Rent Discounts and N4's

Caselaw.Ninja, Riverview Group Publishing 2021 ©
Date Retrieved:	2024-04-28
CLNP Page ID:	1814
Page Categories:	[Payment of Rent (LTB)]
Citation:	Rent Discounts and N4's, CLNP 1814, <4t>, retrieved on 2024-04-28
Editor:	MKent
Last Updated:	2021/11/26

Residential Tenancies Act, 2006, S.O. 2006, c. 17

111 (1) No landlord shall charge rent for a rental unit in an amount that is greater than the lawful rent permitted under this Part. 2006, c. 17, s. 111 (1).

(2) The lawful rent is not affected by a discount in rent at the beginning of, or during, a tenancy of up to 2 per cent of the rent that could otherwise be lawfully charged for a rental period if the discount is provided for paying rent on or before the date it is due and the discount meets the prescribed conditions. 2009, c. 33, Sched. 21, s. 11 (5).

(2.1) The lawful rent is not affected if one of the following discounts is provided:

1. A discount in rent at the beginning of, or during, a tenancy that consists of up to three months rent in any 12-month period if the discount is provided in the form of rent-free periods and meets the prescribed conditions.

2. A prescribed discount. 2009, c. 33, Sched. 21, s. 11 (5).

(2.2) For greater certainty, the lawful rent is not affected if discounts described in subsections (2) and (2.1) are both provided. 2009, c. 33, Sched. 21, s. 11 (5).

(3) Subject to subsections (2) and (2.1), where a landlord offers a discount in rent at the beginning of, or during, a tenancy, the lawful rent shall be calculated in accordance with the prescribed rules. 2006, c. 17, s. 111 (3); 2009, c. 33, Sched. 21, s. 11 (6).

O. Reg. 516/06: GENERAL

12. (1) The rules set out in this section apply in calculating lawful rent under subsection 111 (3) of the Act. O. Reg. 516/06, s. 12 (1).

(2) The lawful rent for any rental period in the 12-month period shall be calculated in the following manner:

1. Add the sum of the rents that are actually charged or to be charged in each of the rental periods in the 12-month period to the largest eligible discount determined under subsection (6).

2. Divide the amount determined under paragraph 1 by the number of rental periods in the 12-month period.

3. Add to the amount determined under paragraph 2 any rent increases under section 123 of the Act and subtract from that amount any rent decreases under section 125 of the Act. O. Reg. 516/06, s. 12 (2).

(3) Despite subsection (2), if a landlord provides a discount in rent that is greater than 2 per cent of the rent that could otherwise be lawfully charged for a rental period for paying rent on or before the date it is due, the lawful rent shall be calculated by dividing the discounted rent by 0.98. O. Reg. 516/06, s. 12 (3); O. Reg. 377/11, s. 3 (1).

(4) Despite subsections (2) and (3), if the landlord provides a discount in rent described in subsection 111 (2) of the Act and another discount, other than a discount described in subsection 111 (2.1) of the Act, the lawful rent for any rental period in the 12-month period shall be calculated in the following manner:

1. Add the sum of the rents that are actually charged or to be charged in each of the rental periods in the 12-month period to the sum of the discounts described in subsection 111 (2) of the Act actually provided or to be provided to the tenant during the 12-month period.

2. Add the amount determined under paragraph 1 to the largest eligible discount determined under subsection (6).

3. Divide the amount determined under paragraph 2 by the number of rental periods in the 12-month period.

4. Add to the amount determined under paragraph 3 any rent increases under section 123 of the Act and subtract from that amount any rent decreases under section 125 of the Act. O. Reg. 516/06, s. 12 (4); O. Reg. 256/10, s. 3 (1, 2).

(5) Despite subsections (2) and (3), if the landlord provides a discount in rent that is greater than 2 per cent of the rent that could otherwise be lawfully charged for a rental period for paying rent on or before the date it is due, and the landlord also provides another discount in rent, other than a discount described in subsection 111 (2.1) of the Act, the lawful rent for any rental period in the 12-month period shall be calculated in the following manner:

1. Divide the discounted rent by 0.98.

2. Multiply the amount determined under paragraph 1 by the number of rental periods in the 12-month period and add the result to the largest eligible discount determined under subsection (6).

