Draft a lease agreement with confidence: 20 best practices to avoid mistakes!

Signing a lease agreement is a key step to ensure a harmonious relationship between the landlord and tenant. Daily, however, CORPIQ consultants come across mistakes that are made right from the drafting of the lease and that can lead to legal and financial complications for the landlord. To avoid these issues, it’s essential to adopt best practices that ensure a clear, legally compliant contract that protects the landlord’s interests while respecting their obligations toward the tenant. Here are 20 essential tips to draft your lease agreement with confidence.

1. Conduct a pre-rental survey

Before signing a lease, it’s strongly recommended to conduct a pre-rental survey to check the applicant’s financial solvency, credit and/or criminal history, and rental behavior. Identity theft cases have been increasingly common in recent years. Therefore, it’s a good practice to ask to see two photo IDs to confirm the applicant’s identity (e.g., driver’s license, health insurance card, passport, etc.). You can use the "Rental Application" form from CORPIQ, available here, or visit propriolocation.com for the free electronic version.

 

2. Properly identify the parties to the lease

Make sure to accurately list the name(s) of the landlord(s) and tenant(s) on the lease. If the landlord is represented by someone else, don’t forget to indicate this information at the bottom of Section A of the lease. Be careful: the term "landlord" is often used interchangeably with "property owner," but they are not always the same person. The landlord is the one managing the property, while the owner holds the title deeds.

 

3. Specify the use of the property

In Section B, specify that the property is for residential use only, if applicable. However, if desired, non-residential use may be allowed for up to one-third of the property’s space. If you opt for this, make sure to verify the local regulations and zoning beforehand and clearly specify it in the lease. If furniture or appliances are included in the rental, take photos to document their initial condition.

 

4.  Choose the correct lease term

When drafting the lease, it is important to carefully choose the lease term in Section C, as this will impact both the landlord’s and tenant’s rights and obligations, including legal deadlines. A lease can be fixed-term or indefinite, and each option has its own particularities. To better understand the legal implications and deadlines, refer to the table on the back of page 4 of the lease.

 

5. Include a rent adjustment clause

For leases longer than 12 months, it’s highly recommended to include an annex with a rent adjustment clause. This clause outlines future rent increases, specifying the date and amount (e.g., an annual fixed increase or one indexed to the CPI). It ensures transparency for the tenant while protecting the landlord’s interests in the face of inflation or rising operating costs. However, it’s important to draft this clause clearly and ensure it complies with legal standards. If in doubt, it may be wise to have it reviewed by a legal expert.

 

6. State the rent payment date

In Section D of the lease, check the box stating that rent is due on the 1st day of each month. If you require the first month’s rent in advance, make sure to specify the payment date for it. The payment date for the first term of the lease may differ from subsequent months. It’s advisable to collect the first month’s rent at the time of signing the lease.

It's also important to understand that the lease forms an indivisible whole: it includes not only the dwelling, but also all its services, inclusions and accessories, such as snow removal, internet service, parking, a shed or access to a yard. These elements must be integrated into the lease and included in the rent. Attempting to separate them with the aim of billing them separately, increasing the price independently, or being able to unilaterally withdraw them during the course of the lease could be deemed invalid. To ensure the validity of the agreement and avoid any ambiguity, it is essential that all rental components be clearly indicated in the lease or in an appendix, and that they be considered an integral part of the lease.

 

7. Specify the methods and location of rent payment

Also in Section D, you should specify the agreed-upon method of rent payment. It’s best to choose only one method to avoid future disputes. If the tenant agrees to pay rent with postdated checks, ensure they initial the appropriate section.

No matter the payment method, it’s strongly recommended to clearly state a fixed location for the payment. For example, you can specify that rent is to be delivered to the landlord's home (without a fixed address in case of relocation). This avoids the need for scheduling monthly meetings with the tenant and simplifies payment management. Even if the tenant pays via e-transfer or postdated checks, it’s still best to list a specific address for rent delivery to avoid any confusion. This way, in the event of a technical problem or deferred payment, it's up to the tenant to come and hand over the rent on the first day of the month. In the absence of a specific address, the general rule is that the landlord is responsible for collecting the rent from the tenant.

 

8. Provide building regulations

Attach a copy of the building regulations to the lease and provide them to the tenant before signing. This will help clarify and further define the tenant's obligations. You can find the building regulations suggested by CORPIQ here. If the building is a condo, also provide the condo regulations in the same way and timeline.

 

9. Plan and outline any work to be done during the lease

If work is planned during the lease term, it’s recommended to specify a realistic and prudent completion date. Also, clearly define the nature of the renovations and set execution deadlines to avoid ambiguity. If the work requires a contractor, avoid committing to a specific date unless you have a formal written agreement with them. Delays and unforeseen events are common in construction, so it’s better not to promise unguaranteed terms.

 

10. Clarify additional services and special conditions

At the bottom of Section E of the lease, you’ll find a section titled "Other Services, Conditions, and Restrictions." This section offers limited space for detailing specific agreements between the landlord and tenant. To better define these elements and ensure that all conditions are clear and well understood, it’s highly recommended to add an annex to the lease.

This appendix can be used to specify any conditions to which you want the tenant to adhere and for which there isn't enough space in the standard lease. For example: a no-smoking clause, an agreement on grounds maintenance, a ban on barbecues (especially if prohibited by the city), or how to communicate by certified e-mail. In short, the appendix allows you to better reflect the reality of your agreement, while reinforcing the validity of these commitments. In our templates, you can also add the lease number to which the appendix refers, for greater clarity and better traceability of the agreement. You can also refer to the appendices directly in the lease. Don't forget to reference the specific lease in your own annexes when preparing them.

