What Realtors Need to Know After Selling a Tenanted Property
The deal may have closed, but the tenancy hasn’t ended. The buyer steps into the seller’s shoes as landlord, with the same lease, rent and obligations. Here is what both sides should know after closing.
Key points
- A sale doesn’t end a tenancy. The buyer becomes the landlord on the same terms.
- A new landlord can’t require another rent deposit if the tenant already paid one to the previous landlord.
- Deal with the last month’s rent deposit and interest in the agreement of purchase and sale.
- The new landlord should give the tenant written notice of the change and where to pay rent.
Closing changes who the landlord is, not the tenant’s rights. Realtors who flag this before and after closing save their clients from surprises.
The tenancy continues
The tenant’s lease, rent and rights under the Residential Tenancies Act continue with the new owner. If the lease term has ended, the tenancy continues month to month. The new landlord can only end it for a reason allowed by law, with the right notice.
The rent deposit
A new landlord can’t require the tenant to pay a rent deposit if the tenant already paid one to the previous landlord. That means the buyer can’t simply ask the tenant again if the seller kept it. Deal with the deposit, and the interest owed on it, in the agreement of purchase and sale.
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- Give the tenant written notice of the new landlord’s name and how to pay rent.
- Get a copy of the lease, rent history and any notices served.
- Confirm the deposit amount and when interest was last applied.
- Check for any LTB applications or orders in progress.
- Confirm when the rent was last increased. It can only go up once every 12 months.
If vacant possession wasn’t delivered
If the seller promised vacant possession and the tenant is still there, the buyer’s options depend on the agreement. If an N12 was served for the buyer’s use, the L2 and hearing may continue, and the buyer or their family must genuinely move in. If they don’t, both the seller and the buyer can face a bad-faith claim. Get legal advice on the agreement itself from a real estate lawyer.
Frequently asked questions
Does selling a house end the tenancy in Ontario?
No. The buyer becomes the landlord on the same terms.
Can the new owner collect a new last month’s rent deposit?
Not if the tenant already paid one to the previous landlord.
Who owes interest on the deposit?
The landlord holding it. Deal with the amount and interest in the agreement of purchase and sale.
Can the new owner raise the rent right away?
Only if 12 months have passed since the last increase, with 90 days’ written notice.
What if the buyer’s family never moves in after a purchaser N12?
The former tenant can file a bad-faith claim against both the seller and the buyer.
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.
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