A residential rental lease agreement defines the rights and responsibility of both the landlord and tenant. It is governed by landlord and tenant law specific to the province or state where a tenant is renting. To create a rental lease agreement, you need to be familiar with your local landlord and tenant law. If you need to resolve a dispute in court, the court will only go by the landlord and tenant law. So do not include any clauses that are against the law. In Ontario, the current law is Residential Tenancies Act (RTA) 2006.

A well-written rental lease agreement will prevent loopholes and possible issues during the lease term. Even with the best tenant, you still need to have a written rental lease agreement in place. Most property management companies have their standard lease agreements in compliance with the local landlord and tenant law. The standard version covers the description of the rental premises, lease term, rental payment, repair and maintenance, rules and regulations, etc.

As a landlord, you need to review each clause in the agreement to ensure that it fits your needs. You can create your own rental lease agreement based on the standard version to include clauses that are important to you. Since the agreement is between you and your tenant, you decide the terms to be negotiated with your tenant.

Beside the terms covered in most standard rental leases, it is recommended to consider the following when you create your own rental lease agreement:

1) The agreement stipulates that the rental payment is made by post-dated checks so that you don’t need to collect the rent each month. It is suggested that you set the first day of each month to be the payment date for your own convenience.

2) For single house, duplex or multi-family rental, you can include a clause declaring that it is the tenant’s responsibility to take care of snow removal, garbage removal and lawn mowing. This clause will alleviate you from these routine tasks.

3) To avoid the mess from moving out, you can have a clause stating that the tenant needs to clean the apartment / house and remove all the garbage and personal belongings from the property according to the moving out checklist. If the tenant fails to do so, he will be billed for landlord’s cleaning cost incurred. This clause will hugely reduce your cleaning work after the tenant moved out.

4) To avoid possible time conflict between the new tenant and old tenant on the moving day, you can specify the exact time when the lease ends and the tenant has to move out. For example, instead of “June 30th”, put “June 30th 2:00pm” so that the tenant knows the deadline and plans accordingly.

5) Do not be afraid to put rental increase in the lease. A reasonable tenant understands the increase of utility and maintenance cost. A 2-5% increase will not scare him away. If you decide to waive the increase, it is your favor to your tenant. The increase percentage needs to be in line with the rental increase guideline set by each province.

6) In general, if your rental property is in a transitional or rough area, you need to have a lease agreement covering all possible scenarios you could think of. I have a 7-page lease agreement using font size 8. If the rental property is in a good neighborhood, you can use a shorter version.

I personally treat the rental lease agreement as gentlemen’s agreement between a good landlord and a good tenant. It relies on the cooperation and good intention of both parties for its fulfillment. Going to the court is the last resort. Therefore, having a reasonable, cooperative tenant and being a good landlord is the key to your success.

If you like this article, we welcome you to visit author’s other articles on the topic, we would highly recommended you read his recent article on”Secrets to Be a Hands-off Landlord, find out what are top 5 Ways to be a Good Landlord”.

Oliver Gu

Success Coach and Real Estate Investor

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