Understand correctly about side agreement

What is a side agreement?

A side agreement is a contract made between tenant and landlord that is outside of the Landlord and Tenant Board’s control. This means that the Board does not have any power over the agreement.

Side agreements are entered into after the Board issues a termination order for nonpayment of rent where the tenant and landlord agree to modify the Board’s order. A common example of a side agreement is one where the tenant promises to make specific payments to the landlord for a specified amount by a specified date where the amounts, frequency of payments and/or payment dates differ from what the Board ordered. In consideration, the landlord promises not to enforce the order.

The side agreement does not replace the eviction order from the Board. It is made in addition to the order. The Board’s eviction order is still enforceable with the Sheriff if the tenant does not follow the agreed terms of the side agreement. The side agreement merely puts the Board’s order on hold and usually extends the period of time in which the tenant has to pay the rent, arrears, and or costs in cases of non-payment of rent.

The tenant should obtain legal advice before entering into any side agreement with their landlord, as there can be serious risks to the tenant if any terms of the side agreement are breached, including immediate enforcement of the Board order.

When might a tenant enter into a side agreement with their landlord?

A tenant might want to enter into a side agreement after the Board has issued an order for the payment of rent arrears by a certain date if: 

• The tenant is unable to pay, or
• The tenant is no longer living in the rental unit but does not want the landlord to enforce the Board’s order to garnish their wages, bank account or damage their credit.

Entering into a side agreement in these situations may allow the tenant to pay off the arrears in a more reasonable timeframe and prevent the landlord from enforcing the order.

Most side agreements for arrears will require the tenant to pay all the rent arrears and monthly rent that becomes due within six months. This is because the Board’s order is not enforceable after six months.

Is the side agreement legal?

The answer is Yes. The side agreement is legal and binding on the tenant and their landlord. The tenant should keep a written copy of the agreement for their records. Without a written copy, a tenant may have a very difficult time convincing a Court of the terms of the agreement, should something go wrong. If the tenant is not able to comply with any of the terms of the agreement, they should tell their landlord before the payment is due.

What should the terms the side agreement contain?

At the very least, the side agreement should address the following:

• The names of the parties;
• The address of the rental unit;
• The file number of the Board’s order;
• The total amount of money owing;
• The dates the payments are due;
• How the payments are going to be made (cash, money order, certified cheque) that the landlord will provide the tenant with a written receipt upon each payment;
• That the eviction order is not enforceable (e.g., the landlord will not use the order to evict your or garnish your wages) if the tenant fully complies with the agreement or any amendments to the agreement.

All parties must sign and date the agreement.

The tenant should make sure to obtain a receipt from the landlord after each payment, that specifies:

• The address of the rental unit to which the receipt applies;
• The name of the tenants to whom the receipt applies;
• The amount and date of each payment received;
• What the payment was for: rent, arrears of rent, costs, etc
• The name of the landlord, and
• The signature of the landlord or the landlord’s authorized agent

Cautions: Tenants should be encouraged to keep a copy of the side agreement along with the Board order. Any agreement should be in writing. Any agreement should be sustainable. Tenants should not agree to amounts they cannot afford to pay or offer to make payments knowing they will not have the necessary funds. Unless directed to do so, the tenant should not leave their payment in an office drop-off box. These payments frequently go missing. Also, the landlord may not check the box regularly. If the landlord receives the payment late, the tenant may be in breach of the agreement. If the tenant is directed to leave payment in the drop box, they should do so with a witness present.