Sublet Agreements in Ontario: Everything You Need to Know
In Ontario, tenants sometimes need to temporarily vacate their rental unit and want to allow another person to live there for a period of time. This arrangement is called a sublet, and it can be a useful option for tenants who plan to return to the unit after a certain period. However, it’s essential that both tenants and landlords understand the legal framework governing sublets, as the rules under Ontario’s Residential Tenancies Act (RTA) are strict and designed to protect the rights of all parties involved.
This detailed guide will explain what a sublet agreement is, how it differs from an assignment, the legal requirements for subletting, and what both tenants and landlords should know to avoid common pitfalls.
What is a Sublet Agreement?
A sublet agreement occurs when a tenant (the original tenant) temporarily rents out their unit to another person (the subtenant) while retaining the right to return to the unit at the end of the sublease period. In a sublet arrangement, the original tenant remains legally responsible for the rental agreement with the landlord. This means that the original tenant must ensure that rent is paid and that the unit is maintained according to the lease.
The subtenant lives in the rental unit for a specified period but does not assume full legal responsibility for the tenancy agreement. The original tenant retains the legal relationship with the landlord and continues to be accountable for the unit during the sublet period.
Sublet vs. Assignment: What’s the Difference?
Many people confuse subletting with assignment, but they are two distinct legal arrangements:
- Subletting: The original tenant temporarily rents the unit to a subtenant and plans to return after the sublease ends. The original tenant remains responsible for rent payments and any lease obligations during the sublet period.
- Assignment: The original tenant transfers the lease entirely to a new tenant (the assignee). Once the assignment is complete, the original tenant gives up all rights to the rental unit and is no longer responsible for paying rent or maintaining the lease. The assignee becomes the new tenant with full legal obligations.
Legal Requirements for Subletting in Ontario
Subletting a rental unit in Ontario requires careful attention to the rules set out in the Residential Tenancies Act (RTA). Here are the key legal requirements:
1. Landlord’s Consent is Required
- The original tenant must seek and obtain the landlord’s consent before subletting the unit. According to the RTA, a landlord cannot unreasonably refuse the sublet, but the tenant must still provide proper notice and details about the subtenant.
- Best Practice: Provide the landlord with written notice, including details about the subtenant (e.g., name, rental history) and the proposed sublet period.
2. Reasonable Refusal
- While the landlord cannot unreasonably deny a sublet request, they are allowed to refuse the sublet if they have a legitimate reason. For example, a landlord may reject a subtenant if they have a history of evictions or if the sublet arrangement would violate the terms of the lease agreement.
3. Length of Sublet
- The sublet must be for a specific period of time. Once the sublease period ends, the original tenant must return to the unit, as the sublet agreement is temporary.
4. Rental Payments
- The original tenant remains responsible for paying the rent to the landlord, even during the sublet period. The subtenant usually pays the rent to the original tenant, who then forwards it to the landlord. If the subtenant fails to pay rent, the original tenant is liable for any arrears.
5. Subtenant’s Rights
- The subtenant has the right to live in the rental unit and use the amenities during the sublet period. However, their rights are typically limited to the duration of the sublet agreement, and they do not gain any long-term rights to the unit after the sublet ends.
Steps for Subletting a Rental Unit in Ontario
If you are a tenant planning to sublet your rental unit, follow these steps to ensure the process is legal and smooth:
1. Review Your Lease
- Check your lease agreement to see if there are any clauses related to subletting. Some leases may outline specific conditions for subletting, so it’s essential to be aware of these before proceeding.
2. Find a Suitable Subtenant
- It’s your responsibility to find a subtenant who is trustworthy and financially stable. Be sure to screen potential subtenants by conducting background checks, verifying income, and checking their rental history.
3. Get Written Consent from the Landlord
- Write a formal letter to your landlord requesting permission to sublet. Include details about the subtenant and the length of the sublease. You can use Form N9: Tenant’s Notice to End the Tenancy if required to provide formal notice.
4. Draft a Sublet Agreement
- Once you receive the landlord’s approval, draft a sublet agreement that outlines the terms of the sublease. This agreement should include:
- The names of the original tenant and subtenant.
- The duration of the sublet.
- The amount of rent the subtenant will pay.
- Any rules or restrictions the subtenant must follow (e.g., no pets, no smoking).
A sublet agreement serves as a legally binding contract between the original tenant and the subtenant.
5. Maintain Responsibility
- Remember that you, as the original tenant, are still responsible for ensuring that the rent is paid on time and that the subtenant abides by the terms of the lease. If there are any issues (e.g., damage to the property, unpaid rent), the landlord will hold you accountable.
What Happens if a Landlord Unreasonably Refuses a Sublet?
If a landlord unreasonably refuses to allow a sublet, the tenant has the right to file an application with the Landlord and Tenant Board (LTB). The LTB can review the situation and determine whether the landlord’s refusal is justified.
If the LTB finds that the landlord acted unreasonably, it may allow the tenant to proceed with the sublet or impose other remedies, such as reducing rent or awarding damages to the tenant.
Risks and Considerations for Landlords and Tenants
For Tenants:
- Financial Liability: You remain liable for rent and any damages to the unit during the sublet. If your subtenant fails to pay rent or causes damage, you are responsible for covering the costs.
- Screening the Subtenant: It’s crucial to thoroughly screen your subtenant to avoid issues such as non-payment or lease violations. Conducting background checks and verifying rental history can help mitigate these risks.
For Landlords:
- Loss of Control: Subletting can result in the landlord having less control over who occupies the unit. However, landlords do retain the right to screen subtenants and refuse them based on legitimate concerns.
- Legal Implications: Landlords must ensure they do not unreasonably refuse sublet requests, as doing so could lead to legal challenges from the original tenant.
Navigating Sublet Agreements in Ontario
A sublet agreement can be a great solution for tenants who need to vacate their unit temporarily without giving up their tenancy. However, both tenants and landlords need to follow Ontario’s Residential Tenancies Act closely to ensure the arrangement is legal and transparent.
For tenants, it’s essential to get the landlord’s consent, screen subtenants carefully, and understand that they remain financially responsible for the unit. For landlords, granting reasonable consent while protecting their property and investment is key.
If you are unsure about any part of the subletting process or face difficulties with your landlord or tenant, consulting with a legal professional or the Landlord and Tenant Board can help resolve disputes and clarify rights.