Commercial Real Estate TransactionsChapter 3 · 28 practice questions

Chapter 3: Commercial Transactions and Business Sales

Includes 8 animated diagrams — view them live in the interactive theory reader.

Residential Tenancy Considerations: Ontario Real Estate Licensing Study Material

Residential Tenancy Considerations — ON-REAL4 TENANCY TYPES Fixed Term Set end date; automatic conversion to month-to-month Month-to-Month Rolling; requires proper notice to terminate Periodic Weekly/bi-weekly/monthly rental intervals KEY LEGISLATION Residential Tenancies Act (RTA) Governs landlord-tenant rights & obligations Excluded from RTA • Shared accommodation with landlord • Certain care facilities LANDLORD OBLIGATIONS • Maintain premises in good repair • Comply with health & safety standards • Provide 24h notice for entry • Return rent deposit with interest • Not interfere with quiet enjoyment • Provide copy of tenancy agreement • Use prescribed forms for notices TENANT OBLIGATIONS • Pay rent on time • Keep premises clean • Report repairs promptly • Not damage premises • Allow entry with proper notice • Follow reasonable rules RENT & DEPOSITS Rent increases limited to once per 12 months Deposit = max 1 month rent Interest paid annually 90 days notice for increase TERMINATION & NOTICE REQUIREMENTS Landlord Notice N4 - Rent Arrears N5 - Damages N7 - Illegal Act LTB Hearing Tenant Notice N9 - 60 days notice Mutual Agreement (N11) LEGEND Landlord Tenant Mutual compliance Residential Tenancy Considerations — Module ON-REAL4 — Ontario Real Estate Licensing Exam
Termination Notices: Forms N4 to N7 Termination Notices: Forms N4 to N7 Residential Tenancies Act, 2006 (S.O. 2006, c. 17) — Ontario N4 — Non-payment • Reason: unpaid rent • Deadline: 14 days to pay • If full payment → notice void • If not paid → application to the Board for eviction ✓ Voidable if full payment N5 — Nuisance • Reason: nuisance or disturbance • E.g.: excessive noise, unreasonable behaviour • Deadline: 7 days to stop • If the problem persists → eviction ✓ Voidable if stopped N6 — Illegal act • Reason: illegal act in the unit • E.g.: drug trafficking • Deadline: 14 days depending on severity • Not voidable — direct eviction procedure ✗ Not voidable N7 — Serious impairment • Reason: serious impairment to safety • E.g.: violence, threats, dangerous acts • Deadline: 14 days • Not voidable — immediate protection required ✗ Not voidable Voidance rules and key points Form Reason Remediation period Voidable? Eviction deadline N4 Non-payment of rent 14 days to pay ✓ Yes, if full payment After the 14-day period N5 Nuisance / disturbance 7 days to stop ✓ Yes, if the nuisance stops If the nuisance persists N6 Illegal act None — not remediable ✗ Not voidable 14 days N7 Serious impairment to safety None — not remediable ✗ Not voidable 14 days Source: Landlord and Tenant Board — Forms prescribed under S.O. 2006, c. 17
The Role of the Landlord and Tenant Board The Role of the Landlord and Tenant Board Administrative tribunal — Residential Tenancies Act, 2006 (RTA) MAIN ROLE • Specialized administrative tribunal • Resolves disputes between landlords and tenants • Issues enforceable orders EVICTION • Eviction order ONLY by the Board • Self-eviction prohibited • No forced eviction by the landlord TENANT REMEDIES • Illegal rent increases • Unmaintained unit • Landlord harassment ✓ Free application to the Board RENT CONTROL — ANNUAL INCREASES TYPE OF UNIT APPLICABLE RULE REQUIREMENTS Before Nov. 15, 2018 (first occupancy) Subject to rent control Guideline rate (e.g., 