Buying a House With Tenants: Vacant Possession in Ontario

Buying a home that already has tenants is different from buying an empty one. You may want to live there yourself, or you may be happy to keep the tenants, and the rules for each path are quite different.

This article explains how vacant possession works in Ontario when a tenanted home is sold, and when a buyer's own use can end a tenancy. Because the agreement and the facts drive the result, have a lawyer review the paperwork before you commit.

Do the tenants have to leave when the home sells?

A sale does not simply push tenants out. The Residential Tenancies Act, 2006 sets out when a tenancy can be ended, and one route is a notice based on the purchaser's own use.

Whether the seller promises to deliver the home empty, or you agree to take it with the tenants in place, is a matter of what your agreement of purchase and sale says. Read that wording closely, and ask what the seller will actually do before closing.

Conditions in your agreement, such as a satisfactory home inspection, must be waived or performed by the agreed time before the deal becomes binding, and they must be used in good faith. Once all conditions are waived, the agreement is firm and binding.

Pay your deposit on time. Paying a deposit late or withholding it can itself breach the agreement. The deposit is normally held by the brokerage in a real estate statutory trust account, and it can be released only with a mutual consent or release signed by all parties, or under a court order.

The purchaser's-own-use N12 notice

Under s. 49 of the Residential Tenancies Act, 2006, a landlord who has signed an agreement of purchase and sale for a residential complex of no more than 3 units, or a condominium unit, may give an N12 notice.

The purchaser must in good faith need the unit for residential occupation by the purchaser, their spouse, a child or parent of either, or a caregiver.

In plain words, good faith means you genuinely intend to move in, not that you are using the notice as a way to empty the unit for some other purpose. Think about this before you sign, because the notice is tied to your real plans.

• Termination date: at least 60 days after the notice, on the last day of a rental period or fixed term.
• Who gives the notice: the selling landlord who signed the agreement.
• Who pays: the selling landlord, not the purchaser.

Compensation and larger buildings

The selling landlord must pay the tenant one month's rent, or offer an acceptable unit, by the termination date.

There are limits. A purchaser's-own-use N12 is only available for a complex of no more than 3 units or a condominium unit, so tenants in larger buildings cannot be ended this way.

The newer 120-day, no-compensation option in s. 48.1, effective September 21, 2026, applies to the landlord's own use under s. 48. It is not described as applying to purchaser notices under s. 49. Do not assume it applies to your purchase.

Bad faith and what is at stake

If the purchaser does not move in after a purchaser N12, the former tenant can file a T5 application within one year of moving out.

The Landlord and Tenant Board may order rent differential, moving costs, general compensation of up to one year's rent and an administrative fine, and may name the purchaser as a respondent. That means you personally can be on the hook, so only rely on this route if you genuinely plan to move in.

What to do next

• Find out before making an offer whether the home is occupied and by whom.
• Ask for copies of any leases and ask what rent is being paid.
• Decide honestly whether you, a family member in the listed categories, or a caregiver will live there.
• Make sure the agreement clearly says whether you are taking the home with tenants or vacant.
• Check the unit count, since the purchaser N12 depends on it.
• Ask the municipal building department what permits exist for the property, since a building permit is required before most construction, additions, renovations and changes of use.
• Have a lawyer review the agreement and any notice before it is served.

Frequently asked questions