Working With Leases

Leases are a lot of work for not much money.  However there is a big upside.

You are building a database of very grateful clients.  If you are newer to the business this is especially important.  It also provides you with an opportunity to gather solid testimonials on the service you provide.

Unfortunately in our industry many representatives treat leases like a grudge service... something they do for past or investor clients.  This means that not only as you approach the transaction like the professional you are you may be frustrated by the other sides attitude... but often the other side has not educated themselves.

The challenge leases present are not only are we operating under our own governing legislation (REBBA) but we need to be hyper aware of the two other pieces of legislation lease transactions bump up against... The Residential Tenancies Act and the Human Rights code.

As we look at both sides of the transaction these pieces of legislation will be referenced.

Start by having your potential client complete a standard  OREA Rental Application.    By filling this out and signing the bottom... your client provides all the pertinent data a prospective landlord will want and grants permission for a credit check.  

Your client can obtain an up to date credit check through Equifax or TransUnion.  These are recognized credible sources and may be preferable to a landlord over CreditKarma.   Credit Karma is free and can be a good place to find out if there are initial blemishes that need to be addressed.

We also suggest that your client request a confirmation of employment from their employer so it’s ready when they are.    

We STRONGLY suggest you send an email to the client including a link to the updated Residential Tenancy Act (keep a copy of that email in your file, it shows you did your due diligence in helping your client understand current legislation).    Use the suggested email communication we have provided below as there is often going to be a disconnect between what a landlord and listing agent is requesting and compliance with the act

Documents

Rentals are very similar to purchases as far as agency paperwork  If you and the client are comfortable working together you can ask them to sign a Buyer Agency Agreement (also found in web kits).  But at the very least, Working With a Realtor should be handed out and its receipt acknowledged and initialed as soon as possible (blue folder available at office or in webforms under agency agreement).  

Form 810  Working with a Realtor

Form 346 Tenant Representation Agreement  (working with Tenant)

From 210 Listing Agreement – Landlord Representation Agreement Authority to Offer for Lease (Working with Landlord)

Form 410  Rental Application

Form 400  Agreement to Lease Residential

Form 324 Confirmation of Representation (Landlord Tenant)

*Ontario Standard Lease*

*Information for New Tenants*

IMPORTANT:  Under the RTA a landlord MUST execute Ontario's Standard Lease and also must provide their new tenant with the LTB brochure "Information for New Tenants".   

The Ontario Standard Lease can attach the executed OREA Agreement to Lease in its entirety as a Schedule.  The listing agent may request that the co-operating Agent submit it along with their OREA Agreement .  Although technically it is the Landlord's responsibility to prepare and provide if you want to make your lease offer easy to work with for the Landlord... go ahead and prepare it.

The Landlord is obligated to provide their new Tenant with the "Information for New Tenants" brochure.  We recommend attaching it to your offer as Schedule C.  You can find a copy a the bottom of this post.

Listing Agent/Landlord Schedules

Often the Landlords agent will have uploaded a schedule laying out the terms they'd like to see in the contract.  When you view the listing in MLS... look on the top buttons, you may see "view attachments".  Once you select that button you may find a schedule.  Likely they will have their Deposit Trust Notice there (a disclosure of how they hold their trust money)... but sometimes you'll see their preferred clauses as well.  Otherwise contact the agent and ask.    

It is important that you review this schedule for potential clauses that contravene the act and discuss with your client their comfort level.  If your elects to accept the schedule be sure to have them indicate to you in an email that they are aware of their rights under the RTA.

Plan Ahead

Banks no longer offer counter cheques.  If your Tenant client does not have cheque on hand they need to know there is a turnaround time to have them produced.  If your client has committed to post-dated cheques on closing ensure they will have them in time if ordering.

Compensation
Rentals traditionally are one month’s rent split between the listing agent and the selling agent. 
Ok, so you won't be making a mint... it's a really, really good experience!

Manage your Time by Qualifying
There is no point showing properties to prospective tenants who are not qualified.  We have included a Check List below for working with Tenants.

Packaging and Presenting your Tenant Client

Do you know what lease listing agent's hate?

Receiving your clients documents in bits and pieces.

How you package your client's application can have a great influence over whether they are accepted if all other things are equal and acceptable.

Before the landlord sees your clients application it has to pass through the hands of the listing agent.  When you have all your documents scanned and labelled and assembled in a logical order it makes it easy for the listing agent to pass along to their client and leaves a subconscious positive impression.  The listing agent transfers your attention to detail to your client in a winning way.

An ideal application 

Has all the fields filled out on the application

Includes Information for New Tenants as a Schedule

Includes the Ontario Standard Lease

Has a quality Equifax or Trans Union credit report

Has a letter of employment

Has a letter from a past landlord

All documents are scanned cleanly and are not photographs

All documents are scanned into one document  in an logical are and is clearly named with your clients name and property address.

