Tenancy Agreements: 4 Common Misconceptions That Hurt Landlords

by Chris on May 21, 2018

Tenancy agreements can be complicated. Toss in local tenancy laws and individual landlord policies, and things can get downright confusing.

Unfortunately, misconceptions about the lease may lead to a false sense of security and, ultimately, to income loss. Don’t be caught off-guard.

Recognize these leasing myths, and avoid problems down the road:

The tenancy will run for the term in the tenancy agreement.

The term stated on the lease may not represent the amount of time the tenant will remain in the property. Given the rental market, it is likely that a tenant will want to stay beyond the standard one-year lease. Local tenancy law may allow the tenant to continue beyond the original term. British Columbia, for instance, has all but done away with fixed-term leases. Landlords need to plan ahead and consider that the rental applicant applying for a one-year term may wind up staying for years.

Likewise, the tenant may leave before the end of the fixed term. In most cases, the tenant will not be liable for payment of the “full” rent stated in the lease. The landlord is required to find a new tenant as soon as possible should the existing tenant leave early. The exiting tenant will not be liable for rent once the new tenant is in place.

If the tenant agrees to a provision, it is enforceable.

The tenancy agreement cannot violate local tenancy laws. So, an Ontario lease that provides for a security deposit will not be enforceable, even if the tenant agreed to it.

Landlords who use leases with controversial or illegal provisions risk income loss. The most common problems are charging fees not expressly allowed under the tenancy statutes, and attempting to pass landlord responsibilities on to the tenant.

If it’s not in the lease, just add it later.

Modifications of a tenancy agreement are tricky. Generally, a lease can only be modified if both the landlord and the tenant agree to the change. Otherwise, the original lease terms will remain in effect for as long as the tenant stays in the property. That’s why landlords need to think about policies that will prevent income loss over the long term and include those provisions in the original agreement.

It’s also best to avoid subsequent verbal promises that impact the lease provisions. Modifications should be in writing so that tenants cannot later claim that the landlord waived rights or changed the terms of the lease.

Automation is a money-saver.

Technology seems to offer ease in communicating with tenants. But there’s one significant downside to online leasing: anonymity. A tenancy agreement is less about court action and more about educating the tenant so problems don’t arise in the first place. That’s better done in person. Face time with the tenant can build trust and respect. A computer or smartphone can’t do that.

Additional Tips:

While the tenancy agreement is crucial, other landlord forms carry as much weight. For instance, the rental application is instrumental in screening out problem tenants and in locating a tenant if the landlord needs to take legal action. The move-in condition report is not nearly as complicated as the lease, yet it serves to prove that a specific tenant caused damage.

The best way to avoid disputes over the tenancy agreement is to be choosy when it comes to tenants. Look at the previous rental history as well as credit to determine if the prospect is both tenant-worthy and credit-worthy before agreeing to execute a tenancy agreement.

This post is provided by Tenant Verification Service, Inc., helping landlords reduce the risks of renting with fraud prevention tools that include Tenant Screening, Tenant Background Checks, (U.S. and Canada), as well as Criminal Background Checks, and Eviction Reports (U.S. only).

Click Here to Receive Landlord Credit Reports.

Disclaimer: The information provided in this post is not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.

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