Buying a Tenanted Home in St. Thomas, Legally and on Time

The situation

Nirosha and Tharshini, both technology executives, had been searching for a larger home for the better part of a year when a detached property in St. Thomas came up that fit everything on their list: enough space for a growing family, a large lot, and a price that felt reasonable next to what they had been seeing elsewhere. There was one wrinkle. The house had a tenant, Keisha, living in it on a month-to-month tenancy after her original one-year lease had expired, paying rent of about $2,300 a month.

The listing said the seller was prepared to deliver the home vacant on closing. In a competitive multiple-offer situation, Nirosha and Tharshini's agent recommended going in firm, meaning no financing or inspection conditions, to make the offer as attractive as possible. They agreed, wrote an offer with a closing date forty-five days out, and included a clause stating the property would be delivered with vacant possession. The offer was accepted the same evening. They came to our office a few days later to arrange the closing, not realizing that the forty-five-day timeline they had just committed to was, on its own, unworkable.

The legal problem

Ontario's Residential Tenancies Act, 2000, protects tenants from being asked to leave on short notice, even when a property changes hands. A landlord, and by extension a seller who is still the landlord until closing, can end a tenancy on the basis that the landlord or a purchaser genuinely intends to move into the unit. But that ground comes with conditions attached, and they exist precisely to stop sellers from promising vacant possession they cannot lawfully deliver.

First, the notice can only be given once the agreement of purchase and sale is firm, meaning all conditions have been satisfied or waived. Because Nirosha and Tharshini's offer was unconditional from the start, that requirement was met the moment it was accepted. Second, and this was the problem, the notice has to give the tenant at least sixty days, ending on the last day of a rental period. For a tenant paying monthly rent, that means the termination date on the notice has to land on the last day of a rental month, at least sixty days after the notice is served. Third, the tenant is entitled to compensation, equal to one month's rent, paid before the tenancy actually ends.

Sixty days does not fit inside a forty-five-day closing under any circumstances, regardless of when the notice was served. When our office called the seller's lawyer to confirm the tenant had already been given notice, the answer came back that nothing had been served yet. The seller's agent had assumed the tenant would simply leave once told the house had sold. That assumption is a common one, and it is wrong. A month-to-month tenant has the same statutory protections as a tenant on a fixed-term lease, and nothing about a sale changes that.

The risk went beyond a scheduling headache. If the seller had tried to rush the tenant out with short notice, or without paying the required compensation, Keisha would have had grounds to challenge the eviction at the Landlord and Tenant Board, including on the basis that it was not made in good faith. A tenant who successfully challenges a termination used to sell the property to a new owner can be awarded significant compensation, and in some circumstances the Board can order the tenant reinstated. That risk would not have stayed with the seller once ownership changed hands; it could have followed the property, and Nirosha and Tharshini, into their first months as homeowners.

What we did

1. Calculated the earliest lawful move-out date. Using Keisha's rental period and the required sixty-day notice, we worked out the earliest date the seller could realistically achieve vacant possession, which fell roughly ten weeks after the offer had been accepted, well past the original closing date.
2. Confirmed the notice had not yet been served. A call to the seller's lawyer established that nothing had gone to the tenant. That meant the clock had not started, and the forty-five-day closing was not simply tight, it was impossible to meet without breaking the law.
3. Laid out the real options for our clients. One path was to close on the original date and take the property subject to the existing tenancy, becoming Keisha's landlords themselves and dealing with the notice process after closing. The other was to negotiate a delayed closing tied to the actual lawful termination date. Nirosha and Tharshini wanted to move in themselves and were not interested in becoming landlords first, so they chose to negotiate the delay.
4. Negotiated an amendment to the agreement. We proposed extending the closing date to align with the earliest date the notice period could lawfully expire, and asked the seller to compensate our clients for the extra weeks of temporary housing and storage the delay would cost them. After some back and forth, the seller agreed to a closing date about nine weeks later than originally planned, together with a credit at closing toward our clients' carrying costs.
5. Confirmed the notice and compensation were done properly. Before closing, we obtained a copy of the notice served on Keisha and confirmation that her one month's compensation had been paid, along with the date she had agreed to vacate. This mattered for more than paperwork's sake; a tenant can raise a bad-faith challenge for up to a year after moving out, and having a clean, properly documented record protected our clients from being drawn into a dispute over a process they had not controlled but would have inherited.

The outcome

The sale closed roughly nine weeks later than the date in the original offer. Nirosha and Tharshini ended up carrying about $14,000 in extra temporary housing, storage, and short-term lease extension costs during the delay. The seller's negotiated credit covered about $9,000 of that, leaving them roughly $5,000 out of pocket beyond what a straightforward closing would have cost, plus the stress and disruption of an extra two months in limbo before moving into their new home.

That was a real cost, and an avoidable one. Had they asked, before writing an unconditional offer with a vacant possession clause, whether the seller had already served notice and when the tenant's earliest lawful move-out date fell, they could have written a closing date that matched reality from the start, or priced a shorter timeline into their offer instead of a longer one. The upside is what did not happen: no bad-faith eviction complaint, no Landlord and Tenant Board hearing hanging over their first year of ownership, and no risk of a tenant reinstatement order complicating title to a home they had already moved into. The extra cost was real, but it was the price of doing the eviction correctly instead of the much larger price of doing it wrong.

What you can learn from this