Lease Listing Steps and Documents

Although Fintrac is not required we suggest you verify the client you are representing (not required to record, just good practice)

Form 810  Working with a Realtor

Form 210  Landlord Representation Agreement - Authority to Offer for Lease

Board Appropriate MLS Data Form

Form 400  Agreement to Lease Residential

*Ontario Standard Lease*

*Information for New Tenants*

IMPORTANT:  Under the RTA a landlord MUST execute Ontario's Standard Lease and also must provide their new tenant with the LTB brochure "Information for New Tenants".   

The Ontario Standard Lease can attach the executed OREA Agreement to Lease in its entirety as a Schedule.  You can request the co-operating Agent submit along with their OREA Agreement and many will... but technically it is the Landlords responsibility to prepare and provide.

We recommend uploading the Information for New Tenants brochure with your Lease Listing as request it be made Schedule C

Steps to a Successful Transaction:

1. Check title on lease listing to ensure there are not other parties on title that would be required to approve a lease

2. If the unit is currently tenanted verify that the landlord has written agreement to terminate tenancy N11 (mutual agreement) relying on a verbal recommendation is not sufficient.

3. Find out if the tenants are open to showings and whether there will be any restrictions. (if tenant is not co-operative Landlord is better to wait until vacant)

IMPORTANT:  Familiarize yourself with the Residential Tenancies Act

I.e.  Key deposits in Ontario must be refundable – i.e. the tenant gets their money back upon returning the keys. In other words, the landlord cannot charge a fee for giving a tenant keys.

The second requirement is that the deposit cannot exceed the expected cost of replacing the keys – e.g. the deposit for keys cannot be $50, since the cost of cutting a single key is usually under $5 (some condominium keys and fobs have a replacement costs that is much higher, but don't pick a random number... verify with property management).  The number of keys given, as well as the replacement cost of any other entrance mechanisms involved, will determine the maximum amount the key deposit can be set.

We STRONGLY suggest sending suggested wording at the bottom of this summary to your landlord in advance of signing the listing.  Better to know now if you are going to be asked to do things that are not in keeping with the residential tenancies act.

Determine if your landlord clients are going to ask you to use an existing lease template (review for any conflicts with the RTA)

Ensure your clients understand they are obligated to provide the new tenant with Ontario’s Standard Lease and the Information for New Tenants brochure.  You can assist with this by making them schedules to any offers to lease.

Promoting and Showing the Listing

Decide on photos.  Will the tenant allow photos?  If the landlord has photos you may use those PROVIDING they are not from a previous listing and belong to the former listing agent.. that is a violation (including using other members photos of common areas).  If not using current photos we recommend indicating in remarks for brokers that the photos may not be exactly has unit is today.

If you use a previous listing or similar unit to assist you with filling out the MLS Data sheet understand that you are ultimately responsible for ensuring that information is accurate.  Best to measure yourself or if floor plans are available even better.

If a condo unit determine if you are able to put lockbox in stairwell or leave key with concierge.  

IMPORTANT NOTE:  during covid some condominiums have prohibited showings call building management to find out.

Compensation

Rentals traditionally are one month’s rent split between the listing agent and the selling agent.  

If you are have a proven track record and testimonies from happy landlords you can always consider charging more.  I have know agents who become VERY proficient at leasing and charged 1.5 months retaining a full month for themselves.

Screening Tenants Reviewing Offer

You may choose to upload your preferred schedule of clauses that you have reviewed with your landlord client.  If the landlord has provided you with their own lease terms once again we caution you to review for any conflicts with the RTA.

It is imperative that when screening clients you do not contravene the Human Rights Code   Review and ensure you are familiar with it.

If you are declining a tenant NEVER EVER EVER be specific.  "I am sorry but my Landlord has declined your tenants application... they did not share their reasons with me"

Think Ahead

The key exchange is something that is often overlooked and tenant clients as well as agents can be left scrambling day of closing.  No mater what side of the table you are sitting at consider inserting a clause that will clarify for ALL parties how it will go down. 

"Landlord will arrange for keys to be available for pick up at Concierge no later than 9:00 am  on the first day of the lease term"

or maybe "Landlord or Listing Agent will arrange for keys to be picked up at the listing brokerage office by 9:00 am on the first day of the lease term"

Value Add

Can you bring value by giving your tenant client a check list?  Help them understand move in protocol for  condominiums...  that they will need to book the elevator... possibly register with the condominium management?   What about utilities will they be responsible for setting up the account?  Do they know how to obtain tenant's insurance?  Provide some guidance!

Notice of Closing

If you are representing the landlord the accounting department will require an email from you confirming that the transaction has "closed" (i.e. the tenant is in possession of the unit) prior to paying out or a copy of the Standard Ontario Lease

When Things Go Wrong

... and from time to time they do.  Sometimes the unit is being handed over as promised... landlord has decided they want to leave it furnished and it was rented vacant.   There was damage to the unit and it can't be occupied on commencement date.   The tenant changed their mind or their circumstances changed.   Something you need to know is the Landlord and Tenant board only gets involved in active leases.  Any challenge prior to a lease commencement has be through agent to agent / tenant to landlord negotiations and then ultimately small claims.

In almost all instances it is better for the parties to release each other.  This is done through a mutual release... occasionally a portion of the rent deposit is left behind depending on the circumstances.