2.5%) 90 days' notice required Official form mandatory OFFICIAL FORMS — LANDLORD NOTICES N4 Non-payment of rent 14 days to pay N5 Nuisance / disturbance 7 days to correct N12 Personal use (immediate family) 60 days + 1 month of compensation N13 Demolition / conversion 120 days + 3 months of compensation N14 Death of tenant 30 days by the estate Key points: • Security deposit for damages: illegal • Assignment: consent required (unreasonable refusal prohibited) • Subletting: temporary, consent required • Clauses prohibiting pets: void • Increase for new occupant: prohibited without lease clause
The RTA and Its Scope THE RTA AND ITS SCOPE Residential Tenancies Act, 2006 — Ontario, Canada 🏠 COVERED DWELLINGS ✓ Residential leases (rental, room, mobile home, student housing) ✓ Rented condominium units ✓ Rentals with limited services ✓ Social housing (certain cases) 📋 NON-WAIVABLE MINIMUM STANDARDS ✓ Minimum rental conditions ✓ Rights and remedies of the parties ✓ Mandatory maintenance and repairs ✓ Authorized deposits and fees ✓ No waiver possible ⚖️ LANDLORD AND TENANT BOARD ✓ Independent administrative tribunal ✓ Resolution of landlord-tenant disputes ✓ Eviction and repair orders ✓ Prescribed official forms ✓ Enforceable decisions 🚫 IMPORTANT EXEMPTIONS — NEW DWELLINGS Before NOVEMBER 15, 2018 After ✓ Rent control applies ✗ Exempt from rent control 📄 OFFICIAL BOARD FORMS — NOTICES OF TERMINATION N4 Non-payment 14 days to pay N5 Nuisance 7 days to stop N12 Personal use 60 days + 1 month N13 Demolition 120 days + 3 months N14 Death of tenant 30 days (estate) ⚠️ Failure to meet deadlines or use the required form may invalidate the eviction process. 💡 Authorized deposits: last month's rent (with annual interest) + keys (refundable). Damage deposit = illegal. 🐾 Pets: no-pet clauses are void — except for serious issues or condominium rules. 📈 Rent increase: 90 days' notice required — guideline rate for pre-2018 units, no cap for post-2018.
Rent Control and Exemptions Rent Control and Exemptions — Ontario (Residential Tenancies Act, 2006) ✓ Controlled rental units First occupied BEFORE November 15, 2018 Annual increase capped at the guideline rate (e.g., 2.5%) Notice required: 90 days Exempt rental units First occupied on November 15, 2018 or AFTER Increase WITHOUT limit (no cap applicable) Notice required: 90 days ⚠ New occupant — Increase prohibited The landlord CANNOT increase the rent unilaterally due to the arrival of a new occupant. Exception: Only if a specific clause in the lease provides for a determined increase for an additional occupant. Source: Residential Tenancies Act, 2006 (RTA) — Landlord and Tenant Board
Permitted Deposits and Financial Rules Permitted Deposits in Rentals — Ontario (RTA 2006) Only two deposits are legally required at lease signing 1 Last month's rent deposit ✓ Maximum: one month's rent ✓ Annual interest at the prescribed rate ✓ Used for the last month of occupancy Upon departure: • Deposit + interest = last month's rent • Any surplus must be refunded The landlord must pay the interest to the tenant each year 2 Key deposit ✓ Refundable upon return of the keys ✓ Amount: reasonable replacement cost of the keys Authorized deduction: • Direct replacement cost only • Any excess amount collected must be returned to the tenant No other fees or deposits may be required ✕ Damage deposits: ILLEGAL in Ontario No landlord may require a deposit to cover potential damage to the unit Source: Residential Tenancies Act, 2006 (RTA), s. 105-106 — Landlord and Tenant Board Permitted Permitted Illegal

