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What Is a Lease Agreement? A Plain-English Explanation

A lease agreement is one of the most important documents you'll ever sign. Here's exactly what it is, what it must contain, and why it matters.

What Is a Lease Agreement?

A lease agreement is a legally binding contract between a tenant and a landlord. It sets out the terms under which the tenant can occupy the rental unit — including how much rent is owed, when it's due, how long the tenancy lasts, and the rules both parties must follow.

Once signed, a lease is binding on both parties. The landlord cannot change the terms mid-lease (for example, raise the rent outside of the permitted annual increase), and the tenant cannot unilaterally leave without following the proper notice process.

In plain terms: it's the rulebook for your tenancy, and both sides have agreed to follow it.

Key Elements of Every Lease

Every residential lease should cover the following core terms:

  • Rent amount: The total monthly rent, including any separate charges for parking or storage.
  • Payment date: When rent is due each month (typically the 1st) and the accepted payment methods.
  • Lease duration: Whether the lease is fixed-term (e.g., one year) or month-to-month.
  • Notice periods: How much notice each party must give before ending the tenancy.
  • Rules about pets: Whether pets are permitted — though note that no-pets clauses are void under Ontario's Residential Tenancies Act.
  • Rules about guests and occupants: Who is permitted to live in or regularly stay at the unit.
  • Subletting: Whether and how you may sublet or assign your lease.

Fixed-Term vs Month-to-Month Leases

Fixed-Term Lease

A fixed-term lease locks in the tenancy for a set period — most commonly one year. During that time, neither party can simply end the agreement without cause; both sides have security.

  • Rent is locked in for the term
  • Harder to leave early without consequences
  • Automatically becomes month-to-month at the end

Month-to-Month

A month-to-month agreement renews automatically each month. Either party can end it by giving proper notice — typically 60 days for tenants in Ontario.

  • More flexibility to leave with 60 days notice
  • Landlord can also end tenancy with proper notice
  • Common after a fixed term expires

What Makes a Lease Legally Binding in Ontario?

For a residential lease to be legally binding in Ontario, it must meet the requirements of the Residential Tenancies Act, 2006 (RTA):

  • 1

    It must be signed by both the landlord and the tenant.

  • 2

    It must use Ontario's Standard Lease form for most residential tenancies (required since April 30, 2018). Landlords who don't use it can be required to provide it within 21 days of a tenant's request.

  • 3

    It cannot contain clauses that waive rights granted by the RTA — those clauses are void even if both parties sign them.

  • 4

    It must accurately identify the parties and the rental unit.

Important: Even if you sign a lease with an illegal clause (e.g., a damage deposit, a no-pets rule), that specific clause is void — but the rest of the lease remains valid.