Representing a buyer purchasing a tenanted property in Ontario is not the same as a standard residential purchase. The buyer is not just buying a home — they may be inheriting a tenancy, a below-market rent, and a timeline they did not expect. Here is what every buyer’s agent needs to understand before their client signs.
1. The Tenancy Transfers to the Buyer on Closing
When a tenanted property closes, the buyer becomes the new landlord. The existing lease terms, rent amount, and tenant rights all carry over automatically under the Residential Tenancies Act. The buyer cannot simply ask the tenant to leave after closing — they have the same rights they had with the previous owner.
2. Vacant Possession Is Not Automatic
Even if the vendor served an N12, the tenant can dispute it at the LTB. A hearing could be scheduled months out — potentially past the closing date. Buyer’s agents should understand the realistic timeline and ensure appropriate conditions are in the APS to protect the buyer if vacant possession is not delivered.
3. The Rent Amount May Be Significantly Below Market
Long-term tenants often pay rent that is far below current market rates. Ontario’s rent increase guidelines cap how much rent can be raised annually. If the buyer plans to rent the property after closing, understanding the actual rent — and what they are permitted to charge — is essential to the investment decision.
4. The Last Month’s Rent Deposit Should Transfer
The vendor’s obligation to hold a last month’s rent deposit transfers to the buyer at closing. If this is not addressed in the APS, the buyer may find themselves unable to collect another LMR from the tenant while also not having received the one the vendor held. Make sure the APS addresses the LMR transfer explicitly.
What Comes Next
Stonegate advises buyers and their realtors on what to expect with tenanted property purchases. Book a free call at https://calendly.com/stonegatelegalservices/20min.
▶ Watch: Top 5 Realtor Mistakes When Selling Tenanted Properties in Ontario
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