N12 Notice: How to Promise Vacant Possession (And What Goes Wrong)
When a tenanted property sells, the buyer often wants vacant possession on closing. The N12 can deliver that, but only if the property qualifies, the timing works and the paperwork is right. Here is what sellers, buyers and agents need to know.
Key points
- A purchaser N12 can only be used for a complex with no more than 3 units, or a condo unit.
- There must be a signed agreement of purchase and sale before the N12 is served.
- The selling landlord serves the N12 and owes the tenant one month’s rent, regardless of the notice length.
- If the tenant doesn’t leave, a hearing can push vacant possession past closing.
Promising vacant possession in an agreement of purchase and sale is a commitment the seller has to deliver. With a tenant in place, the N12 is the legal tool, but it has limits that catch sellers and agents off guard.
Does the property qualify?
A purchaser N12 can only be served for a residential complex with no more than three units, or for a condominium unit. There must be a signed agreement of purchase and sale first. The Board can refuse the application if it isn’t reasonably certain the sale will close, and it will look closely at sales that look like a pretext, such as a transfer to a relative or a sale far below market value.
Who serves it and who moves in
The current landlord serves the N12 on the purchaser’s behalf. The person moving in must be the purchaser, their spouse, a child or parent of either of them, or a caregiver, and they must genuinely intend to live there. The selling landlord owes the tenant one month’s rent, or another acceptable unit, by the termination date. For purchaser N12s, the 120-day exemption doesn’t apply.
Selling with a tenant in place? We’ll map the N12 timeline to your closing date.
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The termination date must be at least 60 days after service and on the last day of a rental period or fixed term, plus mailing time if you mail it. If closing is sooner than that, the N12 alone can’t deliver vacant possession. Build in time for a possible hearing.
If the tenant stays
The tenant doesn’t have to file anything to stay past the termination date. The landlord has to file an L2, with an affidavit or declaration from the person moving in and a copy of the agreement of purchase and sale given to the tenant and the Board at least 7 days before the hearing. The hearing date may fall after closing. Plan for this in the agreement.
Bad-faith risk
If the purchaser or their family doesn’t move in within a reasonable time, the former tenant can file a T5 within one year of moving out. Both the selling landlord and the purchaser can be named, and the Board can split liability between them. Remedies include rent differences, moving costs, up to 12 months’ rent in general compensation and an administrative fine.
The N11 alternative
If the tenant is willing, a negotiated move-out recorded on an N11 is often faster and more certain than an N12. Many sellers serve a valid N12 and negotiate at the same time. See the realtor’s role in cash-for-keys.
Frequently asked questions
Can a purchaser N12 be used for a fourplex?
No. Purchaser N12s are limited to complexes with no more than three units, or condo units.
Who pays the tenant’s compensation in a sale?
The landlord who served the N12, usually the seller. It must be paid by the termination date.
Does the 120-day rule apply to purchaser N12s?
No. Purchaser N12s always require one month’s rent compensation or another acceptable unit.
Can I serve the N12 before the agreement is signed?
No. There must be an agreement of purchase and sale first.
Who is liable if the buyer never moves in?
The former tenant can name both the seller and the purchaser in a T5, and the Board can split liability.
About Robert Di Lisi
Robert is a paralegal licensed by the Law Society of Ontario and co-founder of Stonegate Legal Services, a landlord-only firm. He leads client intake and speaks at landlord seminars across the GTA. Like the rest of the team, he is a landlord himself.
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