How the Residential Tenancies Act shapes a sale with a tenant in place, from showings to the purchaser's own-use notice.
⚖️ This is general information, not legal advice. It can't account for your specific situation. Use it to get oriented, then confirm the details with a licensed Ontario lawyer.
A tenant does not stop being a tenant because the landlord sells. In Ontario the tenancy runs with the property, so the buyer inherits the lease, the rent and the deposit. Whether the buyer can then live in the home depends on the Residential Tenancies Act, 2006, which allows a purchaser's own-use notice only in limited cases, on strict timelines, with compensation. Sellers who understand this before listing can price, market and draft the agreement accordingly. Sellers who promise vacant possession without the law behind them can end up in breach of their own sale.
The tenancy survives the sale
Section 18 of the Act says the covenants in a tenancy agreement run with the land. On closing, the buyer steps into your shoes as landlord: same rent, same lease terms, same obligations. The last month's rent deposit and any interest owing on it pass to the buyer, and your lawyer adjusts for them on the statement of adjustments. A fixed-term lease keeps running to its end date. The sale itself is not a ground for ending a tenancy, and a clause in your lease saying otherwise is void.
Showings while the home is listed
You may show the unit to prospective buyers, but only after giving the tenant written notice at least 24 hours ahead that states the day and a time between 8 a.m. and 8 p.m. Your brokerage may give that notice with your written authorization. The tenant does not have to leave, tidy up or agree to a lockbox, and you cannot penalise a tenant who is present for a showing. Repeated entries without proper notice are a breach of the tenant's right to reasonable enjoyment and can lead to an application against you at the Landlord and Tenant Board.
Who can ask for vacant possession
Under section 49, a landlord who has signed an agreement of purchase and sale may serve a notice of termination on behalf of the purchaser only if the building has no more than three residential units, or the unit is a condominium, and the purchaser in good faith intends the unit for residential occupation by themselves, their spouse, a child or parent of either, or a caregiver for one of those people. An investor who plans to re-rent the unit cannot use the N12 through you. The termination date must be at least 60 days after the notice is given and must fall on the last day of a rental period or of the fixed term. Because the notice is given only once an agreement exists, the earliest lawful vacant-possession closing is roughly two months after the sale is firm, and often longer.
Compensation and the tenant's options
Section 49.1 requires the landlord who serves the notice on behalf of a purchaser to pay the tenant one month's rent, or to offer another unit the tenant accepts, and that obligation stays with the seller even after closing. The tenant may move out earlier than the termination date by giving their own shorter written notice. Alternatively, you and the tenant may sign an N11 agreement to end the tenancy on a date you both choose, sometimes with a payment. That is lawful when it is genuinely voluntary; a tenant who feels pressured can later argue the agreement should not be enforced.
If the tenant stays past the date
An N12 is a notice, not an eviction order. If the tenant is still there after the termination date, only the Landlord and Tenant Board can order them out, on an application that must be filed with the purchaser's sworn affidavit of intended occupancy. Hearings take time, and the Board can refuse the application if it doubts the purchaser's good faith. Your sale agreement needs to say what happens if possession is not vacant on closing: a delayed closing, a price adjustment, or a closing in escrow. Without that language you could be in breach of a contract you cannot perform.
Bad faith and its consequences
Section 57 lets a former tenant apply to the Board within one year if the person named in the notice did not move in within a reasonable time after the tenant left. Remedies can include the rent difference the tenant now pays, moving costs, a payment to the tenant and an administrative fine. The purchaser who did not move in carries most of that risk, but a seller who served a notice knowing the stated purpose was false is exposed as well. Keep the purchaser's declaration on file.
Drafting the sale properly
Tell your agent and lawyer about the tenancy before the listing goes live. Decide whether you are selling subject to the tenancy or offering vacant possession, and make the agreement say so. Give the buyer a written summary of the rent, the deposit, the lease term and any outstanding issues, and have the tenant confirm it where possible. If vacant possession is promised, make the closing date realistic against the 60-day rule and add a clause dealing with a tenant who has not moved.
How Treadstone Law can help
A tenanted sale is not harder than an ordinary one, only more scheduled. The dates come from the Act, the compensation comes from the Act, and the agreement should be written around both.
Treadstone Law handles real estate matters on a transparent flat fee, with online intake and a real lawyer on your file, across Ontario.
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This is not legal advice
This guide is general information, not legal advice. Reading it does not create a lawyer-client relationship. Ontario laws and government programs change, and how the law applies depends on your specific facts. For advice about your situation, speak with a licensed Ontario lawyer. Treadstone Law is licensed by the Law Society of Ontario — reach us at 1-844-900-1070 or start a file online.