When a Landlord Dies in Ontario: What Happens to the Tenants

If you are an estate trustee or heir who has just inherited a rented house or unit, you may wonder whether the tenant has to leave. If you are a tenant, you may be worried about your home and who you now pay.

In Ontario the short answer is that the tenancy generally carries on. There are some exceptions, and they come with their own rules. This article explains how it usually works so you know what questions to ask.

The estate trustee steps into the landlord's role

Under the Residential Tenancies Act, 2006, the word "landlord" includes the heirs, assigns, personal representatives and successors in title of the owner. In practice, when a landlord dies, the estate trustee steps into the landlord's role, including collecting rent.

On death, the deceased's real and personal property passes to and vests in the personal representative, who holds it as trustee for the people entitled to it. That means the estate trustee is generally the person tenants deal with until the property is sold or transferred to a beneficiary.

• Tenants should keep paying rent, and should ask the estate trustee for written details of where to send it.
• Estate trustees should keep rent and expenses on the property recorded separately, because the property belongs to the estate until it is dealt with.
• How other landlord duties, such as repairs, apply to the estate depends on your situation, so it is worth confirming with a lawyer.

The tenancy does not end because the landlord died

A tenancy can be ended only in the ways the Act allows. So an estate trustee or beneficiary who inherits a rented property takes it subject to the existing tenancy.

This is different from a tenant's death. If a sole tenant dies and there are no other tenants of the unit, the tenancy is deemed to end 30 days after the death. If another tenant remains, the tenancy is not deemed ended by the death. The landlord's death has no such automatic effect.

The two main exceptions

There are two common ways a tenancy may be ended in an estate setting. Both are exceptions, and both depend on the facts.

These notices are not simple. Good faith is required in both situations, and other requirements may also apply, so how this works depends on the facts. Speak with a lawyer before giving or accepting any notice. A notice given without meeting the requirements can cause problems for the estate.

Selling the rental property

An estate trustee can sell estate real property without the beneficiaries agreeing, except where the sale is only for the purpose of distribution. A sale made only for distribution needs the approval of a majority of the beneficiaries. Where minors or persons under disability are involved, approval of the Children's Lawyer or the Public Guardian and Trustee is needed as applicable. Without that approval the sale is not valid.

Ontario guidance says probate, meaning a Certificate of Appointment of Estate Trustee from the Superior Court of Justice, is normally required where the deceased owned real property. Where the property must be sold, the certificate should be obtained before anyone enters into an agreement of purchase and sale. Some limited exceptions exist, and buyers' lawyers and title insurers set their own requirements, so confirm the position before listing.

Remember that the buyer usually takes the property with the tenant in place, unless the s. 49 route applies. This affects the price and the buyer pool.

Tax on the rental property at death

When a taxpayer dies, they are deemed to have disposed of each capital property, including a rental property, immediately before death at fair market value. This can trigger capital gains on the final return. Property left to a spouse or common-law partner resident in Canada may roll over at cost instead. Current rates and details change, so confirm them with an accountant.

What to do next

• Gather the leases, tenant contact details, rent records and any deposits held.
• Confirm who the estate trustee is and tell tenants in writing where to pay rent.
• Do not give any notice to end a tenancy until you have checked the rules that apply, including ss. 48 and 49.
• Find out whether probate is needed before any agreement of purchase and sale is signed.
• Ask an accountant about the deemed disposition on the final return.
• Speak with a lawyer if tenants, beneficiaries or buyers disagree about the plan.

Frequently asked questions