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LANDLORDS Now that You've Found New Tenants

Information on deposits, rent increases and how to finalize a tenancy.

Now that You've Found New Tenants…

Congratulations, you've finalized a deal with a new tenant. Here are the steps to take to protect your investment:
  • Review the Provincial and Territorial Fact sheet for the province/territory that applies to you. Take time to familiarize yourself with the basic guidelines for your province, including deposits that are allowed, notice periods and renewal timeframes.
  • Have the tenant sign a written lease that clearly stipulates the terms of your agreement. A written lease is required by law in some provinces and even when not required it is advisable to have a written agreement in place. Standardized lease forms may be available from your local rental authority and they are often sold at local business supply stores as well.
  • Collect the appropriate deposit, if applicable, from the new tenant(s).
  • Conduct a move-in inspection with the tenant, documenting the condition of the rental unit. Consider taking photographs or even videotaping the inspection. When the inspection is complete, ensure that both you and the new tenant(s) sign the Inspection Worksheet. Some provinces have a worksheet that you are required by law to use.

Collecting a Deposit

Rules governing deposits vary from province to province. In Quebec, landlords cannot collect a deposit. In Ontario, landlords may collect a rent deposit, but this is not a "security deposit", so, the landlord cannot use the rent deposit to cover the cost of damages. In some provinces, the Rentalsman Office, not the landlord, holds the deposit for the landlord and tenant.

When a tenancy ends, the initially collected deposit is returned to the tenant, often by way of covering the cost of the last month's rent. There is often a difference between the amount of the initial rent deposit and the rent as a tenant departs. If the tenant has not given you additional money during the tenancy to increase the amount of the deposit, part of the interest owed, if applicable, is often used to cover the difference between the initial deposit amount and the amount of the last month's rent.

Landlords Canada-wide cannot simply keep a departing tenant's deposit or charge for additional repairs to the rental premises. They must negotiate payment with the tenant and if the tenant disagrees, the landlord must formally apply to the local rental authority to keep a deposit, or to charge the tenant for damages costing more than the deposit and interest.

FactHow Much Money?

The amount of money returned to tenants moving out depends on the guidelines set for the applicable province or territory. Factors that often affect the final amount are:

  • Whether the rent is paid in full.
  • The amount of the deposit the tenant paid the landlord, if applicable,
  • The prescribed interest on the deposit, based on the rate set by the province or territory,
  • The condition of the rental unit, excluding normal wear and tear.

Rent Increases

Increasing rent: it's a fact of life. But just how often and by how much are you allowed to increase rent? Each province/territory handles rent increases differently. (Refer to the Provincial and Territorial Fact Sheets).

Notice of a Rent Increase

In many jurisdictions, you are obliged to give 90 days notice of a rent increase. The amount of advance notice can vary depending on the type of tenancy — weekly, month-to-month or yearly. In some parts of Canada, an increase may occur only on the anniversary of the tenancy and the landlord must give four months notice.

A rent increase is void without proper notice stating when the increase comes into effect. If you do not give enough notice, the tenant can refuse to pay the rent increase until you give proper notice.

Tenants often face a rent increase when it's time to renew a lease and only one increase per year is typically permitted. Some provinces set rent increase guidelines based on cost estimates for heat, electricity, taxes and property improvements.

Did You Know...?Rent Control

In Ontario, rent control is in place for existing tenancies. When one tenant moves out, however, the rent control is no longer in effect for that unit, enabling landlords to raise the rent to the rate of their choice. For existing tenancies, a landlord in Ontario can propose a rent increase above the "rent increase guidelines" set for the province. Landlords doing so have to apply to that province's rent authority for acceptance, and they must have their request approved before the increase can take effect.

Ending the Rental Agreement

It's time to move on and move out. Landlords, ensure your departing tenant leaves on good terms and protect your rental investment. Here are some tips that will help you end the rental agreement on good terms.

  • Check with tenants whose lease is coming due to find out if they wish to continue renting from you.
  • Negotiate mutually acceptable terms with departing tenants who may need to assign, sublet or break your rental agreement.
  • When you need to enter a unit to show it to new rental applicants, give the current tenant proper notice.
  • Inspect property for damage. If departing tenant's rental is:
    • Satisfactory: return deposit with interest.
    • Damaged or dirty: ensure repairs and cleaning are completed. Pursue payment or withhold damage deposit, if necessary and if permitted by legislation in your province or territory.

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