PEI Mutual Agreement to End a Tenancy: How It Works and What to Put in Writing

Not every tenancy ends through a formal eviction notice. When both landlord and tenant agree it is time to move on, a mutual agreement to end the tenancy avoids the statutory notice periods, dispute windows, and compensation requirements that come with a Form 4A or Form 4B notice.

The Residential Tenancy Act requires the parties to make a written agreement to end a tenancy. If the arrangement falls apart — the tenant changes their mind, or you disagree about the terms — a clear written agreement is the evidence of what was agreed.

What the Law Allows

The Residential Tenancy Act recognizes that landlords and tenants can agree to end a tenancy on terms they set together. A mutual agreement is not a notice — it sits outside the Form 4A/4B framework entirely. There is no prescribed government form for it, no minimum notice period required by statute, and no mandatory compensation triggered (because the tenant is agreeing voluntarily, not being displaced).

This makes mutual agreements significantly faster than the formal notice process, where personal-use notices require four months and renovation notices require six.

What to Include in the Agreement

A written mutual agreement should contain, at minimum:

• The names of all parties — every landlord and every tenant on the lease
• The civic address of the rental unit, including any unit number
• The agreed move-out date — specific and unambiguous
• What happens with the security deposit — returned in full, applied to final rent, or subject to inspection and potential claim
• Any agreed financial terms — whether the landlord is paying moving costs, waiving last month's rent, or the tenant is paying outstanding arrears
• Acknowledgment that the agreement is voluntary — both parties understand they are not obligated to agree and that the tenant is giving up their right to remain in the unit
• Signatures and date from all parties

Keep a signed copy for your records. If a dispute arises later, this document is your evidence that the tenancy ended by consent, not by improper self-help eviction.

When Mutual Agreements Make Sense

Both parties want to move on. The tenant has found a new place and does not want to wait out a full notice period. The landlord needs the unit back but does not have a statutory ground for a no-fault notice.

The relationship has broken down but does not meet the legal threshold for cause. Personality conflicts, minor disagreements about maintenance, or a tenant who is technically compliant but difficult to work with — none of these are grounds for a Form 4A cause notice. A negotiated departure is sometimes the practical solution.

You are planning renovations or a sale but the timeline is flexible. Rather than serving a six-month renovation notice or waiting for a binding sale agreement to serve a purchaser-use notice, a mutual agreement with a timeline that works for both parties can simplify the process considerably.

When They Do Not Work

The tenant does not actually want to leave. A mutual agreement cannot be coerced. If a landlord threatens, intimidates, or harasses a tenant to deter them from applying under the Act, or in retaliation for seeking a remedy, Section 106 makes that an offence punishable by a fine of up to $25,000.

The tenant agrees verbally but nothing is signed. Verbal agreements are difficult to prove and easy to deny. If the tenant stops cooperating after a verbal agreement, you are back to the formal notice process with no credit for time already passed.

The tenant signs but does not actually vacate. A mutual agreement is a contract, not an order. If the tenant remains past the agreed date, you cannot change locks or remove their belongings. You would need to file a Form 2B application with the Rental Office, presenting the signed agreement as evidence that the tenancy should have ended. This still takes time, but a signed agreement makes your Form 2B case straightforward.

The Security Deposit Question

Many mutual agreements include terms about the security deposit. If you agree in writing that the deposit will be returned in full on the move-out date, return it by that agreed date. The agreement does not remove the statutory 15-day deadline; it sets an earlier return date.

If the agreement is silent on the deposit, the standard rules apply: you have 15 days after the tenancy ends to return the deposit plus interest or file a Form 2B claim against it. Missing this deadline triggers the double-deposit penalty.

Include deposit terms in every mutual agreement to avoid ambiguity.

Mutual Agreement vs. Formal Notice

For a complete walkthrough of both the mutual agreement path and every formal notice ground, the Ending a Tenancy in PEI guide covers the full process from initial decision through enforcement.

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