3. Divide the amount determined under paragraph 2 by the number of rental periods in the 12-month period.

4. Add to the amount determined under paragraph 3 any rent increases under section 123 of the Act and subtract from that amount any rent decreases under section 125 of the Act. O. Reg. 516/06, s. 12 (5); O. Reg. 256/10, s. 3 (3).

(6) For the purpose of this section, the largest eligible discount shall be determined in accordance with the following rules:

1. In the case of a discount that is provided for in a written agreement, the largest eligible discount is the largest of the following amounts:

i. The lesser of the following amounts:

A. The sum of the discounts in rent during the first eight months of the 12-month period.

B. The rent for one month.

ii. The largest discount in rent during any month in the last five months of the 12-month period, plus the lesser of the following amounts:

A. The sum of the discounts in rent during the first seven months of the 12-month period.

B. The rent for one month.

iii. The largest discount in rent during any month in the 12-month period, if,

A. the rent is paid monthly, and

B. the largest discount in rent during any month in the 12-month period is equal to the rent for less than one month.

iv. The sum of the largest discount in rent during any month in the 12-month period and the second-largest discount in rent during any month in the 12-month period, if,

A. the rent is paid monthly,

B. the largest discount in rent during any month in the 12-month period is equal to the rent for one month, and

C. the second-largest discount in rent during any month in the 12-month period is equal to the rent for less than one month.

v. The sum of the largest discount in rent during any month in the 12-month period, the second-largest discount in rent during any month in the 12-month period, and the third-largest discount in rent during any month in the 12-month period, if,

A. the rent is paid monthly,

B. the largest discount in rent during any month in the 12-month period and the second-largest discount in rent during any month in the 12-month period are both equal to the rent for one month, and

C. the third-largest discount in rent during any month in the 12-month period is equal to the rent for less than one month.

vi. The rent for three months, if,

A. the rent is paid monthly, and

B. the largest discount in rent during any month in the 12-month period, the second-largest discount in rent during any month in the 12-month period, and the third-largest discount in rent during any month in the 12-month period are all equal to the rent for one month.

vii. The lesser of the following amounts, if the rent is paid daily or weekly:

A. The sum of the discounts in rent provided in the form of rent-free weeks during the 12-month period.

B. The rent for 13 weeks.

2. In the case of a discount that is not provided for in a written agreement, the largest eligible discount is the largest discount in rent in one rental period in the 12-month period. O. Reg. 516/06, s. 12 (6); O. Reg. 377/11, s. 3 (2).

(7) Despite subsection (2), if a tenancy agreement operates under the Strong Communities Housing Allowance Program — Toronto Pilot, and the landlord does not comply with paragraph 3 of subsection 11 (1), the lawful rent shall be the undiscounted rent that was permitted under the Act at the time when the tenancy agreement began to operate under the Program. O. Reg. 516/06, s. 12 (7).

(8) In this section,

“the 12-month period” has the same meaning as in section 11. O. Reg. 516/06, s. 12 (8).

SOL-19029-11 (Re), 2011 CanLII 101417

Lawful Rent

3. The Landlord claimed the lawful monthly rent to be $700.00. He relies on the lease agreement which reads: When rent is paid by the first of the month it will be discounted from $700.00 to $675.00.

4. Subsection 111(2) of the Act provides:

The lawful rent is not affected by a discount in rent at the beginning of, or during, a tenancy of up to 2 per cent of the rent that could otherwise be lawfully charged for a rental period if the discount is provided for paying rent on or before the date it is due and the discount meets the prescribed conditions.

5. Subsection 111 (3) of the Act provides:

Subject to subsections (2) and (2.1), where a landlord offers a discount in rent at the beginning of, or during, a tenancy, the lawful rent shall be calculated in accordance with the prescribed rules.

6. The discount provided for from $700.00 to $675.00 is greater than 2 per cent. Therefore the lawful rent is affected by this discount.

7. Section 12 of O. Reg. 516/06 sets out the rules that apply in calculating lawful rent under Subsection 111(3) of the Act. This section is too long to reproduce here in its entirety.

8. The Landlord relies on Subsection 12(6) of O. Reg. 516\06. However, Subsection 12(6) does not apply to the type of discount provided for in the lease agreement. Subsection 12(6) is used to determine the largest possible discount, a concept which forms part of the calculation of the lawful rent pursuant to Subsections 12(2), 12(4), and 12(5). Subsections 12(4) and 12(5) do not apply in this situation as they set out rules to calculate the lawful rent in situations where both a discount under 111(2) of the Act, and another discount are provided to a tenant.

