March 22, 2024 | Investors

What Are the Clauses on a Lease?

When all of the pieces of the puzzle fall into place, owning an income property can lead to financial stability. Not only does your equity grow as your unit rises in value, but you also generate a stream of regular passive income. 

In a high-demand city like Guelph, you will always have a vast pool of tenants who are searching for rental housing, which means your home will not sit vacant for long. However, the key is to vet prospective tenants carefully. 

A good one generally means enjoying the benefits of real estate investing with minimal stress, whereas a poor choice can result in many sleepless nights and lost profits. Once you conduct extensive background checks, you can further protect yourself by understanding your rights as a landlord and using a written lease to protect your interests. In this post, we’ll explore some of the must-know clauses in depth.

What Is a Lease Agreement?

Currently, the LTB (Landlord and Tenant Board) requires a signed lease for all new tenancies. Since most laws tend to favour tenants, it makes sense to get everything in writing regardless.

Any rights you have as a landlord depend on all terms being clearly and unmistakably detailed within your lease agreement. Lease clauses detail everything from the names of all parties involved and the address to how much the rent will be and what alterations a tenant can make.

Owning an income property comes with challenges, but it can also be extremely rewarding. Here are some ideas to ensure your investment is successful:

What All Landlords Need to Understand Before Signing a Lease

As a landlord, you will need to do everything in your power to protect your rights and your property. The following strategies will help you be successful as a landlord even in this fast-moving landscape:

Focus on long-term equity as your home grows in value. When you think of how much financial stability you are building over time, it’s less frustrating when dealing with a conflict with a tenant. 

Surround yourself with professionals and experts who can support you. Most successful real estate investors will have an experienced Realtor® on their team, as well as a network of tradespeople and property management companies.

Understand the Residential Tenancies Act inside and out. It’s critical that you know what you can and can’t legally put on a lease. For example, you can ask for a deposit towards the last month’s rent. However, you can’t charge an extra deposit because your tenant has pets.

Most Critical Clauses to Protect Your Interests

A lease agreement lays everything out, from the proper spelling of your tenant’s name to the physical address of the unit to be rented. However, certain clauses are particularly important to protect your rights as a landlord. 

Rent Details

Outline in no uncertain terms how much the rent will be and when it is due each month. In addition, clearly state what is and isn’t included in the rent, such as parking or air conditioning. Having these terms in writing is essential in the event of a dispute between you and your tenant.

Notice of Rent Increases

You are permitted to raise the rent each year according to the LTB guidelines. However, including this in the lease agreement can help you avoid unnecessary conflict when the time arises.

Repairs and Maintenance

Who is expected to make what repairs and when? It is your responsibility as a landlord to remedy all potential safety issues like electrical, plumbing, and heating systems and maintain all fire standards. 

The tenant is responsible for keeping the unit to a reasonable standard of cleanliness. In addition, they must cover any damages that are not due to normal wear and tear. You and your tenant can find these guidelines right on the LTB website. Still, it doesn’t hurt to detail it all out on the written lease. 

Rules and Regulations

It’s important to know what rules you can and can’t enforce before signing a lease agreement. A tenant can freely ignore any illegal clauses, such as forbidding pets or guests. On the other hand, you can prohibit smoking if the second-hand smoke will interfere with other residents’ enjoyment of their unit. 

The Rules on Subletting

Can you forbid your tenant from subletting your home? It gets complicated. On the one hand, your tenant needs your written permission to sublet. On the other hand, you can not arbitrarily refuse without a good reason. 

Alterations to Property

What happens if your tenant decides to paint all of the walls without your permission? In the interest of maintaining a positive relationship with your tenant, you might decide to let it go. It’s not something you can evict over. However, you can apply to the LTB for the tenant to reimburse you for the cost of repairs. All of these scenarios can be avoided by clearly outlining your rules on alterations from the beginning.

Length of Lease and Renewal

A typical lease runs for 12 months. Once it expires, you can have your tenant sign a new agreement. If one or both of you don’t want to renew the lease, it will automatically convert to a month-to-month term.

How can you find an investment property that is worth it? Find out in the related reading below:

Reasons for Eviction

In Ontario, you can’t evict your tenant simply because the lease has expired or even if you don’t want to be a landlord anymore. There are only certain circumstances where a landlord can end a tenancy agreement. 

  • “At fault” reasons include non-payment of rent, damaging the property, or excessive disruptiveness. 
  • You can also end a tenancy if you or a family member is moving into the home or you are selling the property and the new owner plans to move in. 
  • You can ask a tenant to leave if you need to perform extensive renovations that require the house to be empty. Even then, you must offer them the first choice of refusal once the work is completed. 

Whenever you end a lease agreement for “no-fault” reasons, you will usually have to offer compensation to the tenant. These regulations exist due to the “security of tenancy” clause in the Residential Tenancies Act. Understanding these guidelines will help you as a real estate investor who plans to be in the business for the long term.

Do you have questions about real estate investing or how to successfully manage a rental property? Our experienced experts are here to help. Reach out to or call 519-826-7109 to learn more. 

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