This is often when things start to get dicey.  Terms the tenant was perfectly fine with previously are now suddenly viewed as "against the law".  Remember... Everyone is great until they aren't.  This is why we want you educating your clients from the onset and having a record of it (by using our recommended emails).

Deposit funds held in the brokerages trust account CANNOT be released without both parties signatures or a court order.  This can be distressing for your client.

Deposits get tricky when Real Estate Meets the RTA.  Remember you can structure it so that have one month's deposit and first when you take occupancy.  There is less risk structuring that way... the question is will a landlord accept that.  

Although our getting paid should not mean contravening the act not that if only one months deposit is held by the brokerage the commission owed will be One Month Plus HST.  The landlord will owe the brokerage the 13% before the commissions will be paid out.

TO TENANT CLIENT 

(Saved as a FUB Template: Rental: Tenant - Suggested Language)

I am looking forward to working together with you to secure rental accommodations.

First thing I want you do do is following this link to the landlord and tenant board / social justice tribunal information site.

Renting in Ontario

There are key elements you need to be aware of regarding your rights as a tenant.

Unfortunately many landlords are not conversant with the Residential Tenancy Act and will make requests of or include in their lease documents requests that contravene the act. The most common being Post Data Cheques, Key and Security Deposits as well as Pets.

Before we begin looking at places and submitting leases please review the site thoroughly so that when we are ready to make any offer you are very comfortable in what you agree to as anything you put your pen to has to be by your choice and your choice alone.

These brochures will also help you in understanding what your rights and responsibilities are

Guide to the Residential Tenancies Act

Information for New Tenants

TO LANDLORD CLIENT

(Saved as a FUB Template: Rental: Landlord - Suggested Language)

I am looking forward to working together with you to secure an excellent tenant for your property.

First thing I want you do do is follow this link to the landlord and tenant board / social justice tribunal information site.

Guide to the Residential Tenancies Act

Renting in Ontario (LTB)

There are key elements you need to be aware of regarding your rights  and responsibilities as a landlord, please review the site thoroughly.

There are definitely assumptions that are easy to make about what you can and cannot ask for or requests you may want to make.  Many things we have come to think of as "typical" and include in lease documents and applications contravene the act.  The most common being Post Data Cheques, Key and Security Deposits and of course pets.

When we begin screening applicants you will also need to be aware of what is and isn't allowed under the Human Rights code 

Also please be aware that as a Landlord under the RTA you are obligated to provide your new Tenant with the Following Brochure

Information for New Tenants

As well, while we will be using Real Estate Forms to vet applications... once selecting your new tenant we will need to execute Ontario Standard Lease

Remember that Rental Housing is also covered under the Human Rights Code 

https://www.ohrc.on.ca/en/human-rights-housing-overview-landlords-brochure#:~:text=Housing%20is%20a%20human%20right&text=As%20a%20landlord%2C%20you%20are,race%2C%20colour%20or%20ethnic%20background

We can discuss the potential landmines before we go live.

Here is an additional resources you will find helpful.  

LTB - Help for Landlords

Landlord Self Help

TENANT INSURANCE

According to the LTB RTA FAQ The law does not require a tenant to have tenant insurance and your landlord cannot force a tenant to get it. 

However, if the tenant agreed to get tenant insurance as part of the lease agreement and then they don't do it, the landlord could give  notice to terminate the tenancy and then file an application with the LTB for eviction.

To assist you you have developed a HS Tenant Insurance communication piece

This has also been saved as a FUB Email template

Additional Resources:

Tenant Insurance Pros and Cons Articles

https://www.thebig.ca/blog/title/is-tenant-insurance-mandatory-in-ontario/

https://toronto.ctvnews.ca/mobile/these-are-the-pros-and-cons-of-paying-for-tenant-insurance-1.5433537

There is a temptation to become overly involved particularly with Landlord clients.  Remember the agency relationship ends with occupation/closing date.  

When it comes to the relationship between Tenant and Landlord you should not be getting involved... point you clients to the property resources.

As mentioned Landlords in particular tend come to you asking about such topics as lease renewal, rent increases and terminating the tenancy.  You are not a property manager.  If you give your former Landlord client guidance that is incorrect not only do you risk the relationship you could be held liable.

Through out this course we have provided multiple resource links for both Tenants and Landlords.  All the information in this course is also available on the Agent Toolkit so you can refer back to it time and time again.

The best resource you have is the relationship HouseSigma has developed with Stonegate Legal. 

Stonegate Legal Services is a Toronto paralegal firm that focuses solely on the Landlord and tenant board. With over 20 years in real estate, property management, and being landlords themselves, they have an in-depth knowledge of landlord and tenant matters. 

https://stonegatelegalservices.ca/

Paralegal Bita DiLisa has been a frequent guest at HouseSigma.  We recommend you take the time to watch her review of Landlord Tenant challenges in the video above or book mark it for a future watch

You can also find a series of short videos on a variety of topics on the Stonegate Legal Video Library. Feel free to share these with your clients.