Evicting a Tenant:

Question:Can a tenant stay in Ontario if the landlord is selling the property to someone who wants vacant possession?

Answer:In Ontario, tenants generally may remain unless the buyer properly serves an N12 and meets the strict timing and eligibility rules under the Residential Tenancies Act, 2006, S.O. 2006, c. 17, including that a termination for a purchaser’s own use can only be issued at the end of a lease term and is not available where the premises has more than three rental units. If the landlord promises vacant possession in the Agreement of Purchase and Sale, that does not automatically override the tenant’s rights, and tenants can contest bad-faith N12s at the Landlord and Tenant Board.   If you need help evaluating an N12 notice, timing, or “cash for keys” options, Olson Craig Legal can help Ontario tenants and landlords understand their rights and next steps with lawyer & paralegal support.   Call (226) 886-2001 to discuss your situation.

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Determining Whether a Tenant Has the Right to Stay When a Landlord Is Selling the Property

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 prefer, and are seeking, vacant possession, meaning an untenanted property, when purchasing.

Note: Please contact Olson Craig Legal by phone at: (226) 886-2001 to discuss any specific questions that you may have.

When a landlord promises vacant possession to a purchaser, the landlord needs to keep in mind that the landlord only has control over part of the process, being the process of issuing, and serving upon the tenant, an N12 – Notice of Termination for Landlord's, Landlord's Family Member, or Purchaser's, Own Use form.  A landlord must also keep in mind that a Notice of Termination for Purchaser’s Own Use form may only be issued and served at the end of a lease term.  Furthermore, such a termination is inapplicable, and thus invalid, where 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.

The process of purchasing 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.

Rules Regarding Notice

When a landlord is seeking to evict for the purpose of selling to a purchaser that intends 'own use' of the premises, the rules regarding the eviction notice period are very specific.  Often a landlord fails to follow the rules due to failure to provide the proper notice document with the proper advance notice, among other things; accordingly, issuance of the absolutely necessary N12 form as required by the Residential Tenancies Act, 2006, S.O.  2006, Chapter 17 and the Landlord Tenant Board as well as the proper and timely service of the N12 form are important. Additionally, filing of the proper documents with the Landlord Tenant Board is necessary. Making an error on the notice form can be detrimental to the point of having to start again from the very beginning. Furthermore, a landlord should remain mindful that once a date for a hearing at the Landlord Tenant Board is scheduled, the landlord needs to involve the purchaser whereas the purchaser will need to provide an Affidavit as sworn, or affirmed, under Oath and attend at the hearing to testify, also under Oath, that the purchaser intends to move into the premises upon taking possession of the property promptly following closing of the purchase from the landlord.

In law, the seller is without a requirement to provide compensation the tenants; however, to avoid conflict and potential delays, the seller may choose to do so whereas a landlord may negotiate a 'cash for keys' agreement with the tenants. A 'cash for keys' agreement occurs when a landlord, without use of undue pressure, enters into a deal to buy out a tenant.  In such an effort, it is advisable that the landlord obtains the assistance of a legal professional to negotiate the agreement as the terms must be negotiated within the law.  Trying to negotiate such a deal, or allowing a real estate agent to negotiate such a deal, is ill advised. Often when the landlord or a real estate agent takes on this task, failures to abide by the precise law lead to breach of the rights of the tenant with a possibility that such rights will be pursued by the tenant via applications seeking protections and remedies brought to the Landlord Tenant Board. Note also that a real estate agent is legally unable to provide legal services without holding a proper license from the Law Society of Ontario.