December 2009 Rent Control Bulletin

Stocking-stuffers… And a lump of coal from the Courts!

LMR is forfeited if “Tenant” refuses to take possession

We successfully argued in Divisional Court that the LTB had no jurisdiction to order reimbursement of LMR in circumstances where a tenant repudiates a lease prior to its commencement.

In this case the Landlord accepted the rental application in July, resulting in a transfer of the “contract deposit” to an LMR deposit. The term of the lease was to start in September, but in mid-July the tenant said she would not take possession and demanded her deposit back. The landlord re-rented the unit for Sept. 1, but refused to return the deposit. The LTB held she was a “prospective” tenant entitled to a return of the deposit because the Landlord had not “given vacant possession”. The Landlord appealed on the grounds that she was a tenant once the rental application was accepted and the LMR was deposited.

The court agreed that the person was a “tenant” and that the Landlord did not breach the RTA by retaining the LMR deposit. If the tenant wants the deposit back, she will have to sue in Small Claims Court and the Landlord will then be entitled to show that it is entitled to keep the money to offset its costs arising from the tenant’s breach of contract…

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