In most real estate transactions, there are two parties involved: the buyer and the seller. A major exception occurs when the property being sold is home to a tenant. Navigating these situations can be complicated—especially if you’re the buyer. You may have questions about when (and how) you can evict current tenants, and how an existing lease will impact the transfer of property ownership.

Fortunately, with a bit of knowledge and some guidance from the right real estate professional, you can maximize your odds of achieving a smooth and successful purchase.

If you’re thinking of buying a tenanted property, here’s what you need to know…

Tenant’s rights

Tenants in Ontario have a number of rights that protect them from unlawful evictions and rent increases. Whether you’re ultimately planning to move into the property you’re purchasing or take on a landlord’s role, you should review the Residential Tenancies Act. Understanding this crucial document will help ensure that you comply with the law when you complete your purchase—and take possession of the property.

If you want to move in

Are you buying a tenanted property with the intention of calling it home? If so, be aware that you can’t evict a renter to make room for yourself— nor can you ask the property’s seller to do so. If there’s a lease agreement in place, you’ll most likely have to wait for the term to expire.

Of course, buyers sometimes get their hearts set on moving into a home on a specific date. If you find yourself in this situation, there’s one course of action you can try. Consider making an offer that stipulates the move-in date you want to secure. If your bid is attractive, the seller may attempt to get their renter to leave early by using a monetary incentive.

What happens if the tenant is renting month to month? Under these circumstances, you’ll need to give them 60 day’s notice before you plan to move in—along with one month’s rent as a form of compensation. You’ll also have to provide them with an N12 (a notice of Eviction for Personal Use). You can have the seller provide the tenant with this document if you don’t yet own the property.

If you want to be a landlord

If you’re interested in renting out the property you’re planning to buy, you may be wondering how you can start charging more money each month.

Under current provincial guidelines, you can raise rent by 2.2 per cent every 12 months—so if the existing tenant is sticking around, you’ll need to know when they last experienced an increase. If they’re renting month to month, you can ask them to sign a new lease with you. Just be aware that they’re under no obligation to do so, and they can continue renting under the terms they agreed to with the previous landlord.

If you’re hoping to bring in someone new, you can try to make it worth the current tenant’s while to leave. Once again, an agreeable sum of money may provide the right incentive. If they decide to vacate, they’ll need to sign an N11 (an Agreement to Terminate Tenancy). You can also provide them with an N12 if you or a family member plan on moving into the property, but you must do so for a full year before renting the place out again (or incur a stiff penalty).

Get it in writing

Buying a tenanted property can be complicated, which is why it’s so important to be clear about what you need from the seller. Lay it all out in your Agreement of Purchase and Sale—and if you’ll need them to provide the existing tenants with an N12, but sure to include that information.

The bottom line? If the property you want to buy is currently occupied by renters, you have options. Start by getting advice from a real estate agent you trust.

Preparing to buy an investment property? For over 35 years, our clients have trusted us to minimize risk, offer unbiased opinions, and ensure their best interests are served. Contact us today to talk about your needs, by emailing us at or calling us at 416-441-2888 ext. 772.


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