Real Estate

What paperwork is required to mutually cancel a signed lease before tenancy has started?

  • Last Updated:
  • Jan 28th, 2020 3:19 pm
[OP]
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May 23, 2017
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What paperwork is required to mutually cancel a signed lease before tenancy has started?

UPDATE: tenant finally got back to me and we agreed to mutually cancel the lease. I'm not happy that they essentially strung me along until just before move-in but have decided to just cut my losses and cancel it cleanly by just giving them back their last month deposit.

I do want to make sure my bases are covered though--what paperwork should I ask them to sign? The agreement (to cancel the lease) was done verbally so I'm definitely not giving them back the deposit without written confirmation that the tenant also agreed to cancel the lease. Would Form N11 ("Agreement to End the Tenancy") still apply in this case, even though technically the tenancy hasn't started yet?

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Original post:

I recently signed a lease with a new tenant. Lease is set to start Feb. 1, and I made it very clear on the description as well as the lease that the tenant is responsible for all utilities, and also tenant insurance is mandatory. I did receive the last month deposit amount upon lease signing.

Now it is 4 days prior to Feb. 1 and the tenant has shown no signs of setting up any of this. I asked them to sign a form to set up a utility under their name over a week ago and just keep getting excuses on how they are sick/busy so they will send it the "next day" (which of course keeps getting pushed back). At this point I'm pretty fed up with how irresponsible they are being and I honestly don't even want them to move into my unit.

Anyways, I know they still have a few days to take care of everything, but I'd like to know what my options are just in case. I'd honestly be perfectly happy if they just decided they don't want to move in anymore--I will just advertise again for new tenants. The only part that annoys me of course is that since I'll probably be advertising for a March 1 move-in, I will be losing out on 1 month's rent. Not the worst thing that can happen (I'd rather lose a month's rent than be stuck with a bad tenant forever), but I'm just wondering if I am entitled to keep the last month deposit in this case? Or would the tenant win the case if they go to the LTB? (I can show proof that I had other applicants who I could have chosen instead, so they are definitely causing me monetary loss--it's not just a "hypothetical" loss. I feel like I could also sue them for damages in small claims court, but of course just keeping the deposit would be a lot easier.)

Also just checking: I assume even if I'm not allowed to keep the deposit, the tenant would not have any rights to my property once Feb. 1 passes and they haven't met the requirements, right? (I.e. worst-case scenario I return the deposit amount and they have no leg to stand on in front of the LTB?)
Last edited by jk9088 on Jan 28th, 2020 11:25 am, edited 3 times in total.
17 replies
Deal Addict
Sep 19, 2009
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Tenant insurance is not mandatory in Ontario and with a signed lease the police will asist your tenant to get into the property. Also, there is no concept of "conditional lease" unde the Canadian law.

It will be up to you to go in front of LTB to enforce your demands. The additional terms you have on the lease might not be allowed under the new Ontario Standardized Lease Agreement.
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Mar 23, 2008
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jk9088 wrote: I recently signed a lease with a new tenant. Lease is set to start Feb. 1, and I made it very clear on the description as well as the lease that the tenant is responsible for all utilities, and also tenant insurance is mandatory. I did receive the last month deposit amount upon lease signing.

Now it is 4 days prior to Feb. 1 and the tenant has shown no signs of setting up any of this. I asked them to sign a form to set up a utility under their name over a week ago and just keep getting excuses on how they are sick/busy so they will send it the "next day" (which of course keeps getting pushed back). At this point I'm pretty fed up with how irresponsible they are being and I honestly don't even want them to move into my unit.

Anyways, I know they still have a few days to take care of everything, but I'd like to know what my options are just in case. I'd honestly be perfectly happy if they just decided they don't want to move in anymore--I will just advertise again for new tenants. The only part that annoys me of course is that since I'll probably be advertising for a March 1 move-in, I will be losing out on 1 month's rent. Not the worst thing that can happen (I'd rather lose a month's rent than be stuck with a bad tenant forever), but I'm just wondering if I am entitled to keep the last month deposit in this case? Or would the tenant win the case if they go to the LTB? (I can show proof that I had other applicants who I could have chosen instead, so they are definitely causing me monetary loss--it's not just a "hypothetical" loss. I feel like I could also sue them for damages in small claims court, but of course just keeping the deposit would be a lot easier.)

