A Landlord's Guide to Subletting in Ontario

Written By Uba Abraham

Handling subletting requests is a complex but common aspect of property management in Ontario. It requires a clear understanding of your rights and obligations under the province's Residential Tenancies Act (RTA). This guide provides Ontario landlords with a comprehensive roadmap to manage subletting requests, ensuring you comply with the law, protect your property, and maintain a good relationship with your tenant.

What it Means for Landlords

In Ontario, it's crucial to understand the difference between a sublet and an assignment, as the rules for each are very different.

  • Sublet: Your tenant gives another person (the "subtenant") the right to occupy the rental unit for a specific, temporary period. The tenant must have a clear intention to return to the unit before the end of their lease. In this case, your original tenant is still the legal tenant. They remain 100% responsible to you for paying the rent and for any damage caused, including by the subtenant.

  • Assignment: Your tenant permanently moves out and transfers their entire lease (and all responsibilities) to a new person (the "assignee"). This new person effectively becomes the tenant, and the original tenant is no longer responsible.

Key Distinction: While this guide focuses on sublets, know this: You can refuse a request for an assignment for any reason, or for no reason at all. However, as we will see, you cannot unreasonably refuse a request for a sublet.

The Residential Tenancies Act, 2006 (RTA) is the primary law governing sublets. Your lease agreement cannot override these rules.

A tenant must ask for your permission to sublet the unit to a specific person. This request should be in writing.

Your Right to Approve or Refuse

Under the RTA, you have the right to approve or deny the request, but your decision must be reasonable.

  • You CANNOT unreasonably refuse. The Landlord and Tenant Board (LTB) is the authority that decides what is "unreasonable." Refusing without a valid, fact-based reason will likely be seen as unreasonable.

  • You CANNOT charge a fee or any extra charge for consenting to a sublet, beyond your reasonable, out-of-pocket expenses (e.g., the cost of a credit check).

If you do not respond to the tenant's written request within a reasonable time, the LTB may rule that you have implicitly consented.

If you discover an unauthorized occupant, the RTA gives you a specific remedy.

  1. You have 60 days from the date you discover the unauthorized person to file an Application to End a Tenancy and Evict a Tenant (Form A2) with the Landlord and Tenant Board.

  2. This application seeks to evict both your original tenant and the unauthorized occupant.

  3. If you do not file within 60 days, the unauthorized occupant legally becomes a tenant, and you lose your right to evict them for this reason.

While you can't forbid subletting, you can establish a clear process. This policy should be part of your Ontario Standard Form of Lease in the "Additional Terms" section (Section 15).

Your policy should state

To avoid confusion and maintain consistency, establish clear subletting policies within your lease agreement:

  1. Approval Requirement: State that tenants must seek written permission before subletting. This ensures that you are aware of and consents to any new occupants, helping to maintain control over who is residing in your property.

  2. Screening Process: Outline the necessary steps for screening potential subletters. This might include background checks, credit reports, and reference checks to ensure that the new subtenant is reliable and meets the landlord's standards. "The tenant must provide the name and contact information of the proposed subtenant and a copy of the proposed sublet agreement."

  3. Subletter Agreement: Specify that subletters must sign an agreement adhering to the original lease terms. This helps ensure that all parties are aware of and agree to the existing rules and responsibilities, thereby preserving the integrity of the original lease agreement.

The Dos and Don’ts of Subletter Screening

Proper screening ensures that the subletter is reliable and will uphold the tenant's responsibilities. Your reason for refusal must be tied to the proposed subtenant's suitability as an occupant. This means you can and should screen them just as you would a new tenant, but you must strictly follow the Ontario Human Rights Code. Here’s how to effectively screen subletters, ensuring you find the best fit while optimizing your process for efficiency and security:

Dos:

  • Conduct Thorough Background Checks: Verify the subletter's rental history to ensure they have a track record of timely payments and good behavior. Check their employment status and credit score to assess financial stability. This step is crucial to avoid future issues and ensure a smooth subletting experience.

  • Interview Potential Subletters in Person or Virtually: Assess their reliability and suitability by asking pertinent questions about their rental history, reasons for subletting, and future plans. This personal interaction can provide valuable insights into their character and reliability.

  • Request and Verify References: Contact previous landlords for references to get an unbiased opinion about the subletter’s behavior and reliability. Positive feedback from previous landlords can be a good indicator of a trustworthy subletter.

Don’ts:

According to the Ontario Human Rights Commission's policy on housing, your refusal cannot be based on discrimination. This includes:

  • Skip the Screening Process: Never bypass the screening process, even if the tenant provides glowing recommendations. Comprehensive screening is your best defense against potential issues down the line, and skipping it can lead to regrettable consequences.

