In Ontario, hiring a paralegal to draft a Section 78 Mediated Settlement Agreement generally costs between $500 and $1,500 CAD. This investment is highly worthwhile, as a Section 78 clause allows a landlord to apply for an immediate eviction order (ex parte) if the tenant misses even a single payment, bypassing the roughly 3-month wait for a new LTB hearing.
When a tenant falls behind on rent, landlords often feel trapped in a broken system. Waiting for an eviction hearing at the Landlord and Tenant Board (LTB) in cities like Toronto, London, or Hamilton now averages about 3 months, during which the rent arrears continue to pile up. Because of these delays, mediation on the day of the hearing is heavily encouraged. However, agreeing to a payment plan without the proper legal safeguards is one of the most dangerous mistakes a landlord can make.
This is where Section 78 of the Ontario Residential Tenancies Act (RTA) becomes a landlord’s most powerful tool. A Section 78 agreement states that if the tenant breaches the payment plan, the landlord can apply for an eviction order without providing the tenant with a new hearing. 💰 Drafting this agreement requires precise legal language. One missing clause or incorrect date can render the entire agreement useless. This guide explains how hiring a licensed Ontario paralegal to draft a bulletproof settlement can save you thousands of dollars in lost rent.
Step-by-Step Process for a Section 78 Agreement in Ontario
Securing a mediated settlement with a Section 78 clause requires careful negotiation and strict adherence to LTB rules. Here is how the process generally unfolds when you work with a legal professional.
Step 1: Filing the Initial Application
Before you can negotiate a settlement, you must first serve an N4 Notice (Notice to End your Tenancy for Non-payment of Rent) and file an L1 Application with the LTB. Starting September 21, 2026, under Bill 60, the N4 notice period is shortened from 14 days to just 7 days, which significantly accelerates the filing process. A Section 78 agreement must be attached to an active application, and starting July 1, 2026, parties must use the mandatory LTB Payment Agreement Form rather than writing a custom private contract.
Step 2: Negotiating the Payment Terms
On the day of your LTB hearing, or during early resolution, your paralegal will negotiate with the tenant or their legal representative. The goal is to agree on a realistic repayment schedule for the arrears, while also mandating that the tenant pays all future rent perfectly on time. The paralegal will ensure the tenant understands that failure to comply has immediate consequences.
Step 3: Drafting the Section 78 Clause
This is the critical step. Your paralegal will use the LTB’s official Payment Agreement Form, which is mandatory as of July 1, 2026, under Section 206(1) of the RTA. Since parties are legally prohibited from drafting custom, private repayment agreements, the official form must be used to insert specific wording authorized by Section 78 of the RTA, explicitly stating that if the tenant misses a payment by even a single day, the landlord can file an L4 Application to get a direct order for eviction and the collection of the remaining debt.
Step 4: Filing an L4 Application if the Tenant Defaults
If the tenant follows the plan, the tenancy continues peacefully. However, if the tenant’s cheque bounces or they fail to pay, your paralegal will immediately file an L4 Application. 🚨 Because the Section 78 clause was signed, the LTB adjudicator will typically issue an eviction order “ex parte” (without notifying the tenant or holding a new hearing).
The Value of a Section 78 Clause vs Standard Agreement
| Feature | Section 78 Settlement Agreement | Informal / Private Payment Plan |
|---|---|---|
| Consequence of a Missed Payment | Immediate L4 filing for an ex parte eviction order. | Landlord must start over by serving a brand new N4 notice. |
| Hearing Required After Breach? | No. The adjudicator reviews the L4 and issues the order. | Yes. You must wait another 3 months for a new LTB hearing. |
| Legal Enforceability | Fully backed by the Landlord and Tenant Board. | Difficult to enforce; often viewed as legally weak by adjudicators. |
How Much Does it Cost in Ontario?
Hiring a licensed paralegal might seem like an extra expense, but it is an investment in protecting your rental income.
- Paralegal Fees (Drafting & Negotiation): Generally ranges from $500 to $1,500 CAD, depending on the complexity of the arrears and whether they represent you at the hearing.
- LTB Filing Fee (L1 Application): $186 CAD (if filed online via the portal).
- LTB Filing Fee (L4 Application): $0 CAD (There is usually no fee to file an L4 if it stems from a previously paid L1/L2 application).
- Sheriff Eviction Fee: If the tenant still refuses to leave after the L4 order is granted, hiring the Court Enforcement Office (Sheriff) costs roughly $315 CAD plus mileage.
How Long Does the Process Take?
If the tenant breaches a Section 78 agreement, filing the L4 application is fast. The LTB generally processes ex parte orders within 3 to 6 weeks. ⏳ Compare this to the nightmare of an informal agreement: if a tenant breaks an informal promise, you must serve a new N4 (which, starting September 21, 2026, requires a shortened 7-day notice period under Bill 60) and wait approximately 3 months for a brand new L1 hearing. The Section 78 clause still saves you months of lost rent and prevents further arrears.
Frequently Asked Questions (FAQ)
Can a tenant stop an eviction after an L4 is filed?
Yes, but the window is very small. Once the LTB issues the ex parte order, the tenant has exactly 10 days to file a Motion to Set Aside an Ex Parte Order. If they do, a hearing will be scheduled, but the tenant must prove they did not actually breach the agreement.
Can I just draft the Section 78 agreement myself?
No. Starting July 1, 2026, under Section 206(1) of the RTA, using the official LTB Payment Agreement Form is legally mandatory for all rent arrears repayment agreements. Drafting a private, custom agreement is no longer permitted. However, hiring a paralegal is still highly recommended, as any mathematical error or blank field on the mandatory form can cause the LTB to reject your subsequent L4 application, forcing you to restart the process.
Does the agreement cover future rent too?
Yes. A properly drafted Section 78 agreement usually includes a “Section 78(1)(b)” condition, meaning the tenant must pay the agreed-upon arrears PLUS their regular monthly rent on time for the entire duration of the agreement.
Why should I hire a paralegal instead of a lawyer?
In Ontario, licensed paralegals are specifically trained and highly experienced in Landlord and Tenant Board matters. They provide the exact same legal representation at the LTB as a lawyer, but generally at a much more affordable hourly or flat rate.
Do not let a broken promise cost you thousands of dollars in lost rental income. A bulletproof Section 78 agreement is the safest way to give a tenant a second chance. Search our directory today to find a highly qualified Ontario paralegal or law firm to draft your settlement agreement.
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