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A Primer on Rental Lease Agreements

Most, if not all, renters have to sign a (rental) lease agreement for a specified period. Generally, leases are renewable at the end of the lease period depending on the willingness of both parties (landlord and tenant). Rental agreements may vary depending on the province or state but they are similar for the most part. Certain conditions such as managing sublets, giving notice, rent increases, etc. could differ across provinces or states. This post will touch upon some of the basics of such lease agreements and points to remember when signing one.

The Agreement

Irrespective of the presence of a written lease, tenants and landlords will still retain their rights and duties. However, as would be obvious, having a written agreement explains such matters clearly and avoids disambiguation. Typically, a rental lease agreement should cover items such as due date for rent payment, name of bearer of utility and other costs if applicable, and details about parking, pets, smoking, and who is responsible for maintaining the property. To elaborate, an agreement should include the following:

  1. Names of both parties (landlord and tenant)
  2. Location of the rental property
  3. Rent amount, stating clearly whether other expenses such as utilities, parking, Internet, etc. are included
  4. Rent due date
  5. Lease term
  6. Security deposit amount
  7. Termination notice period
  8. Restrictions such as no pets, no smoking, no parties after 11.00PM, no more than a certain number of residents, etc.
  9. Details about subletting, if applicable
  10. Conditions for termination
  11. Emergency contact details of both parties

Province-specific rental lease agreement forms can be obtained through the links on this CMHC page.

Some points to remember

Money matters. Ensure that details about late payments are included and check to see if conditions for security deposit deductions are mentioned. The agreement should mention what situations enable the landlord to withhold a portion (or all) of the deposit amount (such as damaged wall or appliance, accommodation not cleaned on date of termination, etc.). Normal wear and tear does not entail a deduction of the deposit amount but negligence (to maintain) by the tenant will do so. In addition, verify if there is a reparation (e.g. the tenant may have to pay the landlord for breaking a lease) clause and if so, determine if the amount is reasonable.

Pets. Even if pets are allowed, ask if there is a restriction on the number or size. There could be an additional damage deposit to cover for pets.

Maintenance. Usually, landlords take care of property maintenance and it is better to have it that way. Major maintenance work could be an expensive endeavor and the landlord could argue that the tenant, if responsible, did not maintain the property to the level expected. Even if the tenant is made responsible for some minor repairs, it is necessary to have the kinds of work defined clearly in the lease agreement to avoid problems later.

Subletting. If subletting is allowed, ask if the landlord will have to approve the next tenant. Finding a new tenant who satisfies both parties (present tenant and landlord) may be an arduous task; so, an agreement without such a stipulation may help.

Dispute Resolution

Both parties have obligations under rental legislation. Withholding rent or locking a tenant out for any reason are not ways to solve a dispute. The provincial pages linked above will provide more insight.

Do you have any stories to share (as a landlord or tenant)? Do you think the lease agreement used was fair? If not, what do you think was unfair?

About the Author: Clark works in Saskatchewan and has been working to build his (DIY) investment portfolio, structured for an early retirement. He loves reading (and using the lessons learned) about personal finance, technology and minimalism.  You can read his other articles here.

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About the author: Clark works in Saskatchewan and has been working to build his (DIY) investment portfolio, structured for an early retirement. He loves reading (and using the lessons learned) about personal finance, technology and minimalism. You can read his other articles here.

{ 6 comments… add one }
  • Marty Green April 18, 2012, 12:21 pm

    Here in Ontario as a Landlord, the laws are stacked against you. However saying that, if you keep your tenants happy, you reduce the risk of any problems that you may have.

    Happy Tenant = Happy Investment

    cheers

  • WP April 18, 2012, 12:38 pm

    …”However, as would be obvious, having a written agreement explains such matters clearly and avoids disambiguation…”

    I think you mean it avoids ambiguity…disambiguation means to make unambiguous so avoiding disambiguation would be to make ambiguous

  • FT FrugalTrader April 18, 2012, 1:17 pm

    This is a question from a reader:
    ————————————————————————-

    My daughter has rented a room in a house near University of Western Ontario. She was asked to sign a Tenancy agreement (which I am assuming is same as Rental Lease Agreement) with strange clauses. A copy of the tenancy agreement is attached herewith. I understand now that my questions below should have been asked before signing the agreement.

    The tenancy was from September 2011 to August 2012 but the termination notice was to be expected to be given in in February 2012, 7 months in advance of last day of tenancy else the agreement will automatically renew for 1 year, is this valid or violates any regulations/law?

    There was no contact address mentioned for any parties (the landlords don’t live at the rental property) on the agreement to serve written notice of termination which has made it very difficult (impossible) to server termination notice (please see next points)

    I was asked to sign as a guarantor which I did but not sure how do I terminate me being a guarantor as nothing about this is mentioned in the agreement. My daughter is being out of control and that is why I have decided to stop being a gurantor.

    I got the landlord’s phone number and called them few times to tell them about my desire to not continue as a guarantor and they agreed to let me do so and asked me to come to their home to discuss. They asked me to give my daughter few months to see if she will change her ways, she hasn’t.
    I called them again and left a voice mail to tell them that I definitely want to terminate the Gurantor agreement asking them to call me back and provide their mailing address. They didn’t return my call. Fortunately my wife found the address in her paper phone book (because we had gone there once before signing the agreement, I believe the address was given to her over phone by the landlords or my daughter, I am not sure).

    I wrote the attached “Termination Notice” and mailed it to their address through Canada post by registered mail with return signature. They haven’t accepted the delivery even after few attempts and the mail will be returned to me if the item is not picked up from the post office in next 8 days.

    So this is my story. What should I do next? Do I have to do anything else or shall I assume that I have done everything possible and leave it at that and assume that the tenancy agreement will be terminated?

  • Joe April 18, 2012, 2:24 pm

    In Ontario, restrictions on pets in rental agreements are invalid. A tenant cannot be evicted for owning a pet unless it interferes with the reasonable enjoyment of the premises of other tenants (i.e. noise disturbances, allergies, inherently dangerous breeds, etc.).

  • iamphysio April 18, 2012, 8:52 pm

    In response to reader in #3.
    Definitely do not “leave it at that” as nothing appears to have been resolved – remember what they say about assumptions…
    Contact the Ontario Landlord and Tenant board on what you should do next.
    http://www.ltb.gov.on.ca/

  • Clark April 18, 2012, 10:52 pm

    @WP: Good catch; thanks! I did mean it “avoids ambiguity”.

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