Also just checking: I assume even if I'm not allowed to keep the deposit, the tenant would not have any rights to my property once Feb. 1 passes and they haven't met the requirements, right? (I.e. worst-case scenario I return the deposit amount and they have no leg to stand on in front of the LTB?)
As it stands right now, you have a legally binding contract, with you obligated to provide them the unit on February 1. I'd be surprised if you can back out now BEFORE their tenancy starts. As of right now, they haven't violated any term of your contract.

Your best bet is probably to call your local LTB and see what they say. Either that, or a lawyer familiar with the RTA (or equivalent in your area, since you don't say where you live). You may risk a lawsuit by your tenant if you don't provide them a place to live on February 1.

C
[OP]
Member
May 23, 2017
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CNeufeld wrote: As it stands right now, you have a legally binding contract, with you obligated to provide them the unit on February 1. I'd be surprised if you can back out now BEFORE their tenancy starts. As of right now, they haven't violated any term of your contract.

Your best bet is probably to call your local LTB and see what they say. Either that, or a lawyer familiar with the RTA (or equivalent in your area, since you don't say where you live). You may risk a lawsuit by your tenant if you don't provide them a place to live on February 1.

C
Sorry just to clarify, I am not going to do anything until Feb. 1 (will definitely wait to see what happens until then). Just trying to clarify what my options are so I know what I can do on Feb. 1. I did put on the lease that it is void if no proof of tenant insurance is provided by Jan. 31 and was under the impression that this is a valid requirement to request from tenants.
[OP]
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May 23, 2017
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andrew4321 wrote: Tenant insurance is not mandatory in Ontario and with a signed lease the police will asist your tenant to get into the property. Also, there is no concept of "conditional lease" unde the Canadian law.

It will be up to you to go in front of LTB to enforce your demands. The additional terms you have on the lease might not be allowed under the new Ontario Standardized Lease Agreement.
According to this: http://www.sjto.gov.on.ca/ltb/faqs

"The law does not require a tenant to have tenant insurance and your landlord cannot force you to get it. However, if you agreed to get tenant insurance as part of your lease agreement and then you don't do it, your landlord could give you a notice to terminate the tenancy and then file an application with the LTB to evict you."

I assume this means the tenancy can be terminated before it begins if the tenant fails to provide proof prior to their lease start date...

Edit: in addition, part 11 in the Ontario standard lease has a clause that can be selected stating "The tenant must have liability insurance at all times. If the landlord asks for proof of coverage, the tenant must provide it."
Deal Addict
Sep 19, 2009
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jk9088 wrote: According to this: http://www.sjto.gov.on.ca/ltb/faqs

"The law does not require a tenant to have tenant insurance and your landlord cannot force you to get it. However, if you agreed to get tenant insurance as part of your lease agreement and then you don't do it, your landlord could give you a notice to terminate the tenancy and then file an application with the LTB to evict you."

I assume this means the tenancy can be terminated before it begins if the tenant fails to provide proof prior to their lease start date...

Edit: in addition, part 11 in the Ontario standard lease has a clause that can be selected stating "The tenant must have liability insurance at all times. If the landlord asks for proof of coverage, the tenant must provide it."
No. It only means that "the landlord could give you a notice to terminate the tenancy and then file an application with the LTB to evict you". For a such case, it will take you 6 moths to get in front of LTB. At the first term, the tenant will produce an insurance contract and the case will be dismissed.

Just chill, man. This landlord thing doesn't have give you a stoke. You could try actually being friendly with your tenant and not treat him like a criminal.
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Mar 23, 2008
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jk9088 wrote: Sorry just to clarify, I am not going to do anything until Feb. 1 (will definitely wait to see what happens until then). Just trying to clarify what my options are so I know what I can do on Feb. 1. I did put on the lease that it is void if no proof of tenant insurance is provided by Jan. 31 and was under the impression that this is a valid requirement to request from tenants.
You can't just "void the lease", though. You need to request an eviction and all that, at least once the lease starts. Not so funny part may be that any invalid clauses in a lease could be considered void by the LTB, which might work against you in this case. It would suck if that block got thrown out due to your wording.

