Thursday, February 2, 2012

Converting to month-to-month

A few weeks ago, I realized that we are soon approaching the end of our tenant's 1-year lease agreement.

So I investigated what our options are when a lease expires.

The tenant and the landlord can negotiate a new contract with a fixed term.  But the landlord cannot force the tenant into a new contract.  So if no agreement is reached by the last day of the existing lease, then the lease automatically converts to a month-to-month agreement.  The only thing I'm a little unclear about, is what happens if the existing tenant wants to stay, but the landlord wants them to leave.  Is that considered a lack of agreement, and therefore conversion to month-to-month?  Or does the landlord have the right to force the tenant out?  Ontario law generally favours the tenant, so I'm not sure about those circumstances.

Anyway, I presented the option to my tenant as:

  1. We could start a brand new fresh 1-year lease agreement, in which case we would not increase the rent over that period.
  2. We can switch to a month-to-month lease, but we do have the right to raise the rent at any point now.
  3. He can leave, but we would require 60 days notice.  Even if he's leaving at the end of our agreed 1-year lease term, he would still have to state his intent to not stay.

The tenant's response is that he thinks he'll stay 6 months to a year, so the best option for him is to switch to month-to-month.

So far, we've been very happy with this tenant, and we'd be happy to have him stay.  Since he's thinking he might stay up to a year, I'm debating offering him $10 or $20/month off his current rent if he does sign another 1-year lease?  This way, I'm not stuck finding a new tenant in the middle of next winter, and he saves a little off his rent.  The way rents are increasing in that neighbourhood, I imagine that the discounted rent would be one of the best prices he can find in the area.

I haven't presented this offer to him yet, but I'll let you know if I do!

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