A sale does not terminate a tenancy in Ontario. On closing the buyer becomes the landlord, bound by the same rent and the same lease. Vacant possession is something a buyer has to create through the Residential Tenancies Act, not something a seller can simply promise.
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Under the <a href="https://www.ontario.ca/laws/statute/06r17">Residential Tenancies Act, 2006</a>, a change of ownership does not end a tenancy. The buyer steps into the landlord's position on closing and takes the tenancy exactly as it stands: same tenant, same rent, same terms, same history. Nothing agreed between buyer and seller in the agreement of purchase and sale can bind the tenant, because the tenant is not a party to it.
When a fixed term ends, the tenancy does not end with it. It continues automatically as a month-to-month tenancy on the same terms, and the tenant may stay. Rent can generally be increased only once every twelve months, on ninety days' written notice in the prescribed form, and in most cases only by the provincial guideline. Buying the property does not reset any of that.
The last month's rent deposit follows the tenancy. It is credited to the buyer on the statement of adjustments along with the interest that has accrued on it, because the buyer will one day have to apply it to the final month. That deposit cannot be used for damage or arrears. Ask for the deposit record and the interest history before closing, not after.
After closing the new landlord has to tell the tenant who they are and where notices can be served, and give directions for paying rent. Collect the tenancy file at closing: the lease, any renewal, every rent increase notice, the deposit and interest record, and any Board orders. Without it you cannot prove what the lawful rent is.
A seller who cannot lawfully remove a tenant should not sign an agreement promising vacant possession. There are only three routes. The tenant gives notice and leaves. The landlord and tenant sign an agreement to terminate. Or the seller, at the buyer's request, serves a notice for the purchaser's own use — available only where the residential complex contains no more than three residential units, or the unit is a condominium — which works only if the buyer, the buyer's spouse, a child or parent of either, or a caregiver genuinely intends to move in.
The purchaser's own use notice runs at least sixty days and has to end on the last day of a rental period, and it cannot end a fixed term early. Compensation of one month's rent is payable no later than the termination date, unless the landlord instead offers the tenant another rental unit the tenant accepts. The notice by itself does not evict anyone: if the tenant stays, the landlord applies to the Landlord and Tenant Board and a hearing decides, which takes time you must build into the closing date.
Good faith is tested, and it is tested afterwards. If the unit is not used for the stated purpose, the tenant can apply to the Board within a year of moving out. Remedies include the difference in rent the tenant now pays, moving costs, general compensation and an administrative fine. Re-listing the property soon after the tenant leaves is the fastest way to attract that application.
An agreement to terminate, often with an agreed payment, is usually quicker and cheaper than a contested notice, and it gives the buyer certainty. It has to be genuinely voluntary and properly timed: an agreement to terminate signed at the same time as the tenancy agreement is void. Get the signed agreement before the deal goes firm, not after.
Start with the rent, not the tenant. Ask what the lawful rent is, when it was last increased, whether every increase was given on the correct form and timing, and whether any above-guideline increase was approved. A rent that was raised improperly is not the lawful rent, and the shortfall becomes the buyer's problem. Below-market rent that cannot be raised is a permanent feature of the purchase price.
Check whether the unit is lawful. Second units and basement apartments raise zoning, fire code and egress questions, and a work order does not need to exist yet for the cost to land on you. An unlawful unit is still a tenancy under the Act, so you cannot evict the tenant on that basis. You inherit the tenant and the compliance bill together.
Ask about arrears, damage claims, pending Board applications and existing orders. Applications and orders survive the sale, and a mediated payment plan you never saw still binds the property you are buying. While the property is listed, the seller can show the unit on twenty-four hours' written notice, between 8 a.m. and 8 p.m.; the tenant's consent is not required, but the notice is.
At closing your lawyer assigns the leases, adjusts the deposit and interest, apportions rent that has already been paid for the month, and prepares the tenant notification. Our residential real estate fee is published at $1,354.87 with taxes included; see <a href="/pricing">pricing</a> or the <a href="/real-estate">real estate</a> overview for what is covered and what is billed at cost.
Only through the Act. If the complex contains no more than three residential units or the unit is a condominium, and the buyer, their spouse, a child or parent of either, or a caregiver will actually live in it, a notice for the purchaser's own use can be served before closing at the buyer's request. Otherwise the buyer inherits the tenancy. There is no eviction ground that simply says the property was sold.
Yes, if the landlord gives twenty-four hours' written notice stating the date and a time between 8 a.m. and 8 p.m. The tenant does not have to consent and does not have to be present. The tenant does not have to tidy, stage, or leave for open houses, and repeated entry outside the rules can support a tenant application against the landlord.
It transfers with the tenancy. The seller credits the buyer for the deposit plus accrued interest on the statement of adjustments, because the buyer will eventually have to apply it to the tenant's final month. It can only ever be applied to rent, never to damage or cleaning, and it stays with the unit rather than being refunded on closing.
Only within the ordinary rules: one increase in any twelve months, ninety days' written notice on the prescribed form, and generally no more than the guideline unless the Board has approved an above-guideline increase. A rent increase that does not follow those rules is not enforceable, and the buyer is the one left collecting a rent that cannot be sustained.
The former tenant can apply to the Landlord and Tenant Board within a year of vacating. If the Board finds the notice was given in bad faith, or the unit was not used as stated, it can order the rent difference the tenant now pays, moving and storage costs, general compensation and a fine. The buyer, not the seller, usually answers for it.
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