Lease Renewal Notice: Your Guide for the Renewal Period
Avec la fin d’année, il est temps pour les gestionnaires immobiliers de préparer leurs avis de renouvellement de bail ! En effet, avec des baux se terminant majoritairement le 30 juin, il est temps de planifier ces avis afin de respecter le délai légal.
To help you prepare, we discuss notice of changes, rent increases, and your rights and responsibilities.
Lease Renewal, Administrative Housing Tribunal
In Quebec, the management of residential leases is governed by the Tribunal Administratif du Logement (formerly the Régie du logement).
This law clearly defines rules regarding lease renewals, including those governing rent increases or lease modifications.
Note that a residential lease is automatically renewed when it expires. Thus, if you forget to send a renewal notice to your tenants, their lease will be renewed under the same conditions. If you wish to make changes to the lease, such as a rent increase, you must send a renewal notice.
It is crucial that the renewal notice not only meets the deadlines but also follows the format and content prescribed by the law. Failure to meet these requirements can lead to legal consequences, including the invalidity of the notice or disputes with tenants.
Timeline for Submitting a Notice of Lease Condition Modification
The landlord or property manager is required to send a lease renewal notice to tenants within a specific timeframe before the end of the current lease. The timeframe depends on the type of lease.
For example, for a lease of 12 months or more, the notice must be sent 3 to 6 months before the end of the lease. For a lease of less than 12 months and for an indefinite-term lease, the notice must be sent 1 to 2 months before the end of the lease period.
Sending and Proof of Receipt of Lease Renewal
To avoid any ambiguity or dispute regarding the receipt of the lease renewal notice, it is essential to adopt a sending method that allows confirmation of receipt by the tenant. Here are some recommended methods to ensure reliable proof of receipt:
- Sending by registered mail: One of the safest methods is to send the notice by registered mail. This method provides traceability and proof of receipt, as the tenant must sign to confirm receiving the document.
- Hand delivery with acknowledgment of receipt: Handing the notice directly to the tenant is also a viable option. In this case, it is advisable to ask the tenant to sign an acknowledgment of receipt. This provides tangible proof that the tenant has received the notice.
- Use of electronic solutions: Tools like electronic leasing can not only send the notice electronically but also track and confirm the exact moment when the tenant opened the delivery.
We advise you to carefully evaluate the costs (in time and money) of each of these options to make an informed choice based on your needs. Some may take more time and/or have a higher cost to achieve the same result.
What Should a Lease Renewal Notice Contain?
To be valid in the eyes of the Tribunal Administratif du Logement, the lease renewal notice must contain the following elements:
1. Rent Amount
The rent amount must be clearly stated to allow the tenant to make an informed decision.
2. Modification of Lease Duration
This allows the tenant to understand the duration of the commitment they are about to renew.
3. Response Time of the Tenant
Be cautious; your rent increase notice may not be valid if it implies that the tenant cannot refuse it.
4. Other Lease Modifications
These modifications must be detailed so that the tenant fully understands the proposed changes.
How to Determine a Rent Increase?
As there is no fixed rate for rent increases, it is important to consider certain factors to avoid an unjustified increase.
Rent increase must be motivated by various elements such as:
- Energy costs (heating costs)
- Municipal or school taxes
- Work carried out in the building
- Maintenance costs
The HOPEM management software offers a calculation tool based on the Tribunal Administratif du Logement rules to calculate the amount of the increase.
You can also use the Tribunal Administratif du Logement’s calculation tool to help with rent setting and propose an acceptable increase.
Can the Tenant Refuse a Rent Increase?
The proposed rent increase (or other lease modification) can be refused by the tenant within the specified period in the modification notice. Two options are then possible: they can decide to leave the property or refuse the modifications while staying in the property.
In the second case, three options are available to you:
- If you do nothing, the lease will be renewed without modification.
- You can negotiate with the tenant to reach an amicable agreement.
- You can ask the Tribunal Administratif du Logement to set the rent amount. Be aware that you have one month after receiving a refusal notice to do so.
Mistakes to Avoid
- Neglecting to send the notice on time: Not adhering to the deadlines prescribed by law for sending the lease renewal notice can lead to its invalidity.
- Forgetting key information in the notice: Omitting essential details such as the new rent amount, modifications to the lease duration, or the response time granted to the tenant.
- Lack of clarity in terms: Drafting the notice in an ambiguous or complex manner, causing confusion among tenants, can lead to its invalidity.
- Ignoring the need for proof of receipt: Not obtaining official confirmation of the receipt of the notice by the tenant, which can be problematic in case of disputes.
- Not considering modifications: Failing to clearly inform the tenant of additional changes to the lease, such as the addition of parking or storage space.
