Selling a Tenanted Property in Ontario: How the N12 Works
Selling with a tenant in place is one of the most common reasons landlords use the N12. The rules are strict, and mistakes can affect both the seller and the buyer. Here is how the purchaser N12 works from agreement to closing.
Key points
- There must be a signed agreement of purchase and sale before you serve the N12.
- The complex must have no more than 3 units, or be a condo unit.
- The seller owes the tenant one month’s rent, or another acceptable unit, by the termination date. The 120-day exemption doesn’t apply.
- Plan your closing date around 60 days’ notice plus a possible hearing.
When a buyer wants to live in a property you are selling, you can end the tenancy with an N12 for purchaser’s own use. The buyer doesn’t serve it; you do, as the current landlord.
The purchaser’s own-use ground
The person moving in must be the purchaser, their spouse, a child or parent of either, or a caregiver for one of them. They must genuinely intend to live there. This ground only applies to a residential complex with no more than three units, or a condominium unit.
Who serves and when
You can only serve the N12 after you have signed an agreement of purchase and sale. The termination date must be at least 60 days after service and on the last day of a rental period or fixed term, with extra days if you mail it. The Board may refuse the application if it isn’t reasonably certain the sale will close.
Selling with a tenant? We’ll time your N12 to your closing date.
Book a free 20-minute call →Compensation
The landlord who serves the N12 must pay the tenant one month’s rent, or offer another acceptable unit, by the termination date. That obligation belongs to the seller, not the buyer, though the parties can deal with cost-sharing in their agreement. Unlike own-use N12s, a purchaser N12 always requires compensation, no matter how much notice you give. If it isn’t paid on time, the Board won’t issue an eviction order.
If the tenant stays
File an L2 application as soon as the N12 is served, and no later than 30 days after the termination date. Include the purchaser’s affidavit or declaration, and give a copy of the agreement of purchase and sale to the tenant and the Board at least 7 days before the hearing. If the purchaser doesn’t move in, the former tenant can later file a T5 against both the seller and the buyer.
Planning the timeline
- Serve the N12 promptly once the agreement is signed.
- Count 60 days plus mailing time to the last day of a rental period.
- Build in time for a hearing if the tenant doesn’t leave.
- Consider a negotiated N11 move-out alongside the N12.
- Talk to your paralegal and realtor before agreeing to a closing date.
Frequently asked questions
Can I serve an N12 before I have a buyer?
Not for purchaser’s own use. There must be a signed agreement of purchase and sale.
Does the buyer have to pay the tenant compensation?
The obligation belongs to the selling landlord who served the N12, though the parties can agree to share the cost.
Can I avoid compensation by giving 120 days’ notice?
No. The 120-day exemption only applies to own-use N12s, not purchaser N12s.
Can I use a purchaser N12 for a 6-unit building?
No, unless the unit is a condo. Purchaser N12s are limited to complexes with three or fewer units.
What if closing is in 45 days?
An N12 can’t end the tenancy in less than 60 days. Consider a negotiated N11 or a later closing.
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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