The last year has been full of upheaval, and many individuals and families through no fault of their own have been forced to seek early termination of their leases. In the next year, we may see more of this, as families move away from cities and begin to sort out what a post-COVID world looks like for them.
In Ontario, the move to the standard lease form in April 2018 has made the lease signing process much easier for landlords. However, unfortunate situations still occur, which require landlords to know the details of the Ontario Rental Tenancies Act to ensure they’re complying with all relevant laws.
Today, we’ll talk about how landlords and property managers should handle early termination, and what they can do to help their tenants and safeguard their interests if this occurs.
What is Early Termination?
In Ontario, the standard rental tenancy period begins with a one-year lease, which transfers to a month-to-month tenancy after the end of the 12th month. This lease is used by the majority of landlords, with a few exceptions including student accommodations, care home rooms, and social housing.
If a tenant wants to vacate their rental during the first year or wants to leave with less than the required amount of notice, this is considered early termination. Typically, the required amount of notice in Ontario is 60 days, with a termination date on the last day of the month.
Common Reasons for a Tenant’s Early Termination
There are many reasons why a tenant may choose to seek early termination. In 2020, many individuals lost their jobs, which may have put their ability to pay their rent in jeopardy. In this situation, many tenants terminated their lease early, and went in search of cheaper accommodations.
Some other common reasons for a tenant’s early termination include:
- Moving to escape an abuse or domestic violence situation
- Landlord harassment
- Roommate incompatibilities
- Loss of income
- Interference with vital services like heat, cooling, water, or electricity.
- Death of the tenant
Coming to An Agreement with the Tenant
In situations where the tenant requests an early termination, the landlord has a few options. Let’s break them down below.
Agree to End the Tenancy
If your tenant comes to you with a request to end their tenancy, the most important thing you can do is listen to them, and try to be reasonable. Most of the time, people who need to end a tenancy are doing it because they have no other option.
If you’re living in a strong rental market, you can likely secure a new tenant quickly for a higher monthly rent than what you’re getting now. In this situation, doing the work to quickly find a new tenant will help out your current tenant, and help you secure a more advantageous rental price. It’s a win-win.
Situations like these are why it’s so helpful to have a property management expert on your team. Without a property manager, the landlord has to do all the work of re-listing the rental, and may miss out on an opportunity to adjust the monthly rent more favourably if they’re unaware of current market trends.
If you and your tenant make an agreement to end the lease early, you should both sign an N11 form, also called an Agreement to Terminate a Tenancy. Both landlord and tenant should have a copy of the final agreement.
Agree to Allow the Tenant to Assign the Lease
If you’re unwilling or unable to do the work of finding a new tenant, you can make an agreement with your current tenant to assign the lease. This means that the tenant will be responsible for finding someone to take their place on the lease. All the rights and obligations will be taken over by the new tenant, with the current tenant unable to move back in, even if they change their mind.
This is an option that can save a landlord some work in the short-term, but it may not be a great option in the long run. Tenants don’t have the same resources that landlords and property managers can use to assess incoming tenants, and since they’re leaving, they often don’t have the motivation. This could lead to a situation where a landlord is forced to take on a tenant that they have never met, and know nothing about.
If a landlord does not wish for their tenant to assign the lease, they must respond to the assignment request in writing within seven days. If they don’t, the tenant can officially end their tenancy 30 days from the date of their initial request.
There are some mitigating circumstances, including abuse or domestic violence within the home, that give any tenant the right to end their lease early. In this situation, all the tenant needs to do is give 28 days’ notice in the form of an N15 document, also called the Tenant’s Notice to End my Tenancy Because of Fear of Sexual or Domestic Violence and Abuse. The tenant may also provide a court order detailing abuse to themselves or a minor child in the home, in which case an N15 is not necessary.
The landlord may not share any information that is written in the N15 form or court order with anyone other than law enforcement officers.
Dealing with Early Termination
Dealing with an early termination can be a challenge for a landlord, but it doesn’t need to be stressful. Having a qualified property management expert on your side can help.
They can guide you through the process of listing your rental, and can give suggestions on the best way to proceed if there are mitigating circumstances that require the involvement of the Landlord Tenant Board.
To learn more about how a property management expert can help protect your investments and save you time, get in touch with our team at Goldmar Property Management.