Understanding Lease Agreements in Canada: From Signing to Renewal

Sep 6, 2024

A residential lease agreement on a clipboard with a pen
A residential lease agreement on a clipboard with a pen

Table of contents

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Title

Lease agreements can be tricky, due to their many clauses and legally binding terms. It can feel overwhelming, but we’re here to help you with this guide. 

Understanding the ins and outs is crucial whether you’re signing your first lease or renewing an ongoing one. We break down everything you need to know about lease agreements in Canada so you can feel confident and informed every step of the way.

New to renting in Canada? This is part of our series on the basics of renting an apartment in Canada. Check out these articles first:

What is a Lease Agreement?

A lease agreement is a contract between a landlord and tenant that outlines the terms under which the tenant will rent the property from the landlord. It guarantees you, the tenant, use of the rental property and the landlord regular payments for a fixed period. 

Among other things, lease agreements outline how long the tenant will be renting the property and how much they’re paying each month. 

At the start of a tenancy, the landlord can provide you with the Residential Tenancy Branch’s (RTB) official standard rental lease agreement form, or they can create their own agreement. However, it must have all the standard terms required by the Residential Tenancy Act and Residential Tenancy Regulation. 

Once you have signed the tenancy agreement, the landlord must provide you with a copy. Make sure you keep this agreement in a safe place (or star it in your email inbox) so you can come back to it if needed. 

For example, the landlord must give you a copy of an Ontario lease agreement within 21 days after you sign it. The same goes for a BC lease agreement. 

How Does a Lease Work? 

A lease is a legally binding contract between the lessor (landlord) and the lessee (tenant). Both parties agree to the lease terms, including the amount of the rent, when they need to pay it, and when the lease runs out, along with any consequences that may happen if either party does not follow through with the terms of the agreement. 

A lease benefits both the landlord and the tenant. It is a clear, written agreement and a source of reference in case there are any questions about the terms of living in the rental. 

It gives the tenant a locked-in rental rate and a legal statement of their rights, and it gives the landlord security that they will have a source of revenue each month at an agreed-upon date. 

The lease agreement can be verbal, but it is normally in writing, with both parties having signed the document. 

What Is Included in a Lease? 

All residential lease agreements include the following:

  • The basics: the property address, landlord and tenant responsibilities, the rent amount, the rent due date, and the length of the leas

  • Duration of the lease and renewal: whether it is a fixed-term vs month-to-month lease, options for renewal, and what can happen if either party wants to end the lease early. 

  • Security deposits and other fees: the terms for holding, using, and releasing security or other deposits, like pet fees. 

  • Special clauses: this outlines whether you can sublet the property, use it for Airbnb, or have pets. 

  • Property use and maintenance: this includes terms surrounding renovations, repairs, and what the landlord can and cannot do with your permission. 

If the landlord gives you a lease agreement and you have questions or don’t agree with something, discuss it with them before signing. Remember that the lease agreement can always be modified. 

A bright yellow apartment door against white painted walls. 

Photo by Evelyn Paris on Unsplash

Types of Leases 

There are three main types of leases when renting in Canada: 

Fixed-Term Lease

The most common type of lease in Canada, a fixed-term lease typically runs for six months to a year. It has a specific start and end date and does not automatically renew after the end date. 

After a fixed-term lease ends, you and the landlord can agree to:

  • End the lease, and you move out, or 

  • Agree to another fixed-term lease, or

  • Continue with a periodic lease (most commonly month-to-month). 

If you agree to another fixed-term lease, you and the landlord must sign a new lease. 

Periodic Lease 

A periodic lease typically happens at the end of a fixed-term lease. It can be year-to-year, month-to-month, or week-to-week, but the most common periodic lease is month-to-month. This is a great option if you are not sure you want to stay another year. 

If you are in a month-to-month lease and want to end it, you need to give the landlord at least one month’s notice before the end of the month. Similarly, you need to give at least one week’s notice to end a week-to-week lease. 

Lease-to-Own Agreements 

Rent-to-own agreements can be a great strategy for those who want to eventually buy the property at the end of their lease. In this agreement, you commit to renting the property for a certain amount of time; then, you have the option of buying it before the lease runs out. 

Sometimes, a percentage of your rent payment is put towards the purchase price, which helps you when you eventually put a down payment on the property. 

Renting to own can be a great concept for those who want to own a property but cannot do it traditionally (i.e., they have too low of a credit score for a mortgage or don’t have enough money for a down payment). 

Can You Break a Lease? 