  • Ignore Red Flags and Inconsistencies: Pay attention to any inconsistencies or warning signs during the screening. If something feels off, trust your instincts and dig deeper. Ignoring red flags can lead to significant problems, including property damage or late payments.

  • Other Important Don’ts

    • DON'T refuse based on race, ethnic origin, or place of origin.

    • DON'T refuse based on "receipt of public assistance" (e.g., if their income comes from ODSP or Ontario Works). You can only verify that their income is sufficient to pay the rent.

    • DON'T refuse based on age, family status (e.g., they have children), or marital status.

    • DON'T apply a "rent-to-income ratio" (e.g., "rent can't be more than 30% of your income"). You can only confirm their income is sufficient to cover the rent.

    • DON'T refuse simply because you don't like the tenant or want to find your own tenant instead. This would be considered arbitrary and unreasonable.

Clear and Professional Communication

Maintaining transparency with your tenants is key to fostering trust and ensuring smooth property management. When notifying them of your decision, it's essential to communicate clearly and professionally to avoid misunderstandings and build a positive rapport.

Approval:

  • Start by congratulating your tenant on successfully securing a subletter. This positive reinforcement helps build goodwill and a sense of accomplishment.

    1. Provide a detailed outline of any next steps involved in the process, such as signing additional agreements or completing any necessary documentation. This ensures that both parties are on the same page and understand what is required moving forward.

    2. Highlight any specific guidelines or policies that the subletter needs to follow, ensuring compliance with property rules and regulations. This proactive approach prevents potential issues and maintains a harmonious living environment.

Rejection:

  • Clearly explain the reasons for rejecting the proposed subletter in a respectful and constructive manner. It's important to be honest and transparent while maintaining a professional tone to avoid discouragement.

  • Offer valuable guidance on how to find a more suitable subletter, such as providing tips on what criteria to consider or suggesting alternative avenues for finding potential candidates. This support demonstrates your commitment to helping your tenants succeed and fosters a cooperative relationship.

  • Encourage open communication and invite the tenant to discuss any concerns or questions they may have regarding the rejection. This helps address any misunderstandings and provides an opportunity for further clarification or suggestions.

Ongoing Oversight

Once a subletter is approved and moves in, ongoing and diligent monitoring is essential to ensure a smooth subletting experience:

  • Regular Property Inspections: Schedule and conduct periodic and thorough inspections to ensure that the property is well-maintained and any potential issues are addressed promptly. This proactive approach helps in maintaining the property's condition and avoiding costly repairs.

  • Effective Communication Channels: Maintain open and consistent lines of communication with both the original tenant and the subletter. Regular updates and clear communication help in resolving any misunderstandings quickly and keep everyone informed about any changes or important information.

  • Lease Agreement Compliance Checks: Regularly verify that all parties are adhering to the lease terms and the subletting agreement. This includes ensuring timely rent payments, adherence to property rules, and compliance with any other specific conditions outlined in the agreement. Regular compliance checks help in mitigating disputes and ensuring a harmonious living arrangement.

Implementing these ongoing oversight measures will not only enhance the subletting experience but also ensure the property remains in excellent condition, contributing to a positive and hassle-free rental process.

Taking Appropriate Actions

Unauthorized subletting can pose significant risks to property management and tenant agreements. If you discover unauthorized subletting, consider the following steps:

  1. Immediate Communication:
    Promptly contact the original tenant to discuss the breach of the rental agreement. Clear communication is crucial to understanding the situation and determining the tenant's awareness and intentions regarding the unauthorized sublet.

  2. Formal Notice:
    Issue a formal notice to the original tenant, demanding the immediate cessation of unauthorized subletting. Be sure to include details of the violation, reference relevant clauses from the lease agreement, and outline the consequences of non-compliance. This official document serves as a critical step in documenting your actions and reinforcing the seriousness of the breach.

  3. Legal Action:
    If necessary, consult with legal counsel to understand your options and proceed with appropriate legal actions. Legal professionals can provide guidance on the best course of action, whether it involves pursuing eviction, seeking compensation for damages, or other legal remedies available under the law. Taking informed legal steps ensures that your response is both compliant with local regulations and effective in resolving the issue.

Effectively managing subletting requests requires a blend of clear policies, thorough screening, and proactive communication. By following these guidelines, landlords can ensure they are well-prepared to handle subletting requests professionally and confidently.

For personalized assistance and expert property management, schedule a consultation with our team today. Trust us to take care of your property as if it were our own, maximizing its potential while maintaining the highest standards of service.

 

Uba Abraham

The visionary founder of Zulma Real Estate, established in 2022.

Recognizing the need for proactive asset management and preventing long-term value decline, Uba founded Zulma Real Estate to offer superior property management that preserves and grows investment value. The firm aims to partner with 5,000 homeowners and investors to ensure asset appreciation by 2030.

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