Landlords warned about court ruling‏

Landlords in Ontario are being warned not to take advantage of a recent court ruling allowing tenants to pay more rent up front.

Tenants willing to pay more rent up front may be a landlord’s dream, but such a situation could get both parties in legal hot water.

Such a financial arrangement was recently before the Ontario Superior Court when after paying $90,000 in rent and $7,500 in a security deposit, the tenant subsequently demanded the monies back. She claimed this cash was demanded by the landlord. Based on evidence in a text message, it was decided that since the tenant offered the money up-front, the transaction was legal. However, as the security deposit was not offered by the tenant, the amount had to be paid back to her.

Speaking to CREW, real estate lawyer Mark Weisleder advises landlords not to advertise more than first and last month’s rent as outlined in Ontario’s Residential Tenancies Act. He says this decision could solve the “pet deposit” issue. “If the landlord is nervous about taking a tenant with a pet but the tenant offers a deposit in order to repair any damages caused by the pet at the end of the lease.”

Paul Kondakos, president of RealtyHub, believes this decision will become “a somewhat grey area” in the future. “While landlords may not explicitly request extra month’s rent or a security deposit, they could definitely intimate that is what they are looking for in order to approve a tenant’s application.”

Also adding that landlords need to get all transaction agreements in writing, Kondakos says the sticking point will be determining whether the set-up was “suggested or requested.”

Written by Grainne Burns