Either you or the landlord can break a lease, but doing so is not ideal. As a tenant, breaking the lease early could mean owing the landlord for the extra months of rent you have left. You may also need to pay a fee to break the lease early, or you may need to find someone to replace you. 

If the landlord breaks the lease without proper notice, they may have to provide you with an alternate living space or compensation. In some cases, they may face legal or civil challenges. 

How to End a Lease After It’s Over 

If you want to leave when your lease comes to the end of the term, you do not need to provide the landlord with a reason. Just be sure to give them adequate notice. Each province has different requirements for ending a tenancy; some require just 30 days’ written notice, while others require more. 

Rental Lease Agreement Forms by Province 

Each province and territory has a slightly different rental lease agreement form. Here are the links to where you can find more information about leasing: 

Before signing a lease agreement, you’ll need to start looking and applying for rental units. Here are some strategies and tips for making your rental application stand out. When you’ve secured your dream rental, check out our ultimate moving checklist to help with your big move. 

Have you found your dream rental and are ready to move? Use Chexy to pay your rent with your credit card. You could earn points, miles, or cashback and get up to 4% back on your rental payments. Not only that, but you could build your credit, split rent payments with roommates, bundle your bills, and more. 

Get started with Chexy today

Subscribe to our newsletter below for up-to-date credit card, travel, and rental content. 

FAQs

What is the difference between rent or lease? 

The terms renting and leasing can be used interchangeably; however, most people differentiate them based on their duration. A rental agreement usually covers a shorter term (i.e., month-to-month rentals), whereas a lease agreement typically covers a longer term (i.e., six months, one year, or more). 

What is a contract to lease?

A contract to lease is another way of saying “lease agreement” or “rental agreement.” It contains all the terms that both the landlord and tenant must abide by. 

How long after signing a lease can you back out in Canada?

Unfortunately, you cannot back out of a lease after signing it. Once you sign, you are legally bound to its terms and conditions. If you want to back out a lease you just signed, tell your landlord right away. They may try to find someone else and let you off the hook, but it all comes down to the individual landlord. Never sign anything you are not 100% sure of. 

What happens after the first year of the lease in Ontario?

After your fixed-term lease has ended, the lease automatically renews on a month-to-month or week-to-week basis. You and the landlord do not have to sign anything; all the rules of the previous lease still apply. You can also agree with the landlord to enter into another fixed-term period if you wish. 

Lease agreements can be tricky, due to their many clauses and legally binding terms. It can feel overwhelming, but we’re here to help you with this guide. 

Understanding the ins and outs is crucial whether you’re signing your first lease or renewing an ongoing one. We break down everything you need to know about lease agreements in Canada so you can feel confident and informed every step of the way.

New to renting in Canada? This is part of our series on the basics of renting an apartment in Canada. Check out these articles first:

What is a Lease Agreement?

A lease agreement is a contract between a landlord and tenant that outlines the terms under which the tenant will rent the property from the landlord. It guarantees you, the tenant, use of the rental property and the landlord regular payments for a fixed period. 

Among other things, lease agreements outline how long the tenant will be renting the property and how much they’re paying each month. 

At the start of a tenancy, the landlord can provide you with the Residential Tenancy Branch’s (RTB) official standard rental lease agreement form, or they can create their own agreement. However, it must have all the standard terms required by the Residential Tenancy Act and Residential Tenancy Regulation. 

Once you have signed the tenancy agreement, the landlord must provide you with a copy. Make sure you keep this agreement in a safe place (or star it in your email inbox) so you can come back to it if needed. 

For example, the landlord must give you a copy of an Ontario lease agreement within 21 days after you sign it. The same goes for a BC lease agreement. 

How Does a Lease Work? 

A lease is a legally binding contract between the lessor (landlord) and the lessee (tenant). Both parties agree to the lease terms, including the amount of the rent, when they need to pay it, and when the lease runs out, along with any consequences that may happen if either party does not follow through with the terms of the agreement. 

A lease benefits both the landlord and the tenant. It is a clear, written agreement and a source of reference in case there are any questions about the terms of living in the rental. 

It gives the tenant a locked-in rental rate and a legal statement of their rights, and it gives the landlord security that they will have a source of revenue each month at an agreed-upon date. 

The lease agreement can be verbal, but it is normally in writing, with both parties having signed the document. 

What Is Included in a Lease? 

All residential lease agreements include the following:

  • The basics: the property address, landlord and tenant responsibilities, the rent amount, the rent due date, and the length of the leas

  • Duration of the lease and renewal: whether it is a fixed-term vs month-to-month lease, options for renewal, and what can happen if either party wants to end the lease early. 

