In Canada, you can rent out your property to others on a periodic (month-to-month) or a fixed term basis. A fixed term tenancy, often referred to as a Lease, is an agreement to rent a property for a certain term. There will be a start date and an end date, and is usually for a period of one year.
- Consider long-term leases
- What is a “Residential Tenancy Agreement”?
- But what happens at the end of the agreed tenancy term?
- Which option is best?
- How can I end the tenancy agreement?
- Frequently asked questions
Consider long-term leases
As a landlord, once you’ve found a good tenant, you may want them to sign a 6-month or 1-year term for a few reasons, including:
- Security: You know you will be receiving a set rent for a specified period of time.
- Less wear and tear: If you have tenants moving in and out less frequently, that means less wear and tear on your rental property.
- Less expense: Having one tenant for a fixed period means fewer advertising costs for you, as well as the expense of cleaning and repairing any possible damages before a new tenant can move in.
Once you’ve agreed on the terms, you should complete a “Residential Tenancy Agreement”, and provide a copy to the tenant.
What is a “Residential Tenancy Agreement”?
The tenancy agreement form covers such things such as:
- The length of tenancy;
- When the rent is to be paid;
- What’s included in the rent;
- Whose responsible to pay for utilities;
- Whether pets or smoking are allowed;
- What amount of the security deposit is required;
- When rent may be increased; and,
- What the landlord’s and the tenant’s obligations are with regard to repairs and maintenance, the landlord’s access to the unit, and ending the tenancy.
Rental agreements are governed by the provincial or territorial legislation in whichever province the property is located:
- In BC, landlords are required to provide tenants with a copy of the Tenancy Agreement Form as proof of the agreement between the landlord and the tenant. You can get a copy of a Tenancy Agreement Form from the Government of BC.
- In most other provinces, the government does not provide a tenancy agreement form, but you can obtain one from various landlord/tenant advisory agencies.
But what happens at the end of the agreed tenancy term?
You can decide what you’d like to have happen at the end of the fixed term. You can either renew for another fixed term, or you can continue on a month to month basis. Your other option is to end the tenancy, and require the tenant to move out of the unit. If you select this option, there is a likely a spot in the “Residential Tenancy Agreement” where you should both initial agreeing to this choice.
Which option is best?
That’s completely up to you. If you have a good tenant, this allows you to be worry free for another term. But you’re also tying yourself up for another period of time. You will not be able to increase the rent during the upcoming fixed term. If there is a change in your life, for instance, if you or a family member wants to move in, or if you sell the home, you must comply with the regulations surrounding evicting your tenant, which usually means you can’t do anything until the agreed term is up.
How can I end the tenancy agreement?
You can typically evict a tenant for a number of reasons, including:
- Non-payment of rent or utilities;
- Causing unreasonable damage; and,
- Landlord’s use of property.
If major renovations are required, this may also be a reason to end a tenancy. If you’re buying a home with tenants already in place, you will have to abide by the existing rental agreement.
During a fixed term, you can’t end the tenancy, unless there is cause or there is an agreement between you. If the tenant does not pay the rent when due, or causes unreasonable damage, you can serve a “Notice to End Tenancy” on the tenant.
Non-payment of rent or utilities
You can give the tenant a “10-Day Notice to End Tenancy” if the tenant has not paid their rent. Notice can be given on the day after the date the rent is due. After receipt of the notice, the tenant has five days to pay the full rent owing. Or, if they so choose, they can serve the landlord with an Application of Dispute Resolution, within 5 days. The notice will be cancelled, if the rent is fully paid within the first 5 days, and the tenancy goes on as before. If the tenant disputes the notice, the tenant may go through the process of completing and serving you with an Application for Dispute Resolution and a date for the hearing. If neither of these things happens, the tenant will be required to move out on the tenth day after receiving the notice.
Causing unreasonable damage
You can evict your tenant for cause, if they are causing unreasonable damage or if they are repeatedly late paying rent (at least 3 late payments, not necessarily consecutively). In cases such as these you can serve a One Month Notice to End Tenancy for Cause.
Landlord’s use of property
If you want to end the tenancy because: (1) you’ve sold the home, and the purchaser wishes to move in; (2) you or an immediate family member wishes to move in; or, (3) you are going to renovate or demolish the rental unit. In these situations, you will need to serve a “Notice to End Tenancy” on the tenant, giving 2 months’ notice, from the end of the month in which notice is given, but this cannot occur before the end of the fixed term. And tenants are not required to pay you the last month’s rent. This is intended to be compensation for the tenants, and to assist with their moving expenses, since the tenancy is ending at your request, not theirs.
Helpful links and resources
Although there are many benefits to signing a long term lease, it’s not something you enter into lightly. All provinces in Canada have legislation to protect both tenants and landlords. So, it’s important you are familiar with, and acting within, the prescribed guidelines. Be sure you are familiar with the rules in your province before taking steps to evict a tenant.
- Government of BC
- Government of Alberta
- Government of Saskatchewan
- Government of Manitoba
- Government of Ontario
Frequently asked questions
Can a tenant break their lease mid-term?
So the new tenant you thought was a perfect fit for your rental property has now decided to break their lease, perhaps leaving partway through or backing out before they’ve even moved in—now what? There’s a legal responsibility from both parties to follow the agreed upon lease agreement. If the tenant chooses to vacate before the end date, there is a possibility that they will need to pay some money to ameliorate lost funds for the landlord.That said, it’s not as cut and dry as owing the remaining month or months’ rent. In British Columbia, for example, the landlord has a responsibility to mitigate their loss by trying to find a new tenant for the unit. If the tenant has proof that the landlord has made no such attempt, it’s possible they will not have to pay anything.
Is there a legal form a tenant must provide to break a lease?
There are some circumstances where it is well within the tenant’s rights to walk away from a lease—with one month’s written notice, of course. In British Columbia, there are stipulations in place allowing for a renter to end a fixed-term tenancy if they need to leave the rental unit to protect themselves or their children from family violence, they have been assessed as requiring long-term care, or have been accepted into a long-term care facility.
In these cases, it is the tenant’s responsibility to provide the landlord with an Ending Fixed-Term Tenancy Confirmation Statement, which is available through third-party verifiers such as the police, registered social workers and physicians, among others.
What is the difference between a lease and a rental agreement?
A rental agreement is used for shorter tenancy periods, often 30 days. At the end of the agreement, the rental agreement automatically renews. This is often refered to as renting “month-to-month.” A lease, however, is used when the renter will occupy a rental until for a set period of time, often six months or a year. Unlike a rental agreement, a lease does not automatically renew once it has expired.
If you have any other questions, you can always contact Square One at 1.855.331.6933 for more information.