Inheriting tenants and want to update lease agreements

[Michala Vander Ploeg]

My husband and I have recently purchased our first rental property, a triplex with all three units currently occupied. The property closes march 31st, so we have a bit of time yet to get things in order. I'm wondering how to go about new leases/honouring previous leases. All three tenants have a slightly different situation when it comes to their previous agreements. Tenant 1: is currently 6 months into their 1 year lease, and is paying above market, and last month's rent will be transferred upon closing. This is an ideal situation, and we will continue to honour their current agreement with previous owner, and will likely give them the option to renew at the end of the 12 months, or transition to m2m) Tenant 2: is currently on a m2m lease, and is paying market rent. Last month rent will be transferred to us upon closing. Tenant 3: has a m2m verbal agreement, pays $100 below market rate, and does not have last month's rent previously paid. What are my options for tenant 2 and 3? Can I ask them to sign a new lease (whether it be yearly or m2m) with new conditions? Is this something they can decline? And if they decline what are my options going forward? For tenant 3, is it a good idea to raise his rent as soon as we take ownership? Or would it be a better idea to wait a while, that way we can aim for a smooth transition when we take ownership. I will likely be posting again in the weeks to come in order to pick your brains! :) Thanks M

[Thomas S.]

I will assume your rentals are in Ontario. As such you have very limited rights as a landlord to change anything. You need to immediately sit down a learn the Ontario codes and attend a few local LTB hearings to get a feel for how they work. Everything about the RTA and LTB regulations is on line.

Your tenants leases are cast in stone for as long as they wish to remain as tenants unless they voluntarily agree to any new lease you offer. It is their choice to keep the existing leases, written or verbal, and the only thing you can change is the rent. Assuming their rent has not been increased in the past 12 months you may increase any tenants rent by the allowable amount.

You must give 90 days notice for a rent increase, the N1 form is on line in the LTB site and the rent increase allowable for 2017 is 1.5%.

The only way to bring a tenants rent to mark is with a new tenant and you do not have the right to terminate any tenant other than for just cause as defined by the RTA and LTB. Tenants are for life unless they decide to leave or you have just grounds to evict. Eviction is extremely difficult to achieve.

You will need to get copies of your tenants leases and esstopal letters from each tenant before you take ownership.