Well I spoke too soon.
After my last post, I realized we've got a pretty great tenant. The rent has been paid right on time each month, and other than that, I go by the principle that no news is good news.
And then a few weeks later, we got some news - our tenant had decided to break the lease. The reasons presented were due to changes in the tenant's personal circumstances, and I felt that it was not reasonable to try and convince her otherwise, so decided to work with her to make this as mutally agreeable as possible.
I was initially disappointed, frustrated and a bit scared. Would we be left stranded? How long would we have to carry two mortgages without the help of the rental income? I had to keep reminding myself that by having a 1-year lease, we had room to negotiate. I had a discussion with the Landlord and Tenant Board of Ontario, which was actually quite helpful. The person I spoke with did not have to read a canned response to my question, which is what I expected. Instead, she was frank and basically said "if you don't work with your tenant, they may just stop paying rent, and then you have an even bigger issue".
So we decided to work with the tenant. We met with her right away, and all came to a mutual agreement, which we put in writing and all signed. Keeping in mind that it was just about to be Christmas and holiday season, we felt that finding a new tenant could be difficult, at least until the new year. I don't imagine many people move at that time. We agreed that she would stay for three more months, while we actively looked for a new tenant. This would result in an overall lease term of 6 months, which we felt was a fair compromise on what was originally a 1-year lease. She would have to come up with only 2 more months rent, since we had a last month's rent deposit. Additionally, what the minimum amount of time was that she would need to get packed up and move to her new accomodations (which were flexible), and that was about a week or two. So we also agreed that if a tenant was found earlier, we could excuse her from her lease earlier, still allowing her a few weeks to make her move.
We posted the condo on both craigslist and Kijiji before we even went to meet with her, so we are very very actively looking for a new tenant.
And thus, the search begins again!