What Happens if a Co-Signer Wants to Remove Themselves from an Active Lease in Ontario?

Helping a university student secure their first apartment in Waterloo, or assisting a friend with a new townhouse in Kingston, often requires co-signing the lease. When you sign as a guarantor, you are essentially telling the landlord, “If the tenant fails to pay the rent or destroys the property, you can sue me for the money.” It is a massive financial commitment.

However, relationships change. Perhaps you had a falling out with your friend, or your child has graduated, and you no longer want your personal credit score tied to their apartment. Many guarantors mistakenly believe they can simply draft a letter, give 60 days’ notice, and walk away. Unfortunately, under Ontario law and general contract principles, escaping a guarantee is incredibly difficult without the landlord’s explicit cooperation. This guide outlines how you can attempt to legally sever your obligations. 📍

Step-by-Step Process for Removing a Guarantor in Ontario

Because the Landlord and Tenant Board (LTB) primarily deals directly with tenants and landlords, disputes involving guarantors often end up in Small Claims Court. To protect yourself, you must follow a strategic negotiation process.

Step 1: Read the Original Guarantee Agreement Carefully

Before making any demands, you must find the original lease and the specific guarantee document you signed. Did you sign the Ontario Standard Lease as a “Tenant” or did you sign a separate “Guarantor Agreement”? 🔍

Look closely at the wording. Some explicitly state that the guarantee only lasts for the initial one-year fixed term. Others contain strict clauses stating that the guarantor remains fully liable even when the lease automatically converts to a month-to-month tenancy. Understanding exactly what you agreed to is your first line of defence.

Step 2: Negotiate a Release with the Landlord

You cannot unilaterally break a contract. You must ask the landlord to voluntarily release you. Landlords are only likely to do this if the current tenant has proven themselves to be financially reliable.

Have the tenant approach the landlord with proof of their current income, updated credit scores, and a record of perfect on-time rent payments for the past year. If the landlord agrees that the tenant is no longer a financial risk, they may draft a simple legal addendum releasing you from future liability.

Step 3: Have the Tenant Assign the Lease

If the landlord refuses to release you, your next best option is to have the tenancy end entirely. If the tenant wants to stay, this is difficult. But if the tenant is willing to move, they can ask the landlord for permission to “assign” the lease to a brand-new renter. 📬

When a lease is legally assigned to a new person under the Residential Tenancies Act (RTA), a new contract is formed. The old tenant is released, and your obligations as the guarantor attached to that old tenant are permanently severed.

Step 4: Send Formal Notice if the Fixed Term is Ending

If the one-year fixed term is approaching its end, and your guarantee agreement did not explicitly state it continues indefinitely, you should send a formal, registered letter to the landlord. ✍

State clearly that you are terminating your guarantee effective on the exact date the fixed lease expires. While some landlords may threaten to evict the tenant in response, evicting a tenant simply because a guarantor withdraws is generally not permitted under the RTA. This legal grey area often forces the landlord to either accept the tenant on their own merits or attempt to negotiate a new lease.

How Much Does it Cost to Exit a Guarantee?

While negotiating is free, getting out of a messy co-signing situation often requires spending some money to make the landlord whole. 💵

• Paying Arrears: A landlord will absolutely never release you if there is unpaid rent. You may have to personally pay off any existing arrears (e.g., $1,000 to $3,000 CAD) as a condition of your release.
• Legal Advice: Paying an Ontario paralegal or lawyer to review your specific guarantee agreement and draft a formal release letter typically costs between $200 CAD and $500 CAD.
• Assignment Fees: If the tenant assigns the lease to someone else, the landlord can legally charge out-of-pocket administrative expenses (usually around $50 CAD to $250 CAD).

How Long Does the Process Take?

Severing your liability depends entirely on how quickly the landlord agrees, or when the lease expires. ⌛

A mutual agreement to release a guarantor can be signed in a matter of days. However, if you have to wait for the initial fixed-term lease to naturally expire, you could be waiting anywhere from 6 to 12 months before you can legally argue that your obligation has ended.

Frequently Asked Questions (FAQ)

Author: lawyerinfo.ca