Signing and ending a residential lease

Month-to-month vs. fixed-term leases

Month-to-month tenancies don’t have a designated end date. The tenant pays their monthly rent until they decide to move out. Fixed-term tenancies, also known as leases, do have a set end date. Residential leases are most commonly for one year.

The lease should stipulate clearly what happens at the end of the term: Will the tenant move out? Will they need to sign a new lease? Will the tenancy convert to month-to-month?

The most common approach in residential tenancies is that after the initial one-year lease the tenancy becomes month-to-month.

Certain jurisdictions have rules that govern fixed-term leases as well. For example, in BC, a fixed-term tenancy agreement that doesn’t stipulate what happens after the term automatically becomes a month-to-month tenancy at that time.

More on fixed-term leases

As a landlord, once you’ve found a good tenant, you may want them to sign a 6-month or 1-year term for a few reasons, including:

• Security: You know you will be receiving a set rent for a specified period of time.
• Less wear and tear: If you have tenants moving in and out less frequently, that means less wear and tear on your rental property.
• Less expense: Having one tenant for a fixed period means fewer advertising costs for you, as well as the expense of cleaning and repairing any possible damages before a new tenant can move in.

However, there are downsides to fixed-term tenancy agreements. For example, you lose a lot of flexibility. In most jurisdictions, it’s not possible to end the agreement early unless there’s a good reason—and even then it can be an arduous process.

For example, regulations in BC stipulate circumstances in which a fixed-term tenancy agreement can be ended early:

“both parties agree in writing; there are special circumstances such as the tenant is fleeing family violence or the tenant has been assessed as requiring long-term care or has been accepted into a long-term care facility; or as ordered by an arbitrator”

If you decide to offer tenants a fixed-term agreement, just make sure you’re clear on the length of the agreement and what happens at the end.

Once you’ve agreed on the terms, you should complete a Residential Tenancy Agreement, and provide a copy to your tenant.

What is a Residential Tenancy Agreement?

The Residential Tenancy Agreement covers such things such as:

• The length of tenancy
• Who is included in the tenancy
• When the rent is to be paid
• What’s included in the rent
• Whose responsible to pay for utilities
• Whether pets or smoking are allowed
• What amount of the security deposit is required
• Expectations for who is taking care of property (maintenance, lawn, garden, etc.)
• What the landlord’s and the tenant’s obligations are with regard to repairs and maintenance, the landlord’s access to the unit, and ending the tenancy
• If it’s a strata building: who is responsible for move-in fee

Rental agreements are governed by the provincial or territorial legislation in whichever province the property is located:

• In BC, landlords are required to provide tenants with a copy of the Residential Tenancy Agreement as proof of the agreement between the landlord and the tenant. You can get a copy of a Residential Tenancy Agreement from the Government of BC. Note that this form is updated frequently, so make sure you’re always using the most recent version.
• In most other provinces, the government does not provide a tenancy agreement form, but you can obtain one from various landlord/tenant advisory agencies.

But what happens at the end of the agreed tenancy term?

What happens depends on the jurisdiction. Tenancy issues are regulated at the provincial level, but each province is broadly similar.

In BC, for example, you don’t have much choice; almost all fixed-term tenancies will convert to month-to-month at the end of the term. The only exception is if the tenancy agreement specifically states that the tenant will vacate at the end of the term—and this is only allowed in very specific circumstances where the landlord or a close family member intends to move into the unit.

Another option is to sign another fixed-term agreement, but the landlord can’t require this of the tenant; the tenant my opt to continue month-to-month instead.

If the tenancy is on a month-to-month and the landlord would like to renovate the unit where the tenant must vacate, 4 months notice is required. All the permits for the renovation must be submitted with proof of service of the notice. If the landlord wishes to re-rent the unit after the renovation has been completed, the tenants must be given first right to rent it back unless they signed a mutual agreement with the landlord when they left.

How can I end the tenancy agreement?

