4 Things Buyer’s Agents Must Know About Tenanted Properties in Ontario
Buying a tenanted property isn’t a standard purchase. Your client may be inheriting a tenancy, a below-market rent and a timeline they didn’t expect. Here is what every buyer’s agent should understand before the client signs.
Key points
- The tenancy transfers to the buyer on closing, on the same terms.
- Vacant possession isn’t automatic, even if an N12 was served.
- Rent increases are capped by the guideline for most units first occupied before November 15, 2018.
- A new landlord can’t require another deposit if the tenant already paid one.
The earlier these points come up, the better your client’s decision will be.
1. The tenancy transfers on closing
The buyer becomes the landlord. The lease, the rent and the tenant’s rights all continue. The buyer can’t simply ask the tenant to leave after closing. They need a legal reason and the right notice.
2. Vacant possession isn’t automatic
The seller can serve a purchaser N12 only after a signed agreement, and only for a complex with three units or fewer or a condo unit. The tenant gets at least 60 days’ notice and doesn’t have to leave without an LTB order. If they stay, the hearing may fall after closing. Your client or their family must genuinely intend to move in.
Client buying a tenanted property? We can review the tenancy before they firm up.
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For most units first occupied as a residence before November 15, 2018, rent increases are capped by the annual guideline and can only happen once every 12 months, with 90 days’ written notice. Units first occupied after that date are generally exempt from the guideline, but the 12-month and 90-day rules still apply. Confirm which applies before your client relies on a rent increase. See rent-control-exempt units.
4. The rent deposit
A new landlord can’t require a rent deposit if the tenant already paid one to the previous landlord. If the seller holds a last month’s rent deposit, the agreement should deal with it and the interest owed, or your client may end up owing a credit they never received.
Frequently asked questions
Does my client inherit the tenant?
Yes. The tenancy continues on the same terms after closing.
Can the seller guarantee vacant possession?
Not on their own. If the tenant doesn’t leave, an LTB order is needed.
Can my client raise the rent to market after closing?
Not for most units first occupied before November 15, 2018, which are capped by the guideline.
Can my client collect a new last month’s rent deposit?
Not if the tenant already paid one to the previous landlord.
Who can move in under a purchaser N12?
The buyer, their spouse, a child or parent of either, or a caregiver.
About Bita Di Lisi
Bita is the lead paralegal at Stonegate Legal Services and is licensed by the Law Society of Ontario. She represents Ontario landlords at the Landlord and Tenant Board and teaches landlords and investors about notices, LTB timelines and the mistakes that cost months.
Representing a buyer on a tenanted property?
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Book your free 20-minute call →or call 416-937-2766We represent landlords across Ontario, including Toronto, Mississauga, Brampton, Hamilton, Ottawa, Vaughan, Markham, Oakville and London.
