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Ontario Landlord Starter Guide for ADU Owners

Everything you need to know about renting your ADU

Understanding the Residential Tenancies Act (RTA)

The Residential Tenancies Act (RTA) is Ontario's landlord-tenant law. It governs most residential tenancies including ADUs.

Does the RTA Apply to Your ADU?

YES, the RTA applies if:

NO, the RTA does NOT apply if:

Why This Matters:

The Ontario Standard Lease

Required by Law

Since April 30, 2018, landlords MUST use the Ontario Standard Lease for most residential tenancies.

Get the form: ontario.ca/page/residential-tenancy-agreement-standard-form-lease

What's in the Standard Lease

  • Section 1: Names and addresses
  • Section 2: Rental unit details
  • Section 3: Contact information
  • Section 4: Lease term (fixed or month-to-month)
  • Section 5: Rent (amount and due date)
  • Section 6: Rent discounts
  • Section 7: Deposits
  • Section 8: Smoking rules
  • Section 9: Tenant insurance
  • Section 10: Changes to rental unit
  • Section 11: Maintenance and repairs
  • Section 12: Additional terms
  • Section 13: Signatures

    • Additional Terms (Section 12)

    You CAN add reasonable rules about:

    You CANNOT include terms that:

    Rent Rules

    Setting Initial Rent

    You can charge whatever the market supports for initial rent. No limits.

    Rent Increases

    Rent Guideline (2026): 2.1%

    Rules for Increases:

    Rent Guideline Exemptions

    Your ADU may be EXEMPT from rent control if:

    If Exempt:

    Important
    Most new ADUs built after 2018 are exempt from rent control.

    What Rent Must Include

    Rent ALWAYS includes:

    Rent CAN include (if agreed):

    Tip
    Decide what's included BEFORE signing lease.

    Security Deposits

    What You CAN Collect

    Deposit TypeMaximum AmountWhen
    Last month's rentOne month's rentAt signing
    Key depositActual replacement costAt move-in

    That's it. Only last month's rent and keys.

    What You CANNOT Collect

    ❌ First and last month's rent (only last)

    ❌ Security/damage deposit

    ❌ Pet deposit

    ❌ Cleaning deposit

    ❌ Furniture deposit

    ❌ Any other deposit

    Last Month's Rent Interest

    You must pay interest on last month's rent deposit:

    Tenant Screening

    Legal Screening Methods

    You CAN ask for:

    You CAN verify:

    Illegal Discrimination

    You CANNOT discriminate based on:

    You CAN select based on:

    Application Tips

  • Use consistent screening criteria for all applicants
  • Document your selection process
  • Keep applications confidential
  • Don't promise unit until verified
  • Get written consent for credit checks

    • Landlord Responsibilities

    Maintenance & Repairs

    You MUST:

    Vital Services (cannot be interrupted):

    Entry to Unit

    You CAN enter:

    Notice must include:

    You CANNOT:

    Vital Service Requirements

    Heat Requirements:

    PeriodMinimum Temperature
    October 1 - May 1521°C (70°F)
    Rest of yearNo minimum (if not included in rent)

    If You Provide Utilities:

    Ending Tenancies

    Tenant Gives Notice

    Lease TypeNotice Required
    Month-to-month60 days (on last day of rental period)
    Fixed term (end of lease)60 days before end date
    Fixed term (mid-lease)Generally cannot leave early

    Form Required: N9 (Tenant's Notice to End Tenancy)

    Landlord Gives Notice

    You can ONLY evict for specific reasons:

    ReasonFormNotice Period
    Non-payment of rentN414 days
    Persistent late paymentN8End of term
    Damage to unitN520 days (first notice)
    Illegal activityN610-20 days
    Interfering with othersN520 days
    Own use/family useN1260 days
    RenovationsN13120 days
    Demolition/conversionN13120 days
    Sale with purchaser useN1260 days

    Own Use Eviction (N12)

    If you want to use the ADU for yourself or immediate family:

    Requirements:

    Immediate Family:

    Eviction Process

  • Serve proper notice (N-form)
  • Wait required notice period
  • If tenant doesn't leave, apply to LTB
  • Attend LTB hearing
  • If successful, get eviction order
  • If tenant still won't leave, sheriff enforces

    • Timeline: Often 3-6+ months

    Rent Collection

    Acceptable Payment Methods

    Let tenant pay by:

    Payment Records

    Always provide receipts showing:

    Late Payments

    Common Landlord Mistakes

    Legal Violations

    ❌ Collecting damage deposits (illegal)

    ❌ Requiring post-dated cheques (cannot require)

    ❌ Entering without notice (invasion of privacy)

    ❌ Shutting off utilities (illegal)

    ❌ Changing locks (illegal lockout)

    ❌ Keeping tenant's belongings (illegal seizure)

    ❌ Discriminating in tenant selection

    Business Mistakes

    ❌ Not screening tenants properly

    ❌ No written lease

    ❌ Not documenting unit condition

    ❌ Poor communication

    ❌ Slow repair response

    ❌ Not keeping records

    ❌ No landlord insurance

    Insurance Requirements

    Landlord Insurance

    Your regular home insurance may NOT cover:

    Get landlord insurance that covers:

    Requiring Tenant Insurance

    You CAN (and should) require:

    Add to lease: "Tenant shall maintain tenant liability insurance of at least $1,000,000 and provide proof of coverage upon request."

    Tax Implications

    Reporting Rental Income

    You MUST report:

    You CAN deduct:

    Calculating Rental Percentage

    If ADU is 25% of your home:

    Capital Cost Allowance (CCA)

    Record Keeping

    Keep for 6+ years:

    Move-In/Move-Out Process

    Move-In Checklist

    Before tenant moves in:

    Property Condition Report

    Document everything:

    Both parties sign and keep copies.

    Move-Out Checklist

    When tenant leaves:

    Normal Wear vs. Damage

    Normal Wear (cannot charge):

    Damage (can charge):

    Resources

    Official Resources

    LTB Forms

    Landlord Associations

    Quick Reference: Key Numbers

    ItemNumber
    2026 Rent Guideline2.1%
    Rent Increase Notice90 days
    Tenant Move-Out Notice60 days
    Minimum Heat (Oct-May)21°C
    Entry Notice24 hours
    N4 (Non-payment)14 days
    N12 (Own Use)60 days
    Keep Records6+ years

    This guide provides general information about Ontario landlord-tenant law. For specific situations, consult a lawyer or the Landlord & Tenant Board.