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evicting when selling

Selling property as a vacant space to attract buyers who seek flexibility in usage and customization

Does a tenant have to leave when a landlord sells property in Ontario?

Eviction of a tenant during a property sale is possible only if the buyer intends to use the premises themselves. Usually, buyers have the option to purchase the property without tenants, except for a few exceptional cases.

There Are Four Opportunities to Avoid An Eviction For Non-Payment:

  1. Is it legal for a landlord to evict a tenant when selling the property?
  2. Can a landlord evict a tenant when selling the property?
  3. When a landlord sells the property, can they evict the tenant legally?
  4. Must a tenant leave if a landlord is selling the property?

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Assessing if a Tenant has the Entitlement to Continue Occupancy during the Sale of a Property by the Landlord.

The law in Ontario says that when a landlord is selling a property, and the property has tenants residing within the unit, the tenants can stay should the new owner want to take on those tenants; however, within the market today, many purchasers are requiring vacant possession when purchasing a property. The process of obtaining a property with vacant possession, usually, occurs as part of a process set out within the Agreement of Purchase and Sale documentation. 

 The process begins with the seller, being the landlord, properly completing and serving the N12 – Notice of Termination for Landlord’s, Landlord’s Family Member, or Purchaser’s, Own Use form prescribed by the Residential Tenancies Act, 2006, S.O. 2006, Chapter 17. This form requires that the seller provide due notice to the tenants at least sixty (60) days in advance of the termination date. The tenant can choose to move out by the date on the notice or, if the tenant believes that the notice was given in bad faith, the tenant may contest the notice at a hearing at the Landlord Tenant Board. It is notable that once the landlord as seller provides notice to the tenant, the landlord can then file the notice with the Landlord Tenant Board immediately utilizing the L2 – Application form. 

 Furthermore, such a termination is inapplicable if the premises contains more than three (3) rental units. Additionally, the rules of eviction when selling a property disallow eviction if the landlord is selling a property to a relative of the landlord.

Guidelines for Eviction Notice in Case of Property Sale

When a landlord wishes to evict a tenant to sell the property to a purchaser who intends to use it as their own residence, there are specific rules that must be followed regarding the eviction notice period. Failure to provide the proper notice document with the required advance notice, among other things, can lead to the landlord’s failure to comply with the Residential Tenancies Act, 2006, S.O. 2006, Chapter 17 and the Landlord Tenant Board. It is essential to issue the necessary N12 form and serve it correctly and on time, as well as file the appropriate documents with the Landlord Tenant Board. Any error on the notice form can cause significant delays, requiring the landlord to start again from the beginning.

Furthermore, once a hearing date at the Landlord Tenant Board is scheduled, the landlord must involve the purchaser, who needs to provide an Affidavit under Oath and attend the hearing to testify that they intend to move into the property promptly after the purchase’s closing.

According to the law, the seller is not obligated to compensate the tenants, but it is advisable to avoid conflict and potential delays by negotiating a ‘cash for keys’ agreement with the tenants. Such an agreement involves a landlord voluntarily entering into a deal to buy out a tenant without using undue pressure. It is recommended that the landlord seek the assistance of a legal professional to negotiate the agreement within the law’s parameters. Attempting to negotiate such a deal or delegating this task to a real estate agent without proper legal credentials can lead to breaching the tenant’s rights, potentially resulting in applications seeking protections and remedies brought to the Landlord Tenant Board. Note that a real estate agent is legally unable to provide legal services without holding a proper license from the Law Society of Ontario.

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