Under Section 206 of Ontario’s Residential Tenancies Act, tenants and landlords can sign a formal LTB Payment Agreement to pay back rent arrears over time and stop an eviction. However, if you miss a single payment on this schedule, the landlord can use Section 78 to apply for an immediate eviction order without another hearing.
Falling behind on rent is a stressful reality for many Canadians facing job losses, medical emergencies, or the rising cost of living. When a landlord issues an N4 Notice for non-payment of rent, the fear of homelessness sets in quickly. 📝
However, most landlords in Ontario would rather recover the money owed to them than deal with the expensive, months-long process of evicting you and finding a new renter. The Landlord and Tenant Board (LTB) highly encourages both parties to negotiate and settle their disputes out of court through a formalized payment plan.
This guide will explain how to negotiate an LTB Payment Agreement, how Section 206 of the RTA makes these agreements legally binding, and the severe consequences of missing a payment. We will also discuss when consulting a local law firm is a smart idea before signing any legal contract.
Step-by-Step Process in Ontario
Whether you rent an apartment in London, a townhouse in Toronto, or a basement in Hamilton, creating a payment plan is a formal legal process. You cannot just text your landlord and say you will “pay a bit extra next week.” 📍
To truly protect your tenancy and legally stop an L1 eviction application, the payment plan must be formalized using official LTB documentation.
Step 1: Negotiate Affordable Terms
Before filling out any forms, you must have an honest conversation with your landlord. Calculate exactly how much extra money you can afford to pay on top of your regular monthly rent. ❗
For example, if your rent is $1,500 and you owe $3,000 in arrears, do not promise to pay $3,000 all at once next month if you cannot afford it. Instead, offer to pay your regular $1,500 rent plus an additional $500 towards the arrears for the next six months.
Step 2: Complete the Official LTB Payment Agreement
Do not write the agreement on a blank piece of paper. Under Bill 97 rules taking effect on July 1, 2026, any arrears agreement submitted to the LTB must be completed on the official, LTB-approved “Payment Agreement” form (drafted under Section 206 of the RTA). Handwritten or informal written agreements are no longer legally valid for this expedited process.
This form explicitly details the schedule of payments, the exact dates the money is due, and the total amount owed, which usually includes the rent arrears and the landlord’s $186 LTB filing fee if they have already applied for a hearing.
Step 3: File the Agreement with the LTB
Once both you and the landlord sign the Payment Agreement, the landlord must submit it to the LTB. If an L1 hearing is already scheduled, the adjudicator or an LTB Dispute Resolution Officer (mediator) can formalize it on the day of the hearing. 💪
Once accepted, the LTB will issue a formal Order based on your agreement. This effectively pauses the eviction process, provided you stick to the agreed-upon schedule.
Step 4: Strictly Respect the Payment Schedule
This is the most critical step. You must pay both your regular ongoing rent AND the agreed-upon arrears installments exactly on time.
If you are late by even one single day, or short by five dollars, you breach the Section 206 agreement. If this happens, the landlord can utilize Section 78 of the RTA to apply for an “ex parte” order. While this means the LTB will issue an Eviction Order without holding a prior hearing, you have a strict legal right to dispute it. You have exactly 10 days from the date the order is issued to file a Motion to Set Aside an Ex Parte Order (Form S2). Filing this motion automatically pauses (stays) the Sheriff’s eviction process and triggers an emergency LTB hearing where you can explain the default.
How Much Does it Cost in Ontario?
Negotiating a payment plan is generally free, but it does require you to pay back every cent you owe, which often includes administrative fees the landlord incurred while starting the eviction process. 💰
Here is a breakdown of the typical financial elements included in an LTB Payment Agreement:
| Financial Element | Estimated Cost (CAD) | Who Pays? |
|---|---|---|
| Rent Arrears | The exact amount of missed rent | Tenant (Spread over months) |
| Landlord’s LTB Filing Fee | $186 | Tenant (Usually added to the plan) |
| NSF Cheque Fees | Up to $20 per bounced cheque | Tenant (If applicable) |
| Lawyer / Paralegal Review | $150 – $350 (Consultation) | Tenant (Paid out of pocket) |
It is important to remember that landlords cannot legally charge you “interest” or arbitrary “late penalties” on your unpaid rent in Ontario. Only the actual rent, NSF fees, and LTB filing fees can be included in the formal agreement.
How Long Does the Process Take?
A payment plan can be negotiated at any time, from the day you receive the N4 notice right up until the day of your LTB hearing (which can take 4 to 8 months to be scheduled). ⏱
The duration of the payment plan itself is entirely up to what you and the landlord agree upon. Most successful payment plans span 3 to 12 months.
If you breach the agreement, the landlord’s ex parte application is processed extremely quickly. The LTB can issue the immediate Eviction Order within 1 to 2 weeks of the missed payment, and the Sheriff can lock you out shortly after.
Frequently Asked Questions (FAQ)
Can the landlord refuse to sign a payment plan?
Yes. A Payment Agreement is completely voluntary. The landlord is not legally obligated to accept installments. However, LTB adjudicators look very favourably upon tenants who try to negotiate in good faith. Even if the landlord refuses, bringing a proposed payment plan to your hearing can help your case immensely.
Do I need a lawyer to negotiate a payment plan?
You do not strictly need a law firm, as the LTB provides free Dispute Resolution Officers (mediators) on the day of your hearing to help you draft the form. However, if the landlord is demanding illegal fees or confusing terms, having a paralegal review the contract is a smart decision.
What happens if I lose my job again while on the plan?
If you foresee that you will miss an upcoming installment, you must contact the landlord immediately before the due date to renegotiate the agreement in writing. If you simply miss the payment without a new agreement, the landlord can apply for an immediate ex parte eviction.
Can I pay off the plan early?
Yes. If you receive a tax refund or a bonus at work, you can absolutely pay off the remaining balance of the arrears early. Once the balance hits zero and you are only paying your regular monthly rent, the Section 206 agreement is fulfilled and the threat of eviction is gone.
What is an ex parte order?
An ex parte order is an order made by the LTB without holding a hearing or notifying the other party. In the context of a Section 206 payment agreement, if you miss a payment, the landlord can apply under Section 78 for an eviction order behind closed doors. However, you can stop this: you have exactly 10 days from the order’s issue date to file a Motion to Set Aside an Ex Parte Order (Form S2), which automatically stays the eviction and grants you an emergency hearing.
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