You should also have wording about being able to verify the insurance annually, and the tenant is required to keep the insurance in place at all times. It's not unknown for tenants to get insurance to show the paper to the landlord and then turn around and cancel it the next day to save money.

C
[OP]
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May 23, 2017
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CNeufeld wrote: You can't just "void the lease", though. You need to request an eviction and all that, at least once the lease starts. Not so funny part may be that any invalid clauses in a lease could be considered void by the LTB, which might work against you in this case. It would suck if that block got thrown out due to your wording.

You should also have wording about being able to verify the insurance annually, and the tenant is required to keep the insurance in place at all times. It's not unknown for tenants to get insurance to show the paper to the landlord and then turn around and cancel it the next day to save money.

C
Thanks for the input, it seems like an extremely roundabout way to start the lease and then apply for eviction--I guess I'll call the LTB to get their take on this and see what the process is. Was hoping someone else would have been in this situation but seems like it's a grey area.
andrew4321 wrote: Just chill, man. This landlord thing doesn't have give you a stoke. You could try actually being friendly with your tenant and not treat him like a criminal.
Good job assuming things. FYI I am on very good terms with all my tenants and have always given them the benefit of the doubt (e.g. fixing or replacing appliances no questions asked, being prompt with repairs, etc). I didn't want to get into all the details of this particular situation but I suspect that this tenant is stringing me along until Feb. 1 right now and wants to get the lease cancelled, so I just want to make sure my side is covered. Even though I did advertise the unit for Feb. 1, they asked for March 1 move-in just before the lease signing, but when I said I was going to just rent it to someone else they reluctantly agreed to Feb. 1, saying they would carry 2 leases, so I strongly suspect they are regretting that right now and trying to get out of the lease. They have promised me 4 times that they will send a form on a specific date and then come up with various vague excuses to delay it (busy, sick, etc. etc). In my most recent text I just asked them flat-out if they wanted to cancel the lease and I have not received a response yet. IMO, all of this does not show me they are acting in good faith and I do not appreciate being strung along, which is why I am looking into what options I have available to me. Also btw it's not like I am leaving them homeless--they told me specifically they are not going to move in anyways until Mar 1 (but will take on the lease starting Feb 1), I of course told them I would let them move in starting February (this was back when I still trusted they were acting in good faith and would have everything set up prior to Feb 1), but again, I suspect they told me this because they were hoping I would end up waiving the rent for them in February. In retrospect perhaps I should have just said "tough luck" to this tenant and moved onto the next applicant who would have been happy to move in on Feb 1, but I gave them the benefit of the doubt that they would be fine with carrying 2 leases for a month and unfortunately that doesn't seem to be the case anymore.
[OP]
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UPDATE: (I've added this to the original post and also changed the title to reflect the new situation) tenant finally got back to me and we agreed to mutually cancel the lease. I'm not happy that they essentially strung me along until just before move-in but have decided to just cut my losses and cancel it cleanly by just giving them back their last month deposit.

I do want to make sure my bases are covered though--what paperwork should I ask them to sign? The agreement (to cancel the lease) was done verbally so I'm definitely not giving them back the deposit without written confirmation that the tenant also agreed to cancel the lease. Would Form N11 ("Agreement to End the Tenancy") still apply in this case, even though technically the tenancy hasn't started yet?
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jk9088 wrote: UPDATE: (I've added this to the original post and also changed the title to reflect the new situation) tenant finally got back to me and we agreed to mutually cancel the lease. I'm not happy that they essentially strung me along until just before move-in but have decided to just cut my losses and cancel it cleanly by just giving them back their last month deposit.

I do want to make sure my bases are covered though--what paperwork should I ask them to sign? The agreement (to cancel the lease) was done verbally so I'm definitely not giving them back the deposit without written confirmation that the tenant also agreed to cancel the lease. Would Form N11 ("Agreement to End the Tenancy") still apply in this case, even though technically the tenancy hasn't started yet?
I don't think there is such a form. The N11 wouldn't apply, since the lease would never come into effect, and basically, it wouldn't come under the LTB's jurisdiction (since there never was a landlord/tenant relationship). I think you just need to draw up a letter that documents the canceling of the lease prior to it taking effect, identifying both parties, signed by both, dated and witnessed.

