Selling a House With Tenants in Ontario: Vacant Possession Rules

Many buyers want to move into the home they are buying. If tenants live there, the seller cannot simply promise an empty house. A tenant can only be required to leave through the process set by the Landlord and Tenant Board (LTB).

This article explains how the purchaser's own-use notice, called the N12, generally works, what happens if the tenant does not move out, and where the rules on compensation need to be confirmed. Timing matters a great deal, so speak with a lawyer before you agree to a closing date.

When an N12 is available

The purchaser's own-use N12 is available only where the residential complex has no more than 3 units and the landlord has entered an agreement of purchase and sale. The purchaser, their spouse, a child or parent of either, or a person providing care services to any of them must want to move in.

This means the notice generally cannot be given before there is a signed agreement. It also means the buyer's wish to move in has to be genuine. The LTB may consider the conduct and motives of the landlord or purchaser when assessing good faith, and it can refuse or postpone eviction in some cases.

Notice periods and compensation

An N12 requires 60 days' notice, and the termination date must be the last day of the rental period or lease term. A wrongly dated or incomplete notice is a real risk, since an incomplete or incorrect N12 may be void and an application based on it may be dismissed.

Compensation has changed. Before September 21, 2026, an N12 required the landlord to pay the tenant one month's rent no later than the termination date, or offer another unit the tenant accepts. For N12 notices on or after September 21, 2026, the LTB says no compensation is required if the landlord gives at least 120 days' notice and the termination date is the last day of the tenancy or fixed term.

Whether that new rule applies the same way to a purchaser's N12 should be confirmed against the current Residential Tenancies Act and with a lawyer before you rely on it. Until you have confirmed it, plan on the basis that compensation or longer notice may be involved.

If the tenant does not leave

A tenant does not have to move out just because they received an N12. If the tenant stays, the landlord must file Form L2 with the LTB within 30 days after the termination date, with a completed Schedule B. In a purchaser case an affidavit is required. The tenant can dispute the application at the hearing.

A tenant may also choose to leave sooner, by giving at least 10 days' written notice.

Even if the LTB orders an eviction, only the Court Enforcement Office (Sheriff) can enforce it. The landlord files the order with that office and pays its fee. A landlord cannot personally remove the tenant or change the locks, and illegal lockouts can bring fines of up to $100,000 for an individual or $500,000 for a corporation.

This process takes time and the outcome is not certain. A seller who promises a fixed vacant-possession closing date without allowing for it may end up in a dispute with the buyer.

Good faith and the risk of a bad-faith claim

If a tenant moves out believing an N12 was given in bad faith, and the named person (or another eligible person) does not move in within 60 days after the tenant leaves, the tenant can file a T5 application. That is why the buyer's intention to move in must be real, and why sellers and buyers should talk about who takes on responsibility if something goes wrong.

• The buyer should be clear about who will actually live in the home.
• The agreement of purchase and sale should address what happens if the tenant stays or the LTB process is delayed.
• Paperwork, including the notice dates, should be checked before it is served.

What to do next

• Check the number of units in the building to see whether an N12 is available.
• Gather the lease, the rental period dates and records of rent paid.
• Work out the earliest realistic termination date, allowing for the notice period.
• Confirm compensation rules for your notice date with a lawyer before serving anything.
• Talk to the buyer's lawyer about conditions, closing date and what happens if the tenant stays.
• Do not change locks or remove belongings, and do not pressure the tenant to leave.

A lawyer can review the agreement of purchase and sale and the notice before it goes out, which is much easier than fixing a defective notice later.

Frequently asked questions