Guarantors and Co-Signers Liability (RTA Leases)

Caselaw.Ninja, Riverview Group Publishing 2021 ©
Date Retrieved:	2024-11-22
CLNP Page ID:	2167
Page Categories:	[Contract Law, Leases, & Sub-Letting (LTB)]
Citation:	Guarantors and Co-Signers Liability (RTA Leases), CLNP 2167, <https://rvt.link/4k>, retrieved on 2024-11-22
Editor:	Sharvey
Last Updated:	2023/02/28

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HMV Properties Inc. v. Lycett, 2010 CarswellOnt 4915

18 HMV's position is that having guaranteed the rent payable under the tenancy agreement, Dayne Lycett remained liable to pay rent during the deemed month-to-month renewal provided for by section 38 of the Residential Tenancies Act, 2006.

19 Dayne Lycett's position is that the tenancy agreement that he co-signed was for a one-year term and that he had no obligation to HMV following the expiry of that term.

20 In Kar v. Chung, a case not cited in argument, the Court of Appeal, reversing a decision of the Divisional Court, held that the deemed renewal provided for in subsection 104(1) of the Landlord and Tenant Act did not apply to guarantors, that landlords and tenants are deemed to have renewed their tenancy agreements but that guarantors are not deemed to have done anything. While the language in section 38 of the Residential Tenancies Act, 2006 is not identical to that in subsection 104(1) of the predecessor Act, it does not differ in any material respect and accordingly, the result must be the same.

Kar v. Chung, 2001 CanLII 8600 (ON CA)

[1] We disagree with the reasoning of both Mr. Justice Murphy and the Divisional Court.

[2] The lease was entered into on May 4, 1997 and it was to expire on May 4, 1998, subject to the tenant’s right to renew for another year on giving 60 days notice. The tenant did not give notice. The Landlord and Tenant Act R.S.O. 1990, C. L.7 was then in force. Section 104(1) of that act provided as follows:

Subject to subsection (2), upon the expiration of a tenancy agreement for a fixed term, the landlord and the tenant shall be deemed to have renewed the tenancy agreement as a monthly tenancy agreement upon the same terms and conditions as are provided for in the expired tenancy agreement.

[3] The legislation does not purport to affect or apply to guarantors. The guarantor in this case is not deemed to have done anything. There was no language in the guarantee itself dealing with renewals. In those circumstances it seems to us that the guarantee expired at the end of the first year.

[4] Part of the award of the Divisional Court was for damage to the premises. There was no evidence whether it occurred during the first year or after the guarantor’s liability had ceased.

[5] In these circumstances the order of the Divisional Court is set aside and the judgment of the trial judge restored. The tenant is entitled to her costs here and below. Those costs are fixed, on consent, at $5000.

Stamm Investments Limited v Ryan, 2015 CanLII 52577 (ON SCSM)

3. The tenancy started on February 1, 2012. Mr. Ryan and Ms. Marks were the tenants and Ms. Brooks signed on as a guarantor of their obligations under the lease. The terms of the guarantee refer to the guarantor’s obligations being co-extensive with those of the tenants, stating that the guarantor’s obligations continue until “lawful termination of the Tenancy Agreement”.

...

18. I accept the plaintiff’s submission that the Landlord and Tenant Board has no jurisdiction over guarantors. In other words where a landlord is owed arrears of rent by tenants it can proceed before the board against the tenants but the board cannot make an order against the guarantor because a guarantor is not a “tenant” within the meaning of the Act: 501606 Ontario Ltd. v. Manbauhar, 1998 CarswellOnt 6412 (ORHT).

19. Accordingly I find that the board’s exclusive jurisdiction under s. 168(2) of the Act cannot oust the court’s jurisdiction to entertain a claim against a guarantor of a residential tenancy.

20. However, on the merits I find that no amount is owed by the tenants and so there is no basis for a judgment against the guarantor in this case.

21. Regarding the narrow question whether the sheriff’s fee of $325 can be claimed in this court from the guarantor, in my view it cannot. The board’s order makes no award for that item and therefore the tenants are not liable for it. The guarantor’s liability being co-extensive with that of the tenants, she is not liable for the sheriff’s fee.

Singh v Fitzgerald, 2020 CanLII 117594 (ON LTB)

10. With respect to Rita Fletcher, I find that she is a guarantor (and occupant), but not a tenant. First, Rita did not actually sign the agreement, rather her name was written on the lease. Further, according to the Landlord’s evidence this was only done because the Tenant did not have proof of her income. Furthermore, aside from her phone number, no other information concerning Rita was requested or obtained by the Landlord.

11. In the context of finances and residential tenancies, a guarantor, while not defined in the Act, is generally understood as someone who takes responsibility on behalf of a debtor in the event that a debtor ceases to pay. However, the Board does not have the authority to make an order against a guarantor and only tenants can be named as respondents in rent arrears applications.