9. Subsection 12(2) does not apply in this situation as it is ruled out by Subsection 12(3), which provides:

Despite subsection (2), if a landlord provides a discount in rent that is greater than 2 per cent of the rent that could otherwise be lawfully charged for a rental period for paying rent on or before the date it is due, the lawful rent shall be calculated by dividing the discounted rent by 0.98

10. Accordingly, the lawful rent is determined by dividing the discounted rent ($675.00) by

0.98 (675 ⁄ 0.98 = 688.77). Therefore, the lawful monthly rent is $688.77.

N4 Notice to Terminate

11. The Landlord claimed the rent charged on the Notice to End a Tenancy Early for Non- payment of Rent (N4) to be $700.00. This is incorrect. Because of this the notice requires the Tenants to pay more than the lawful rent to void the notice. As a result the notice is invalid.

12. Without a valid N4 Notice the Board does not have the jurisdiction to order eviction for non-payment of rent. As a result, the order will be limited to rent arrears and costs only, not eviction.

SWL-94855-16 (Re), 2016 CanLII 88168 (ON LTB)

“No pet” discount does not meet the prescribed discount rules

25] In this case, the tenancy agreement provides for a 2% prompt payment discount and the $100.00 per month “no pet” discount. The lawful rent is not affected if these discounts meet the prescribed discount rules. [See sections 111(2), 111(2.1), 111(2.2) and 111(3) of the Act.]

[26] The 2% prompt payment discount is provided for in a written agreement and therefore complies with the prescribed rule for that type of discount. [See subsection 10(0.1) of O. Reg. 516/06.]

[27] The total amount of the “no pet” rent discount over the 12-month period of the tenancy is $1,200.00 [$100.00 per month X 12 months]. This amount is greater than the rent for one month but not more than the rent for two months.

[28] The “no pet” discount does not meet the prescribed discount rules because:

a) The rent is paid monthly but the portion of the discount that equals one month’s rent is not taken during one rental period (month), and the balance is not taken during another rental period (month). [See paragraph 1 of subsection 111(2.1) of the Act and paragraph 3 of subsection 10(1) of O. Reg. 516/06.]

b) Also, the amount of the discount that is provided in the last 5 months of the 12-month period ($500.00) is not provided in only one of those months. [See paragraph 2 of subsection 111(2.1) of the Act and paragraph 2(iii) of section 11 of O. Reg. 516/06.]

[29] Since the “no pet” discount does not meet the prescribed discount rules, the lawful rent must be calculated. [See subsection 111(3) of the Act and section 12 of O. Reg. 516/06.]

Calculation of the lawful rent

[30] Since the Landlord offered a prescribed 2% prompt payment discount plus a non-prescribed “no pet” discount, the applicable lawful rent formula is found in subsections 12(4) and 12(6) of O. Reg. 516/06.

[31] The calculation is as follows:

• Sum of rents actually charged or to be charged in a 12-month period: 12 months X $758.00 per month = $9,096.00

+

Sum of 2% prompt payment discount provided or to be provided in a 12-month period: The 2% prompt payment discount is calculated as ($858.00 ÷ 0.98) - $858.00 = $17.51 per month; 12 months X $17.51 per month = $210.12

= $9,306.12.

• Largest eligible discount: $940.08 [per paragraph 1(ii)(A) of subsection 12(6) of O. Reg. 516/06].

• ($9,306.12 + $940.08) ÷ 12 = $853.85.

[32] The lawful rent is $853.85 per month. The Landlord cannot charge the Tenants more than this amount.

SOT-74320-16 (Re), 2017 CanLII 48966 (ON LTB)

8. The difficulty with the Landlord’s position is that neither lease identifies the $300.00 charge as a discount. The first lease does not mention that the $300.00 charge is discounted and it does not mention a monthly rent of $450.00. The second lease does not mention a discount, it simply purports to be a new lease for the same property and tenancy but with a monthly rent of $450.00. There is nothing in the second lease agreement to suggest that an increase in services or facilities accounts for the change in the monthly rent; in any event, no such argument was put forward by the Landlord.