 

11. Address pets

If you wish to restrict pets, it’s better to check the box that prohibits pets and specify any exceptions, if applicable (e.g., check "No" and specify "except for one cat").

 

12. Complete clause F if applicable

If your situation requires it, make sure to complete Clause F.

IMPORTANT – NEW REQUIREMENT FROM FEBRUARY 21, 2024

For a landlord to freely set the rent during the first five years, in accordance with the new law, the following conditions must be met:

• The lease must be signed after February 21, 2024, and the property must either be newly habitable or have changed its purpose from this date.
• A maximum rent notice must be completed and sent using the form available on the Administrative Housing Tribunal (TAL) website.

If these conditions are not met, the landlord cannot increase the rent at their discretion, even if Clause F is checked.

Of note:

• There is no set scale for the maximum rent. The landlord may enter any amount they wish.

• A change of use refers to the conversion of a commercial space into a residential unit (or vice versa).

• This clause does not apply to low-rent housing.

 

13. Complete section G – Lowest rent paid in the last 12 months

Don’t forget to complete Section G, which states the lowest rent paid in the 12 months prior to the lease being signed or the rent set by the Tribunal administratif du logement (TAL) during that period.

IF YOU OMIT THIS SECTION:

• Your tenant can contest the rent up to two months after the lease starts.
• You could be subject to punitive damages, especially if the omission is intentional.

If the property has been vacant for more than 12 months, you can indicate that this section is not applicable. However, when you sign the lease, you must give your tenant the notice of the last rent paid, available on the TAL website.

After preparing your lease, check that the amount declared is correct, because in the event of a false declaration, you could also be exposed to punitive damages.

Take the time to read this section of the lease carefully to understand its legal implications.

Note that you do not need to complete this section if you have completed section F.

 

14. Solidary responsibility for roommates

In Section H, it’s recommended that all roommates be held solidarily responsible for the lease and its renewals.

Why is it important?

• Each roommate will be liable to the landlord for the full obligations of the lease.
• In the event of non-payment of rent or damage to the dwelling, the landlord will be able to claim the full amount from a single tenant, without having to divide it with the other tenants.

To formalize this joint and several liability, you can check “yes” in section H (mentions 11 and 12) and ask the tenants to initial in the appropriate place.

 

15. Verify the guarantor’s signature

If there is a guarantor for the lease, ensure they sign as a guarantor. Before accepting a guarantor, it’s strongly recommended to check their credit history in the same way as the applicant.

Good to know:

• The guarantor is only liable for the first term of the lease (indicated in section C) when they only sign section H of the lease. To ensure that the guarantor remains jointly and severally liable with the tenants when the lease is renewed, we recommend that you have the guarantor sign a specific appendix, available on our website here. You can also fill out the CORPIQ Lease Annex directly, which guarantees that the surety remains in force for the entire term of the lease and its renewals. Download this document here.

If you wish, you can also get the guarantor to sign a solidarity clause, so that he or she cannot invoke the “benefit of discussion” provided for by law (which would enable him or her to demand that the landlord sue the tenant first).

 

16. Consent for communication via email

Have your tenant sign written consent for email communication. This allows you to easily send legal notices and other official communications electronically, saving you time and money.
If you use Pronotif, CORPIQ's notification tool, this document is indispensable for exchanges with your tenant, particularly for sending legal notices.

 

17. Security deposit – Be aware of regulations

By law, landlords cannot require a security deposit. However, a recent decision suggests that such a deposit may be accepted if the tenant voluntarily offers it.

In this case, it’s strongly recommended to obtain a written statement from the tenant confirming that they initiated this offer, in order to avoid any subsequent dispute. A sample declaration is available on our website, where you'll also find a warning as well as details of the decision in question and its legal implications.

You can consult it here.

 

18. Provide the lease and annexes to the tenant

Once the lease is signed, you must provide the tenant with a complete copy of the lease and all annexes within 10 days of signing.

Some legal deadlines only start to run once the lease has been delivered. Delaying may result in the landlord losing certain rights and remedies. It's best to take care of these matters quickly, to avoid any complications.

In fact, for this step, using the electronic lease offered by CORPIQ is a real advantage. By opting for this method, the lease and all its appendices are automatically delivered to the parties once the process has been completed, eliminating the need for additional exchanges or trips to deliver the documents in paper form. This not only saves time, but also makes managing your leases more efficient, and ensures that you have delivered all signed documents in compliance with the law.

 

19. Key handover – Conditions to be met

Keys should only be given to the tenant on the start date of the lease, as indicated in section C of the lease. It’s advisable not to allow the tenant to enter the property before the lease start date unless the lease is amended to reflect this.

 

20. Sign a move-in inspection report

On the first day of occupation, which should correspond to the lease’s start date, it’s essential to complete a move-in inspection report with the tenant to confirm the condition of the property at the time of their move-in. If there is no report, the property is presumed to have been delivered in good condition.

This formalizes the tenant's acceptance of the current conditions of the property, and helps avoid future disputes. It is also advisable to take detailed photos of the various rooms and features of the property, to provide visual evidence in the event of a dispute.

By following these tips, you'll be well equipped to conclude a lease with peace of mind. As each contract can have its own particularities, it's always best to put your agreements in writing in an appendix to the lease, to avoid any ambiguity. Prevention is better than cure! Our advisors are on hand to answer any questions you may have, and to support you if necessary. Remember: a well-drafted lease avoids litigation!