Understanding Lease Agreements in Ontario: What You Need to Know

Understanding Lease Agreements in Ontario: What You Need to Know

In Ontario, a lease agreement isn’t just a formality—it’s a legally binding contract governed by the Residential Tenancies Act (RTA). Whether you’re a landlord or a tenant, understanding your lease is essential to avoid disputes and protect your rights.

1. What Is a Lease Agreement?

A lease agreement outlines the terms under which a tenant rents a property. In Ontario, most residential leases are required to use the standard lease form, which helps ensure consistency and transparency for both parties.

2. Key Terms to Pay Attention To

Lease Term
Leases can be:

• Fixed-term (e.g., one year)
• Month-to-month (automatically applies after a fixed term ends, unless renewed)

Rent & Payment Rules

• Rent increases are regulated and typically allowed once every 12 months
• Landlords must provide 90 days’ written notice for increases
• Some newer properties may not be subject to rent control—this is critical to verify

Security Deposit (Important in Ontario)
Ontario does not allow security or damage deposits.

• The only deposit permitted is a last month’s rent deposit
• It must be applied to the final month of tenancy—not for damages

If a landlord is asking for a security deposit, such as an additional flat rate fee, or an additional month of rent, they are doing so illegally. When you work with a REALTOR® to lease a property, we can help you avoid situations that aren't legal! 

Maintenance Responsibilities

• Landlords are legally responsible for maintaining the property in a good state of repair—even if the lease says otherwise
• Tenants are responsible for keeping the unit clean and reporting issues promptly

Entry by Landlord

• Landlords must give 24 hours’ written notice before entering (with limited exceptions like emergencies)

Ending the Lease

• Tenants must typically provide 60 days’ notice
• Landlords can only end a tenancy for specific legal reasons (e.g., personal use, non-payment), following strict processes through the Landlord and Tenant Board
• Selling a home does NOT automatically end a tenancy. If your lease (1 year, for example) is still in effect, the new owner must assume your tenancy. If they intend to move into the home once your lease is completed, they must follow proper procedures, issuing the proper forms, and providing you with sufficient notice along with 1 month rent.

3. Common Mistakes to Avoid

Signing Non-Standard or Outdated Leases
If a landlord doesn’t provide the Ontario standard lease, tenants can request it—and even withhold rent (legally, under specific conditions) until it’s provided.

Agreeing to Illegal Clauses
Some clauses (like “no pets” in most cases or requiring damage deposits) are not enforceable under Ontario law—even if they’re written in the lease.

Relying on Verbal Agreements
Always get everything in writing—especially repairs, inclusions, or special terms.

4. When to Get Help

If you’re unsure about your lease or facing a dispute, the Landlord and Tenant Board is the governing body that handles residential tenancy issues in Ontario. Legal clinics and real estate professionals can also help guide you.

5. Protecting Yourself

For Tenants:
Understand your rights—Ontario law strongly protects tenants, but you need to follow proper notice and care requirements.

For Landlords:
Use the standard lease and follow RTA rules closely. Trying to shortcut the process can lead to delays, fines, or dismissed applications.

Final Thought

Ontario’s rental rules are designed to balance fairness for both landlords and tenants—but only if you understand them. A well-structured lease, grounded in the RTA, sets the foundation for a smooth and professional rental experience.

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If you need help leasing a new home, please contact me!