Through our condo property management in Toronto, one challenge we see often is tenants who want to end their lease early. A renter may take a new job, relocate to another city, or move in with a partner. Whatever the reason, landlords need a clear plan to reduce vacancy losses.
Most owners start with a 12-month lease to lock in steady income, yet Ontario rules give tenants several legitimate ways to leave early. Even though the lease is a binding contract, a tenant can sometimes terminate it with little notice.
Below, we outline the two key points every landlord should understand: when a tenant is allowed to break a lease in Ontario and what steps the owner must take to protect both the unit and their cash flow.
When is a Tenant Allowed to Break a Lease?
When a tenant signs a lease agreement, the expectation is that they will follow the agreed terms until it expires. However, the tenant is allowed to break the lease in the following situations:
- The tenant and the landlord reach an agreement allowing the tenant to break the lease.
- The tenant is running away from domestic/ sexual abuse.
- The Landlord and Tenant Board (LTB) issued an order that the lease is ended because the landlord has failed his legal obligation. Some of the things that could make the board allow the tenant to break the lease include unlawfully entering the rental apartment, withholding vital services, and harassing tenants.
- The tenant assigns the property to another person to continue until the end of the lease. In this case, you can refuse to rent the unit to another tenant if there is a good reason, such as a low credit score.
- If you do not respond to a tenant’s request to assign the rental space in seven days or reject a new assignment is enough to allow the tenant to issue Form N9 (Notice To End the Tenancy). The form should be issued within 30 days after the date of the request.
When is a Landlord Allowed to Break Lease?
Ending a tenancy used to be fairly simple for landlords, but some owners of investment property in Toronto abused the process—terminating leases merely to relist units at higher rents. To curb this practice, the Landlord and Tenant Board (LTB) tightened the rules, allowing landlords to break a lease only for the following limited reasons:
- The rental unit is required by a purchaser or a family member.
- There is a need to convert, repair, or demolish the property for other use cases.
- The tenant fails to comply with the lease agreement. Some of these failures include non-payment or late payment of rent and being involved in illegal acts.
- The landlord can also enter into an agreement with the tenant to break the lease. When such an early lease break takes place, the landlord is required to fill out Form N11 (Agreement To End Tenancy).
What to Do If the Tenant Breaks the Lease Illegally
If a tenant is breaking the lease early in Ontario, you might be wondering what to do. Here is the right approach to consider:
The Residential Tenancies Act allows the landlord to file a lawsuit when the tenant vacates the property without following the right process or breaking the lease. At this point, it is important to appreciate that the tenant owes you the rent for the house/apartment until the lease expires.
- You can insist that the tenant continues paying rent for the house until the lease is over or a replacement is found. This is a good method to use when the tenant is available and willing to pay.
- If the tenant has moved to another location where it is difficult to track them, consider following the info they shared when making the rental application. This is one of the reasons why landlords are encouraged to always verify the details that the client gives before signing a lease.
- Take the security deposit that the tenant paid at the start of the lease. Before new tenants can sign leases, they are required to deposit an amount that is equal to one month of rent to be applied towards the last month of the tenant’s stay.
- Start looking for a replacement. Even as you try to track down the tenant, it is important to accept that they have already made a decision to move away. This implies that even if they agree to clear the cost of the lease for the remaining period, the property will still be vacant. Therefore, it is prudent to start looking for a replacement.
Conclusion
If you are a landlord, it is prudent to understand the challenges that come with having tenants in your home. When the problem of a tenant breaking a lease in Ontario occurs, it is prudent to understand the available options. Here, the focus should be on trying to make the tenant meet the cost for the remaining part of the lease while seeking to get a replacement. Make sure to emphasize the involved consequences so that only the right methods are followed when a tenant wants to break the lease. If you need further help, contact a Toronto property management company.