9. Therefore, I find that this alleged discount is not a discount pursuant to the Act as it is not in writing as required by section 11 of O. Reg. 516/06. Therefore, I find that the increase in rent from $300.00 to $450.00 in September 2015 is an illegal rent increase.

SOL-56206-15 (Re), 2015 CanLII 16009 (ON LTB)

Arrears of rent / lawful rent

1. The Tenants stated that their rent is $700.00 per month. The Landlord submitted a copy of the Tenancy Agreement which shows the lawful rent is $714.28 discounted to $700.00 for prompt payment. The Landlord submitted that the Tenants have not paid their rent on time. The Tenants did not dispute the arrears of rent.

2. I find the lawful rent for the unit is $714.28. I find that the Landlord discounted rent of $700.00 for payment on time complies with section 111(2) of the RTA.

SWL-06415-17 (Re), 2017 CanLII 70397 (ON LTB)

3. The monthly rent is $650.00, subject to a $100.00 reduction for maintenance work performed by the Tenant, George Richardson (‘G.R.’).

(...)

7. At the hearing the Tenants raised the following issues pursuant to section 82 of the Residential Tenancies Act, 2006 (the 'Act'):

(...)

d. The Landlord failed to deduct $100.00 from the monthly rent for August, 2017 pursuant to a contract between the parties for G.R. to perform maintenance work at the residential complex.

(...)

9. There was no suggestion that the tenancy was contingent on G.R. performing maintenance work. Essentially, if he failed to conduct the work, the Tenants would presumably not receive the discount for that month. As a result, there was no indication of duress on the part of either the Landlord or J.B. with respect to this issue.

10. As the Ontario Court of Appeal found in Montgomery v. Van, in order to be effective, a clause that requires a tenant to provide maintenance services must constitute a contractual obligation severable from the tenancy agreement. Such a clause must be able to stand alone as an enforceable contract because section 4 of the Act provides that provisions of tenancy agreements that are inconsistent with the Act or Regulations are void. The Act and Regulations make clear that in the residential landlord and tenant relationship, the landlord is responsible for maintenance of the residential complex. Therefore, it cannot be a term of the tenancy that the Tenant perform maintenance duties.

11. This does not mean that a landlord cannot contract with a tenant as a service provider to perform maintenance tasks. It does mean, however, that the clause under which the tenant agrees to provide such services, even if included in the same document as the tenancy agreement, must create a severable contractual obligation. The severable contractual obligation, while it cannot transfer the landlord’s statutory responsibility to ensure maintenance standards are met, may support the Landlord’s claim over against the Tenant in contract.

12. In this case, while no written tenancy agreement was submitted at the hearing, on the evidence of both parties, the provision relating to maintenance work is severable from the tenancy agreement as it involves a quantifiable consideration for the work that is separate from the provision of the premises. I would therefore conclude that the provision is not contrary to the Act.

(...)

14. In the present case, I find that the discount complies with paragraph 1 of subsection 111(2.1) of the Act as the total discount is less than the equivalent of three months’ rent.

15. The facts in the present case are similar to that in Kizemchuk v. Kizemchuk.In that case, pursuant to an agreement, the husband and wife tenants, who lived in a building owned by the husband’s parents, performed services for the building in which they resided, in which the services were valued at $2,500.00 monthly. For the first six months of the tenancy (January to June, 1997), they were paid $2,500.00 monthly and did not pay rent. Following that, they were not paid for their services, but also continued not to pay rent. The parents gave notice of a rent increase to $3,100.00 with a $2,500.00 credit to be given for management services, although the additional $600.00 was never paid or collected. The building was subsequently sold to the male Tenant’s sister, who now asked for the rent. At issue was the amount of lawful rent charged. On appeal, the Divisional Court held that the last period for which rent was charged was the first period when the parties agreed that the last period for which rent was charged was the period from June to November, 1997 and that the real rent charged and agreed to by the parties for that period was $2,500.00 per month.

(...)

20. This leaves the issue of the Landlord’s failure to pay for G.R.’s services for August, 2017, the last month of the tenancy. G.R. testified that he performed the requisite duties, but did not receive the discount for that month; this evidence was not contested by the Landlord or J.B.

21. While the rental discount had been functionally applied as a discount against the monthly rent, since the tenancy contract is severable from the contract for provision of services and the former is not dependant on the latter, I do not find that the Landlord and Tenant Board (the 'Board') has jurisdiction to order compensation based upon this separate contract between the parties.