Typically, the landlord can end a fixed-term tenancy agreement:

• For non-payment of rent
• For breach of contract (unapproved pets, smoking, noise, or excessive damage) with proper notice served
• Upon mutual agreement with the tenant

The landlord can end a month-to-month tenancy agreement:

• For landlord’s use of property
• For restoration or renovation
• Upon mutual agreement with the tenant

If major renovations are required, this may also be a reason to end a tenancy. If you’re buying a home with tenants already in place, you will have to abide by the existing rental agreement.

During a fixed term, you can’t end the tenancy, unless there is cause or there is an agreement between you. If the tenant does not pay the rent when due, or causes unreasonable damage, you can serve a “Notice to End Tenancy” on the tenant.

Non-payment of rent or utilities

You can give the tenant a “10-Day Notice to End Tenancy” if the tenant has not paid their rent. Notice can be given on the day after the date the rent is due. After receipt of the notice, the tenant has five days to pay the full rent owing. Or, if they so choose, they can serve the landlord with an Application of Dispute Resolution, within 5 days. The notice will be cancelled, if the rent is fully paid within the first 5 days, and the tenancy goes on as before. If the tenant disputes the notice, the tenant may go through the process of completing and serving you with an Application for Dispute Resolution and a date for the hearing. If neither of these things happens, the tenant will be required to move out on the tenth day after receiving the notice.

Causing unreasonable damage

You can evict your tenant for cause, if they are causing unreasonable damage or if they are repeatedly late paying rent (at least 3 late payments, not necessarily consecutively). In cases such as these you can serve a One Month Notice to End Tenancy for Cause.

Landlord’s use of property

If you want to end the tenancy because: (1) you’ve sold the home, and the purchaser wishes to move in; (2) you or an immediate family member wishes to move in; or, (3) you are going to renovate or demolish the rental unit. In these situations, you will need to serve a “Notice to End Tenancy” on the tenant, giving 2 months’ notice, from the end of the month in which notice is given, but this cannot occur before the end of the fixed term. And tenants are not required to pay you the last month’s rent. This is intended to be compensation for the tenants, and to assist with their moving expenses, since the tenancy is ending at your request, not theirs.

Helpful links and resources

Although there are many benefits to signing a long term lease, it’s not something you enter into lightly. All provinces in Canada have legislation to protect both tenants and landlords. So, it’s important you are familiar with, and acting within, the prescribed guidelines. Be sure you are familiar with the rules in your province before taking steps to evict a tenant.

Here are some resources about ending a tenancy agreement in different provinces:

• British Columbia
• Alberta
• Saskatchewan
• Manitoba
• Ontario
• Quebec

Commonly asked questions

Can a tenant break their lease mid-term?

So the new tenant you thought was a perfect fit for your rental property has now decided to break their lease, perhaps leaving partway through or backing out before they’ve even moved in. Now what? There’s a legal responsibility from both parties to follow the agreed upon lease agreement. If the tenant chooses to vacate before the end date, there is a possibility that they will need to pay some money to ameliorate lost funds for the landlord.

That said, it’s not as cut and dry as owing the remaining month or months’ rent. In British Columbia, for example, the landlord has a responsibility to mitigate their loss by trying to find a new tenant for the unit. If the tenant has proof that the landlord has made no such attempt, it’s possible they will not have to pay anything.

Is there a legal form a tenant must provide to break a lease?

There are some circumstances where it is well within the tenant’s rights to walk away from a lease—with one month’s written notice.

In British Columbia, there are stipulations in place allowing for a renter to end a fixed-term tenancy if they need to leave the rental unit to protect themselves or their children from family violence, they have been assessed as requiring long-term care, or have been accepted into a long-term care facility.

In these cases, it is the tenant’s responsibility to provide the landlord with an Ending Fixed-Term Tenancy Confirmation Statement, which is available through third-party verifiers such as the police, registered social workers and physicians, among others.

What is the difference between a lease and a rental agreement?

In residential terms, there is effectively no difference between a lease or a rental agreement—they are interchangeable.

Watch the full video

Want to learn more? Visit our Landlord resource centre for more helpful articles about all the topics most important to landlords. Or, get an online quote in under 5 minutes and find out how affordable personalized home insurance can be.