In Ontario, landlords can only charge for their actual, out-of-pocket expenses when you assign your lease (e.g., a $25 CAD credit check fee). Demanding an arbitrary $500 CAD “tenant turnover fee” or “admin fee” is illegal under the Residential Tenancies Act.
Life can be unpredictable. Whether you are relocating for a new job in Ottawa, upgrading to a larger home in Mississauga, or moving in with a partner in Toronto, you might need to break your lease early. 🏠 One of the most common ways to do this legally is by assigning your lease to a new tenant. However, many renters hit a roadblock when their landlord demands a massive “turnover fee” to process the paperwork.
It is important to know that while your landlord has the right to vet the new assignee, they do not have the right to profit from your departure. The Residential Tenancies Act (RTA) strictly limits what a landlord can charge during a lease assignment. If you are being asked to pay hundreds of dollars just to hand over your keys, this guide will explain your legal rights and how to fight back.
Step-by-Step Process in Ontario for Handling Assignment Fees
Navigating a lease assignment requires careful documentation and an understanding of the law. 📍 Here are the steps to follow if your landlord demands an unreasonable fee to process your assignment request.
Step 1: Ask for General Consent to Assign
Before finding a new tenant, you must ask your landlord in writing for general permission to assign the lease. Under the RTA, the landlord must respond within 7 days. If they say no to the idea entirely, or if they ignore your request for 7 days, you are legally allowed to end your tenancy with just 30 days’ notice using an N9 Form. You do not have to pay any fees.
Step 2: Propose Your Specific Assignee
If the landlord agrees in principle, your next step is to find a suitable replacement tenant. 👤 Once you find someone, present their application, proof of income, and references to the landlord. At this stage, the landlord can only refuse the specific person if they have a valid, objective reason, such as a terrible credit score or insufficient income to cover the rent.
Step 3: Scrutinise the Landlord’s Fee Demand
This is where “turnover fees” usually appear. The landlord might send you an email stating there is a mandatory $500 CAD administration fee for drafting a new contract. You must reply and politely remind them that under Section 95(7) of the RTA, they can only charge for actual, reasonable out-of-pocket expenses incurred during the background check.
Step 4: Request an Itemised Invoice
If the landlord insists on a fee, ask for a detailed receipt. 📄 Legitimate expenses might include a $25 CAD Equifax credit check or a $30 CAD background screening service. The landlord cannot charge you for their own time spent answering emails, nor can they charge a generic corporate “processing fee.” If they cannot produce a receipt from a third-party company, the fee is generally considered illegal.
Step 5: File a T1 Application with the LTB
Sometimes, tenants are forced to pay the illegal fee just to secure the assignment and avoid losing their new home. If you paid an unlawful turnover fee under pressure, you can file a T1 Application (Tenant Application for a Rebate of Money the Landlord Owes) with the Landlord and Tenant Board (LTB). An adjudicator can order the landlord to refund the illegal charge.
How Much Does it Cost in Ontario?
Fighting an illegal assignment fee should not put you in debt. 💰 Here are the typical costs associated with this process in CAD:
- Lawful Expenses: A reasonable out-of-pocket expense for a landlord to run a credit check is generally between $20 and $50 CAD.
- LTB Filing Fee: Filing a T1 Application online via the Tribunals Ontario Portal costs $53 CAD. If you win, the adjudicator usually orders the landlord to reimburse this fee.
- Paralegal Representation: You can easily self-represent for a T1, but if you hire a licenced Ontario paralegal, expect to pay between $400 and $1,000 CAD.
How Long Does the Process Take?
The assignment process itself is fast. A landlord must reply to your general request within 7 days. Once you propose a specific person, they must respond reasonably quickly (usually within a few days to a week). However, if you are forced to file a T1 Application to get your illegal fee refunded, you will face severe backlogs at the LTB. Getting a hearing date can currently take between 6 and 10 months.
Reasonable vs. Unreasonable Assignment Fees
It is vital to distinguish between what the law allows and what landlords try to get away with. ♻ Here is a quick comparison.
| Fee Type | Status in Ontario | Explanation |
|---|---|---|
| Third-Party Credit Check | Legal | Actual cost incurred by the landlord (usually $20-$50). |
| Flat “Admin/Turnover” Fee | Illegal | Landlords cannot arbitrarily charge for their own time. |
| Lease Drafting Fee | Illegal | An assignment does not require a new lease; the assignee simply takes over the old one. |
Frequently Asked Questions (FAQ)
Can the landlord force the new tenant to sign a new lease?
No. An assignment means the new tenant steps into your exact shoes. They inherit your current rent price, your lease terms, and your remaining timeline. If the landlord forces them to sign a brand new lease at a higher rent, it is no longer an assignment; it is a new tenancy.
Is subletting the same as assigning?
No. Assigning means you are leaving permanently and handing over the lease entirely. Subletting means you are moving out temporarily (e.g., for a summer internship) and intend to return before the lease ends. You remain legally responsible for the rent during a sublet.
What happens to my Last Month’s Rent (LMR) deposit?
During a lease assignment, the landlord keeps the LMR on file. Standard practice is for the new tenant to pay you directly for the LMR deposit that is currently sitting with the landlord. Ensure this exchange is documented in your assignment agreement.
Can I just break my lease instead of assigning it?
You can, but you may be financially penalized. If you abandon the unit without assigning it or giving proper notice, the landlord can sue you for the remaining months of rent. However, the landlord has a legal duty to “mitigate their losses” by actively trying to find a replacement tenant.
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