefully anyone reading this will see there is a difference between a statute that prohibits the landlord from requiring something as opposed to one that prohibits the landlord from even agreeing to it.

I try to give people proper references etc when they post stuff like this so they do not get all sorts of the urban myths that float around about these issues.

It might be true if you have one or 2 rental units there is not much to lose but if you illegally increase rents in a large portfolio and get ordered to pay it back it is no joke.

Then again if you have a larger building you probably pay properly qualified professionals to give advice on these matters, any one of whom will tell you that you cannot increase the rent as you suggest.

 

[3canctheayr]

[quote user="REQRentals"]The case you are describing is exactly the one I linked above and the reasoning is exactly as you describe.

Hopefully anyone reading this will see there is a difference between a statute that prohibits the landlord from requiring something as opposed to one that prohibits the landlord from even agreeing to it.

I try to give people proper references etc when they post stuff like this so they do not get all sorts of the urban myths that float around about these issues.

It might be true if you have one or 2 rental units there is not much to lose but if you illegally increase rents in a large portfolio and get ordered to pay it back it is no joke.

Then again if you have a larger building you probably pay properly qualified professionals to give advice on these matters, any one of whom will tell you that you cannot increase the rent as you suggest.

[/quote]Umm, I'm sorry, I can't find any reference in that link to the case I'm referring to. That link doesn't even have a description of the case it's about, that I could find. Please specifically show me the exact text you are referring to and how it references the case you think that I'm thinking of. It would probably be a good idea for you to describe the case that you think that I'm thinking of as well.
The case I'm referring to didn't have $90,000 in as part of the issue.

I guarantee you to an absolute, that if a potential tenant comes to me and offers me a years rent in advance, completely of their own volition & puts the offer in writing signed by an independent witness and/or lawyer and submits the funds with this offer, I am absolutely within my legal, moral, social, and ethical rights to not only accept the offer if I choose to, but move forward with the ensuing lease or similar agreement as well.
Same thing for the issue of renovations.

I know you may have a lot of experience in this regard and it may be hard to accept, but as I mentioned in another thread, the LTB isn't the ultimate be all and end all when it comes to Landlord and Tenant issues. The LTB and the RTA are both desperately flawed and the adjudicators at the LTB consistently make bad decisions for a wide variety of reasons. There have been several cases where their decisions have been overturned by higher courts - and rightfully so. It's so bad that one of the higher court judges named Ted Matlow, IIRC? has gone on record pointing out the numerous flaws in the current system.

 

[Seeley]

Nothing about this thread included any discussion in regards to a landlord increasing a tenants rent above guidelines. This thread is about whether a tenant can voluntarily agree to pay a higher rent than the annual guideline or above guideline regulations dictate. There is a very distinct difference.

You can argue this point until you are blue in the face as to what is legal but what you repeatedly fail to realise is that the RTA is "guidelines" in place to restrict landlords. There is absolutely nothing that a tenant and landlord can not mutually agree to. I see it every day and have on numerous occasions had adjudicators state to me the very same.

Next time you are at a hearing ask the adjudicator if a tenant is permitted to voluntarily pay a higher rent than the annual increase will allow. He will look you in the eye and tell you that is a tenants prerogative. They can pay any increased amount they want it is only the landlord that is restricted in demanding a tenant pay more.

This is actually a fairly ridiculous discussion as no tenant worth their salt would ever agree to pay more rent than the guidelines. They all pretty well know that landlords are hog tied by the RTA.

But you are wrong on tenants being free to make their own decisions to pay me a higher rent. I don't think the government has restricted our individual rights to that degree yet.

 

[InvestagainInc]

Ok. Thank you everyone for your replies. You have given me a lot to think about. I think a tenant may pay more for a nicer place. Ill try it and let you know!

Thanks again.