Overview

This chapter covers the legal framework governing residential landlord-tenant relationships in Ontario. Real estate professionals must understand these rules to advise clients ethically and accurately, whether representing landlords or tenants. The Residential Tenancies Act, 2006 (RTA) is the primary legislation, establishing rights, obligations, and procedures for all residential tenancies in the province. Key areas include permitted deposits, termination notices, eviction processes, maintenance duties, and rent control exemptions. Mastering these concepts is essential for compliance and for avoiding legal pitfalls in property management and transactions.

Key Concepts Explained

1. The Residential Tenancies Act (RTA) and Its Scope

The RTA applies to most residential rental units in Ontario, including houses, apartments, condominiums, and mobile homes. It sets minimum standards that cannot be waived by agreement. The Act is enforced by the Landlord and Tenant Board (LTB), which adjudicates disputes and issues eviction orders. Certain accommodations are exempt, including some student housing, care homes under specific conditions, and units in newly constructed buildings first occupied for residential purposes on or after November 15, 2018 (see Rent Control Exemptions below).

2. Permitted Deposits and Financial Rules

Landlords can only collect two types of deposits from tenants:

  • Last month’s rent deposit: Maximum of one month’s rent. It must be applied to the final month of tenancy. The landlord must pay interest on this deposit annually at the prescribed rate (set by the Ministry of Municipal Affairs and Housing). At the end of the tenancy, the deposit plus accumulated interest must match the last month’s rent; any surplus must be refunded to the tenant. Underpayment occurs if the landlord fails to pay interest for years, requiring a refund at termination.
  • Key deposit: Refundable and limited to the reasonable replacement cost of keys or access devices. Any amount collected in excess (e.g., $100 deposit for keys costing $10 to replace) must be repaid when keys are returned, minus only the actual replacement cost.
  • Illegal deposits: Security deposits for damages, pet deposits, or any other deposits are prohibited. Rent receipts or post-dated cheques may be required but are not considered deposits.

3. Rent Control and Exemptions

  • General rule: Rent increases are capped annually by a guideline set by the government (e.g., 2.5% in the example year). Landlords must provide 90 days' written notice using the proper form for any rent increase.
  • Exemption: Units first occupied for residential purposes on or after November 15, 2018, are exempt from rent control. Landlords of such units can increase rent by any amount with 90 days' notice. This exemption applies to new construction, creating a distinction between older and newer rental stock.
  • Additional occupants: A landlord cannot unilaterally increase rent simply because a new occupant moves in, unless the lease contains a specific clause with a predetermined increase amount for additional permanent occupants.

4. Maintenance and Repair Obligations

  • Landlord’s duty: Maintain the rental unit and common areas in a good state of repair, complying with all health, safety, and maintenance standards. This includes normal wear and tear (e.g., repainting, appliance maintenance). Repairs must be done in a reasonable time after request.
  • Tenant’s duty: Keep the unit clean and repair damage caused by the tenant or their guests. Tenant-caused damage is not the landlord’s responsibility.
  • Emergency repairs: In urgent situations (e.g., burst pipe, flood, gas leak, no heat in winter), the landlord may enter the unit without notice to prevent damage or protect the property. Normal entry requires at least 24 hours’ written notice.

5. Pets in Rental Units

  • General rule: “No pets” clauses in residential leases are void under the RTA. Tenants may have pets unless the pet causes significant damage, poses a danger, or creates a serious disturbance.
  • Exceptions: Condominium rules or building regulations that prohibit pets may apply. Also, a landlord can evict a tenant for pet-related nuisance or damage through proper procedures.

6. Termination of Tenancy: Notices and Procedures

Termination notices must be in the prescribed form (e.g., forms N4, N5, N12, N13) with specific notice periods and grounds. The tenant may void some notices by curing the breach within the specified time.

PurposeFormNotice PeriodKey ConditionsNon-payment of rentN414 daysTenant can void by paying allarrears within 14 days.Persistent nuisance, damage, orinterferenceN57 daysTenant has 7 days to stop thebehaviour. If not, landlordapplies to LTB.Landlord’s own use (or child,spouse, caregiver)N1260 days(minimum)Termination date must be last dayof rental period. Landlord mustpay one month’s rent compensation.Demolition, conversion, or majorrepairsN13120 days(minimum)Landlord must pay 3 months’ rentcompensation or offer anacceptable alternative unit.Tenant death (estate)N1430 days(minimum)Estate can give 30 days’ noticeeven during fixed term. Lease doesnot end automatically upon death.

Tenant-initiated termination: For a month-to-month tenancy, the tenant must give at least 60 days’ notice, with the termination date being the last day of the rental period (e.g., last day of the month). A notice ending mid-month is invalid. Fixed-term leases cannot be terminated early by the tenant unless the landlord agrees.