12. Finally, with respect to Ryan, I find him to be an occupant of the rental unit and not a tenant. The evidence of both parties was that he was asked to sign the lease by the Landlord simply because he was present on the day the parties entered into the agreement. I take this to mean an acknowledgement of his intended occupation of the rental unit as opposed to an intention to become a party to the tenancy agreement.

13. The application is amended accordingly to identify the proper parties.

Doucette-Grasby v Lacey, 2013 CanLII 95661 (ON SCSM)

59. That exhausts the areas of damage for which the plaintiffs seek compensation. There remains to be dealt with the claim against the Estate of William Millar, the alleged guarantor of the Cheryl Lacey’s lease.

60. This claim is premised on the signature of William Millar at the end of the lease beside “Guarantor” but it also depends upon paragraph 25 of the lease:

25. In consideration of the execution and delivery of this Tenancy Agreement by the Landlord, the guarantor as principal debtor agrees to execute an agreement made collateral to this Tenancy Agreement which, upon execution by the Guarantor and the Landlord shall be deemed to constitute a part of and be incorporated into this Tenancy Agreement with the Guarantor deemed to be a party to this Tenancy Agreement. the Guarantor further agrees that liability under the guarantee shall continue until such time as this Tenancy Agreement is terminated and the Guarantor continues to be liable and bound by this guarantee during any renewals and extensions, statutory or otherwise, of the term of this Tenancy Agreement.

61. The collateral agreement referred to in this paragraph has not been submitted into evidence, and I heard no evidence to suggest that it exists. On my reading of paragraph 25, the collateral guarantee agreement is the vehicle by which the guarantor will become liable. This lease was presented by the plaintiffs’ agent as the terms under which the premises would be leased. This was their standard lease. Even if paragraph 25 was amenable to other interpretations than the one I have given it above, I would apply the principle of contra proferentem, and hold that the lease must be interpreted against the party who presented it as the terms upon which they would do business. These terms were not the subject of negotiation and mutual settlement by both parties. The wording was entirely selected by the plaintiffs or their agents. Therefore, in the absence of the collateral agreement by which the guarantor might become liable, I find that the Estate of William Millar is not liable for any claims under this lease.

GMAC Leaseco Corporation v. Jaroszynski, 2013 ONCA 765 (CanLII)

[53] At para. 21, Cory J. states that the mortgagor as a principal debtor had to be given notice of the renewal agreement. Because the principal debtor clause converted the guarantor into a full-fledged principal debtor, the guarantor was entitled to the same notice. At para. 21, he states:

If a lending institution wishes to have the guarantor obligated as a principal debtor, then the guarantor must be entitled to the same rights as the principal debtor which would include both notice and agreement as a party to a renewal.

[54] At para. 22, Cory J. concluded that regardless of whether Mr. Conlin was considered a guarantor or a principal debtor, the principle applied to determine his liability:

Even if it were thought that the principal debtor clause does not convert the guarantor into a principal debtor, the equitable or common law rules relieving the surety from liability where the contract has been materially altered by the creditor and the principal debtor without notice to the surety would apply, in the absence of an express agreement to the contrary. The question is whether in this case, either as principal debtor or as surety, [page273] the guarantor has expressly contracted out of the normal protections accorded to him.

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[60] Justice Iacobucci decided liability in Manulife on the basis of his status as a guarantor. He concluded that Mr. Conlin was liable to pay the amount secured by the original mortgage, but not the increased amount required by the renewal agreement.

[61] Justice Cory's reasons, however, show that he decided liability on both bases. As indicated above, although Cory J. began his analysis by considering the legal principle governing guarantors, he used that principle as the foundation for determining Mr. Conlin's liability as a principal debtor. In this regard, it will be recalled that Cory J. concluded that the principle applied regardless of whether Mr. Conlin's liability was based on his status as guarantor or principal debtor (para. 22). [page274]

[62] It is important to note that, in para. 22 of Manulife, Cory J. does not say that the principle applies because Mr. Conlin was a guarantor. He says it applies whether Mr. Conlin was considered "either as a principal debtor or as a surety". As a result, because the contract had been materially altered without his consent, Mr. Conlin was relieved from liability under the mortgage, unless he had contracted out of the normal protections accorded to him by law.

...

[69] Manulife, as we have seen, stands for the proposition that the principle applies to a principal debtor as well as a guarantor. Accordingly, a principal debtor will be released from liability under a contract where there has been a material alteration to the contract without his or her consent, provided that the principal debtor has not contracted out of that protection.

Li v Evangelista, 2018 CanLII 82867 (ON SCSM)

[8] Glenn signed as guarantor, but did not execute a Guarantor Agreement pursuant to paragraph 38 of the rental agreement, nor was any such agreement adduced as evidence

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[55] Glenn Evangelista signed the rental agreement as guarantor but did not sign any further guaranty as contemplated by the guaranty clause in the rental agreement. In any event Glenn did not guaranty any future extensions of the lease, nor to the statutory month-to-month tenancy in 2014. He is not liable for the special damages awarded.