Tenant Guide: Understanding Your Lease Agreement Before You Sign

When signing your first lease contract, it’s tempting to skim over the words and assume everything on that sheet of paper is good to go. However, it’s essential to ensure you don’t miss anything that may cause you issues in the future. A leasing contract is a legally binding document that helps clarify potential misunderstandings that could arise between a resident and a landlord.

Here are some general recommendations to keep in mind when it’s time for you to sign:

1. Ensure There’s a Tenancy Agreement to Sign

Having a record of the agreement allows for the protection of all parties involved. We highly recommend avoiding rental situations where your future property manager doesn’t provide a contract. A tenancy agreement lays out the obligations and responsibilities of the landlord and tenant, which can help avoid confusion and disputes later on.

2. Read the Entire Contract

If you don’t feel comfortable reading it or don’t have the legal knowledge to understand the contract, don’t sign it immediately. Either review it with someone you trust or ask for a copy to read at your own pace before signing.

Make note of the following aspects of the contract before signing:

1. The amount and due date of the monthly rent.
2. The format in which rent is accepted (which may not necessarily be specified in the contract).
3. Services included (utilities, parking, and other amenities).
4. Any potential fees the landlord may charge you, and the reasons for these fees.
5. Maintenance responsibilities of residents.
6. Guidelines for subletting, evictions, and conduct.
7. Agreement on apartment condition.
   1. Contracts will often include an agreement claiming that the apartment is in pristine condition. However, if you know that there are specific damages or maintenance issues, it’s important to note this in the contract to establish that you will not be held responsible for something you didn’t do. 

3. Ensure the Validity of the Agreement

When leasing a property, verifying the tenancy agreement is valid and legally binding is important. A valid agreement is one that has been entered into freely and voluntarily by both the landlord and tenant, and it meets all the legal requirements for a tenancy agreement in your jurisdiction. To guarantee this, there are several things to keep in mind:

• Review the terms of the agreement: Ensure the terms are clear, fair, and reasonable for both parties. 
• Ensure the agreement is signed by all parties, including the landlord and the tenant.
• Check for any illegal terms: Review the agreement for any terms that are illegal or contrary to the law in your jurisdiction.
  • For example, it may be illegal for a landlord to require a tenant to waive their legal rights or to charge an excessive security deposit.
• Confirm the agreement complies with local laws: This may include laws related to tenant rights, security deposits, and eviction procedures, among others. If you aren’t familiar with the local laws, it’s important to enlist someone who can help you make sense of the contract, especially if some parts of the agreement feel off or suspicious.

4. Review Termination Clauses

It’s essential to understand the requirements for terminating your lease agreement early or upon its expiration. An early termination fee may be required, or a sublet arrangement may be allowed. It’s also wise to understand the specific situations in which a landlord can evict you, such as for personal use, renovations, or bad faith evictions, as well as your rights.

Rent Increases and Eviction Rules

Under Ontario’s Residential Tenancies Act, your landlord must abide by these rules. Knowing them before you sign your lease can help you protect your rights as a tenant:

• Your landlord is prohibited from raising the rent more than the Rent Increase Guidelines for Ontario.
• Your landlord can only evict you for a valid reason. Otherwise, a wrongful eviction is an offence under the Residential Tenancies Act.
  • Individual landlords could face a fine of up to $50,000, while corporations could face one up to $250,000.
• Your landlord must give you a 60-day notice if they want to legally evict you, and provide a Notice to End Your Tenancy For Landlord’s or Purchaser’s Own Use (Form 12).
• If the landlord evicts you for an invalid reason, known as a “bad faith eviction,” you may be entitled to additional compensation.
• Consult resources to attempt to resolve a disagreement with your landlord before escalating the issue.

5. Understand the Repercussions of Breaking the Lease

Breaking a lease can have serious financial and legal consequences. Before signing the contract, ensure you fully understand the penalties associated with breaking the lease early. These penalties may include paying the remaining rent on the lease term, forfeiting your security deposit, or being held liable for the landlord’s expenses in finding a new tenant. Understanding these consequences can help you make informed decisions and avoid unexpected outcomes in the future.

Understand the Financial Risks

Breaking your lease can come with many risks; it’s not just risking losing your money to cover the remaining rent, but it could also be detrimental to your future attempts to rent another property. 

• Breaking your lease could negatively impact your credit score, as it’s considered a breach of contract and reported to your bank.
• Landlords can view your rental history and may be less likely to rent to tenants who have broken their lease.

6. Seek Clarification on Ambiguous Terms

If there are any terms or clauses in the lease agreement that you find unclear, don’t hesitate to seek clarification from the landlord or property manager. It’s better to address any uncertainties before signing the contract rather than dealing with misunderstandings later. Asking for clarification can help ensure that both parties are on the same page and prevent future conflicts.

7. Pay Attention to Red Flags

Be cautious of contracts that lack clarity on crucial terms, such as rent increases, maintenance responsibilities, or eviction procedures. Additionally, watch out for hidden fees or charges that the agreement may not clearly disclose. It’s also vital to be cautious of any clauses that seem unfair or overly restrictive, as they could potentially infringe upon your rights as a tenant.

What to Do If You Encounter a Problem

Several signs may indicate that a lease or the landlord is suspicious. Here are some things to look out for: 

• The rent is significantly lower than the property’s worth
• The landlord requests a deposit without a formal rental agreement, or for someone outside the country.
• The landlord immediately asks for personal or financial information before letting you see the apartment.

To be safe rather than sorry, report any rental scams to the Canadian Anti-Fraud Centre (CAFC) 

Lease Agreement Checklist:

• There’s a written, signed lease agreement
• All fees, rent, and services are clearly listed
• You’ve reviewed clauses on maintenance, subletting, and termination
• Damage or issues in the unit are documented
• Rent increase and eviction rules are understood
• No illegal or suspicious clauses
• You’ve asked questions and feel confident before signing

Our team at CLV Group has ample experience executing leasing agreements. If you have any questions, our team will be happy to help you out. For more information, get in touch with us today or browse our current apartment listings.