7. Assignment and Subletting

Assignment and Subletting Assignment and Subletting Comparison — Residential Tenancies Act, 2006 (Ontario) ✓ ASSIGNMENT DEFINITION Complete transfer of the lease to another person for the remaining term of the lease. CHARACTERISTICS Total transfer of the lease The original tenant vacates the premises The assignee assumes all rights and obligations LANDLORD'S CONSENT • Unreasonable refusal PROHIBITED • No response = refusal EVICTION — UNAUTHORIZED OCCUPANT Deadline: 60 days after discovery by the landlord ✓ SUBLETTING DEFINITION Temporary rental by the original tenant (e.g., 4 months). The main lease remains active. CHARACTERISTICS Temporary transfer of the lease The original tenant retains their primary rights and obligations Tenant returns at the end LANDLORD'S CONSENT • Unreasonable refusal PROHIBITED • Application to the Board possible EVICTION — UNAUTHORIZED OCCUPANT Deadline: 60 days after discovery by the landlord Reference: Residential Tenancies Act, 2006 — Chapter 3, Commercial Transactions and Sale of Businesses VS
  • Assignment: Transferring the entire lease to another person. The landlord cannot unreasonably withhold consent. If the landlord refuses or does not respond within 7 days, the tenant may terminate the lease (with 30 days’ notice) or apply to the LTB. An unauthorized assignment (tenant moving in another person without consent) allows the landlord to apply for eviction, but only within 60 days of discovering the unauthorized occupancy.
  • Subletting: The tenant temporarily gives up possession to another person (subtenant) for part of the lease term. The landlord cannot unreasonably refuse a sublet. If refused without reason, the tenant can apply to the LTB to order consent or terminate the lease.

8. Changing Locks and Entry Rights

  • Tenant’s right: A tenant may change or add locks to their unit, but they must give a copy of the new key to the landlord. Failure to do so can be considered interfering with the landlord’s lawful entry.
  • Landlord’s entry: Requires 24 hours’ written notice (unless an emergency) and entry must be between 8 a.m. and 8 p.m. Reasonable purposes include inspections, repairs, showing the unit to prospective tenants (after notice of termination), or for emergencies.

Important Regulations and Procedures

The Role of the Landlord and Tenant Board (LTB)

The LTB is the tribunal that resolves disputes under the RTA. Landlords must apply to the LTB for an eviction order; they cannot forcibly evict a tenant themselves. Tenants can apply for relief from illegal rent increases, maintenance failures, or interference with reasonable enjoyment.

Notice Forms and Service

All termination notices and rent increase notices must be in the prescribed form (e.g., N1 for rent increase, N4–N8 for various terminations). Service of notices must follow strict rules: personal delivery, leaving with an adult person in the unit, or posting in a conspicuous place if the tenant is absent, plus mailing. Electronic service is allowed if the tenant consents.

Voiding a Notice

Tenants can void certain eviction notices by taking corrective action within the notice period:

  • N4 (non-payment): Pay all overdue rent within 14 days.
  • N5 (nuisance): Stop the interfering behaviour within 7 days.
  • N6 (illegal act): Cannot be voided; landlord applies directly.
  • N7 (serious impairment of safety): Cannot be voided.

Common Relationships Between Concepts

  • Deposit interest vs. last month’s rent: The deposit must always equal one month’s rent at the time it is used. Annual interest adjustments ensure the deposit keeps pace with rent. A landlord who fails to pay interest for years must refund the shortfall to the tenant at termination.
  • Notice period vs. rental period: Many termination dates must align with the last day of a rental period (e.g., month-end for monthly leases). A tenant giving 60 days’ notice but ending mid-month does not meet the legal requirement.
  • Rent control exemption vs. new construction: The date of first occupancy (November 15, 2018) is critical. Units built after that date are exempt from guideline increases, but all other RTA rules still apply (e.g., 90 days’ notice, deposits, maintenance).
  • Unauthorized occupancy vs. eviction timeline: A landlord must act within 60 days of discovering an unauthorized assignee or occupant; otherwise, the landlord may lose the right to evict due to implied consent.
  • Landlord’s own use vs. compensation: Form N12 requires both 60 days’ notice and one month’s rent compensation. If the landlord fails to actually move in (or allow the child/spouse to occupy) within a reasonable time, the landlord may be liable for tenant damages.
  • Emergency entry vs. routine entry: Urgent repairs justify immediate entry without notice, but routine inspections still require 24 hours’ notice. Tenants cannot refuse emergency entry.
  • Sublet vs. assignment: Sublet is temporary (tenant returns); assignment is permanent (tenant leaves permanently). Both require landlord consent, but refusal must be reasonable. Unreasonable refusal can lead to termination or an LTB order.

Practice this chapter

Reinforce Commercial Transactions and Business Sales with 28 licensing exam–style practice questions, matched to your weak areas.

Try Free Practice QuestionsView Pricing