The real estate transaction may be firm, but the landlord-tenant situation is still very much in progress. Realtors who think their job is done after the deal closes on a tenanted property may be setting their clients up for problems — and themselves up for complaints.
The Closing Does Not End the Tenancy
When a tenanted property closes, the tenancy transfers to the new owner automatically. The existing lease terms, rent amount, and tenant rights all carry over. The new landlord inherits whatever situation the previous landlord left behind — including any disputes or maintenance issues in progress.
If Vacant Possession Was Promised and Not Delivered
When a vendor promised vacant possession but could not deliver it, the deal may still close under the existing tenancy. The purchaser may have a legal claim against the vendor. Realtors who advised the vendor on how to handle the tenant without legal guidance may have created additional exposure.
The New Owner’s First Steps
After closing on a tenanted property, the new landlord should: notify the tenant in writing of the ownership change and where to pay rent, review the existing lease for any terms that may have been missed, confirm whether last month’s rent deposit was transferred, and check whether any LTB applications are in progress.
LMR Deposit Transfer
The vendor is required to transfer the last month’s rent deposit to the purchaser at closing. If this was not done, the new owner cannot demand another LMR deposit from the tenant. Ensure your purchase agreement addresses this.
Guiding Clients on What Comes Next
The most valuable thing a realtor can do post-closing on a tenanted property is connect their client with a paralegal who handles landlord-tenant matters. Whether the client wants to continue the tenancy, eventually use the N12, or negotiate an exit, getting the right advice early prevents costly mistakes later.
What Comes Next
Stonegate works with realtors and new property owners to manage the transition after a tenanted property sale. Book a free call at https://calendly.com/stonegatelegalservices/20min.
▶ Watch: Tenant Relocation When Landlords Sell: Understanding Your Rights
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