  • Security deposits and other fees: the terms for holding, using, and releasing security or other deposits, like pet fees. 

  • Special clauses: this outlines whether you can sublet the property, use it for Airbnb, or have pets. 

  • Property use and maintenance: this includes terms surrounding renovations, repairs, and what the landlord can and cannot do with your permission. 

If the landlord gives you a lease agreement and you have questions or don’t agree with something, discuss it with them before signing. Remember that the lease agreement can always be modified. 

A bright yellow apartment door against white painted walls. 

Photo by Evelyn Paris on Unsplash

Types of Leases 

There are three main types of leases when renting in Canada: 

Fixed-Term Lease

The most common type of lease in Canada, a fixed-term lease typically runs for six months to a year. It has a specific start and end date and does not automatically renew after the end date. 

After a fixed-term lease ends, you and the landlord can agree to:

  • End the lease, and you move out, or 

  • Agree to another fixed-term lease, or

  • Continue with a periodic lease (most commonly month-to-month). 

If you agree to another fixed-term lease, you and the landlord must sign a new lease. 

Periodic Lease 

A periodic lease typically happens at the end of a fixed-term lease. It can be year-to-year, month-to-month, or week-to-week, but the most common periodic lease is month-to-month. This is a great option if you are not sure you want to stay another year. 

If you are in a month-to-month lease and want to end it, you need to give the landlord at least one month’s notice before the end of the month. Similarly, you need to give at least one week’s notice to end a week-to-week lease. 

Lease-to-Own Agreements 

Rent-to-own agreements can be a great strategy for those who want to eventually buy the property at the end of their lease. In this agreement, you commit to renting the property for a certain amount of time; then, you have the option of buying it before the lease runs out. 

Sometimes, a percentage of your rent payment is put towards the purchase price, which helps you when you eventually put a down payment on the property. 

Renting to own can be a great concept for those who want to own a property but cannot do it traditionally (i.e., they have too low of a credit score for a mortgage or don’t have enough money for a down payment). 

Can You Break a Lease? 

Either you or the landlord can break a lease, but doing so is not ideal. As a tenant, breaking the lease early could mean owing the landlord for the extra months of rent you have left. You may also need to pay a fee to break the lease early, or you may need to find someone to replace you. 

If the landlord breaks the lease without proper notice, they may have to provide you with an alternate living space or compensation. In some cases, they may face legal or civil challenges. 

How to End a Lease After It’s Over 

If you want to leave when your lease comes to the end of the term, you do not need to provide the landlord with a reason. Just be sure to give them adequate notice. Each province has different requirements for ending a tenancy; some require just 30 days’ written notice, while others require more. 

Rental Lease Agreement Forms by Province 

Each province and territory has a slightly different rental lease agreement form. Here are the links to where you can find more information about leasing: 

Before signing a lease agreement, you’ll need to start looking and applying for rental units. Here are some strategies and tips for making your rental application stand out. When you’ve secured your dream rental, check out our ultimate moving checklist to help with your big move. 

Have you found your dream rental and are ready to move? Use Chexy to pay your rent with your credit card. You could earn points, miles, or cashback and get up to 4% back on your rental payments. Not only that, but you could build your credit, split rent payments with roommates, bundle your bills, and more. 

Get started with Chexy today

Subscribe to our newsletter below for up-to-date credit card, travel, and rental content. 

FAQs

What is the difference between rent or lease? 

The terms renting and leasing can be used interchangeably; however, most people differentiate them based on their duration. A rental agreement usually covers a shorter term (i.e., month-to-month rentals), whereas a lease agreement typically covers a longer term (i.e., six months, one year, or more). 

What is a contract to lease?

A contract to lease is another way of saying “lease agreement” or “rental agreement.” It contains all the terms that both the landlord and tenant must abide by. 

How long after signing a lease can you back out in Canada?

Unfortunately, you cannot back out of a lease after signing it. Once you sign, you are legally bound to its terms and conditions. If you want to back out a lease you just signed, tell your landlord right away. They may try to find someone else and let you off the hook, but it all comes down to the individual landlord. Never sign anything you are not 100% sure of. 

What happens after the first year of the lease in Ontario?

After your fixed-term lease has ended, the lease automatically renews on a month-to-month or week-to-week basis. You and the landlord do not have to sign anything; all the rules of the previous lease still apply. You can also agree with the landlord to enter into another fixed-term period if you wish.