C
[OP]
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May 23, 2017
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CNeufeld wrote: I don't think there is such a form. The N11 wouldn't apply, since the lease would never come into effect, and basically, it wouldn't come under the LTB's jurisdiction (since there never was a landlord/tenant relationship). I think you just need to draw up a letter that documents the canceling of the lease prior to it taking effect, identifying both parties, signed by both, dated and witnessed.

C
Thanks for the advice--I'll draft up a letter then and hopefully this will be the end of it.
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jk9088 wrote: Thanks for the advice--I'll draft up a letter then and hopefully this will be the end of it.
Hopefully indeed... Did you already cash their cheque? Have you verified that's it's cleared, and you are safe to return their money, if you did cash it?

C
[OP]
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May 23, 2017
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CNeufeld wrote: Hopefully indeed... Did you already cash their cheque? Have you verified that's it's cleared, and you are safe to return their money, if you did cash it?

C
They actually sent the money by e-transfer and the money was deposited in my account a few weeks ago, so I was just going to e-transfer it back to them as soon as everything is signed.
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jk9088 wrote: UPDATE: (I've added this to the original post and also changed the title to reflect the new situation) tenant finally got back to me and we agreed to mutually cancel the lease. I'm not happy that they essentially strung me along until just before move-in but have decided to just cut my losses and cancel it cleanly by just giving them back their last month deposit.

I do want to make sure my bases are covered though--what paperwork should I ask them to sign? The agreement (to cancel the lease) was done verbally so I'm definitely not giving them back the deposit without written confirmation that the tenant also agreed to cancel the lease. Would Form N11 ("Agreement to End the Tenancy") still apply in this case, even though technically the tenancy hasn't started yet?
Good idea, as I don't think you had any legal ground to keep the deposit even if you wanted to. As your lease was written the tenants had an "out" up to the last day simply by not getting tenant insurance. Did your lease contract state what would happen to the deposit or if any penalties/damages would be charged it they didn't get insurance and lease was cancelled last minute?
Had there been no such clause or condition to fulfill on the tenants parts, the lease would be been legally binding upon signing and you perhaps could have gone after them for damages when they wanted to break the contract without cause. Anyways something to consider for next lease you write up. I'm just guessing here so you could talk with a lawyer to see what your actual options are for protecting yourself.

Oh and tenant sounds like a jerk, you may actually be lucky in the long run you didn't end up renting to them.
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rob444 wrote: Good idea, as I don't think you had any legal ground to keep the deposit even if you wanted to. As your lease was written the tenants had an "out" up to the last day simply by not getting tenant insurance. Did your lease contract state what would happen to the deposit or if any penalties/damages would be charged it they didn't get insurance and lease was cancelled last minute?
Had there been no such clause or condition to fulfill on the tenants parts, the lease would be been legally binding upon signing and you perhaps could have gone after them for damages when they wanted to break the contract without cause. Anyways something to consider for next lease you write up. I'm just guessing here so you could talk with a lawyer to see what your actual options are for protecting yourself.

Oh and tenant sounds like a jerk, you may actually be lucky in the long run you didn't end up renting to them.
Yeah for sure...originally we were pretty pissed off by all the shenanigans so we wanted to keep the deposit amount (because after all the tenant is causing us to lose out on a month's rent, not to mention making us go through the hassle of looking for tenants all over again), but in the end we just figured we were better off getting them to agree to cancel the whole thing by giving back the deposit. Especially after reading the comments here stating that we might not be entitled to it anyways.

Overall, I suppose it's a relatively small price to pay for a lesson learned and to avoid future troubles with a difficult tenant. We're definitely planning on changing the way we draft leases going forward to add more specific clauses as it seems unfair that a tenant could sign a lease then decide to back out last-minute with no penalties. (In retrospect the lease was definitely too "lax"--as you pointed out we did not state specifically what would happen to the deposit, but previous tenants have never caused us issues so I guess we were too complacent.) I was planning on calling the LTB later this week to ask what exactly is enforceable, but if anyone here has advice on how they draft up leases with wording/clauses to protect themselves in such cases, I would definitely appreciate it!

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