Sale of rental property to new owner does not change tenant’s rights

WHO PRACTICE LANDLORD/TENANT LAW AND OTHER AREAS OF LAW

Q: I signed a lease to rent a single-family home in Ottawa last August, and things have been fine until now. However, the person I rented from has now sold the property. The new owner has given me a document called “Residential Tenancy Agreement (Standard form of Lease),” which has the symbol of the Ontario government in the top left hand corner of page 1. The new owner has set out a rent that is 25 per cent higher than I am paying now and says that I am to pay a deposit for the last month’s rent. He is demanding that I sign the new lease and pay the deposit and the new rent. Do I have to?

A: No. Whether it is a house or an apartment, the sale of a rental unit does not change the tenant’s rights. The new owner “steps into the shoes of the previous owner.” In Ontario, when a residential lease comes to an end, it automatically renews on the old terms unless the landlord or tenant gives notice of termination, or the parties agree to terminate the tenancy or to enter into a new lease.

Absent a termination or mutual agreement to a new lease, the only term that can change is the rent, and it only changes if the landlord has given a notice of rent increase in the approved form at least 90 days before the effective date of the increase. The amount of the increase must be a legal amount. That is usually the guideline, which is 1.8 per cent for 2018 and 2019.

The lawful increase can be above the guideline if the landlord has experienced unusual cost increases, such as property tax increases above the norm or major repair costs for such things as a new roof or furnace. However, such higher increases are usually limited to a maximum of three per cent per year. Such higher increases need to be approved by the Landlord and Tenant Board.

Buying a property is not a reason for an above-guideline rent increase, regardless of how much an owner’s financing costs have gone up or whether the rent carries the costs of the property. (That used to be a factor between 1975 and 1990, but that ground for a rent increase was eliminated in 1990.)

You do not have to sign a new lease when you are renewing your tenancy. Since your tenancy has already begun, you do not have to agree to pay the deposit for last month’s rent. You could agree to that, but you do not have to.

If a tenant rents a new unit now, landlords are required to use the Residential Tenancy Agreement (Standard form of Lease), which is provided by the Ontario government. It does have the government’s Trillium logo on page 1. There are several sections that are to be filled in, including the rent, whether there is a deposit for last month’s rent, what utilities are included and the rules about smoking, if any.

Landlords can also add an addendum to deal with specific issues. For example, many landlords use an addendum that allows them to reallocate parking, that requires tenants to carry liability insurance or that sets out how tenants need to report the need for repairs or to make a request for consent to sublet or assign their tenancy.