When potential tenants appear to be a great fit for your property, but don’t have evidence of their rental history, it can raise concerns. In these instances, our property management team often suggest trial leases. There is often good reason for a person’s lack of rental and employment history, for example:

  • the applicants are new to the city or country
  • they are students
  • they are moving out of their parent’s home for the first time (typically younger applicants)
  • they are going through a separation or a divorce
  • they have been on extended travels.

Your first impression is important, however, a good impression alone is not enough to take the risk of renting out your apartment to an applicant that does not have proof of being a reliable tenant. This is why a trial lease may be a good solution for you.

What Is A Trial Lease?

A trial lease is a lease that has a fixed term and does not carry on to a month to month tenancy after the end of the fixed term date.

*Important note, when doing a trial lease, you must check the correct box on the lease to ensure the tenancy does not carry over to a month to month tenancy. Make sure the tenants have initialed the correct box next to this, to confirm they understand.*

You would then write an addendum to the lease that would specify what the trial lease involves. The addendum, for the most part, would cover the following:

    • the term and dates of the fixed lease
    • the fact that a rent review will be completed, plus the date it will be completed by (should be at least a month in advance of the lease end date to ensure the tenants have time to relocate if they do fail the rent review)
    • the items that will be assessed during the rent review. These are the items that will determine whether or not a new lease will be completed with the tenants for a second term
    • what will happen if the tenants fail any of the items on the trial lease
    • what will happen if the tenants pass the trial lease (including the new lease term and dates on the renewal lease)
    • the fact that the terms, rent and inclusions on the original lease will be the same on the renewal lease.

You should also include a statement that the only reason the lease would not be renewed would be because of the failure of any one of the listed items noted on the rent review.

A trial lease term would typically be six months, with the rent review on or before the first day of the final month. In the review you would want to include:

  • an overview of rental payment history, including ensuring there is no outstanding rent owed and rent has always been paid on time
  • a review with the strata to ensure that no fines or complaints have been issued against the tenants
  • an in-suite inspection.

If the tenants pass all three of the above items, you would then take them onto a second six month lease term.

The Benefits Of A Trial Lease

Our property managers have seen that doing a trial lease can open you up to some of the best tenants, who may just not have the information you would normally require from an applicant. It also gives those tenants the opportunity to start building their rental history in the city, which will often result in a great appreciation from them and they are likely to have an even higher level of respect for your property.

Very Important – Never do a trial lease simply because you are not receiving any good applications. A trial lease will not do you any favours in this type of situation. Putting a bad tenant into your unit on a trial lease does allow you to get rid of them in 6 months, but, by that point there may be damages to the apartment, fines from strata or unpaid rent. Trial leases are ONLY for those applicants that you really feel would make good tenants, but are unable to verify any rental history.

If you aren’t receiving quality tenant applications, time should be taken to figure out why, rather than opting for a trial lease with a mediocre tenant. Perhaps it could be worth considering doing some work to your property. Read our property management team’s tips on knowing when to update your property.

Using a property manager to handle trial leases can help you ensure you have the correct addendum written in and that the rent review and lease renewal are completed accurately. Contact our Vancouver property management office today to find out how we can help place quality tenants into your rental property.