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Buying a House With Tenants in Ontario: What You Inherit and What You Can Do About It

3rd September 2026BY Qasim Nihang

Buying a House With Tenants in Ontario: What You Inherit and What You Can Do About It

This article is for informational purposes only and does not constitute legal advice. Every legal situation is unique — consult a licensed lawyer before making any legal decisions.

Quick Answer

Quick answer

In Ontario, a tenancy does not end when the property is sold. On closing, the buyer becomes the landlord and takes on the existing lease, the current rent, and the tenant's last month's rent deposit. A purchaser who wants the unit for their own use may only obtain vacant possession through an N12 notice under section 49 of the Residential Tenancies Act, 2006, and that notice is given by the seller before closing, not by the buyer afterward. It is available only where the residential complex contains no more than three residential units.

The Tenants Come With the House

A buyer closes on a semi-detached house in Scarborough on a Friday. The plan is to move in over the weekend. On Saturday morning, the family renting the basement unit is still there, and they are not leaving.

Nothing has gone wrong. This is how Ontario law works.

Many buyers assume a tenancy is something the seller clears up before closing, the way a seller discharges a mortgage. In Ontario, a tenancy attaches to the property rather than to the owner, so it continues through the sale, and the buyer steps into the previous owner's position as landlord.

Knowing this before you make an offer makes it manageable. Finding out afterward makes it hard. This article covers what transfers to you on closing, what a buyer can lawfully do about it, and what a buyer cannot do at all.

3maximum residential units for a purchaser’s own-use notice
60days minimum notice, either own-use route
0signatures needed for the tenancy to transfer

Start Here: Which Buyer Are You?

Three kinds of buyers land in this situation, and the answer differs for each. Find yourself below, then read the sections that apply.

Buying a home to live in yourself
Vacant possession is not automatic, and depending on the number of units, it may not be available at all. Read the section on the only route to vacant possession.
Buying an investment property and keeping the tenants
The lease, the rent, and the deposit all come with the property. Read what transfers to you on closing, then the section on rent and deposits.
The seller has promised the property empty on closing
That promise is a contractual obligation on the seller, not something a buyer arranges afterward. Read the roadmap section before you waive any conditions.

What Transfers to You on Closing

When a tenanted property is sold in Ontario, the tenancy transfers with it. The buyer becomes the landlord on closing and takes on the existing lease, the rent currently being charged, the last month's rent deposit, the interest owed on that deposit, and the repair obligations the previous owner carried.

This follows from the Residential Tenancies Act, 2006, the provincial law governing most residential rentals in Ontario. The Act defines a landlord to include the successors in title of an owner, so a buyer becomes the landlord automatically. It also provides that covenants concerning a rental unit run with the land, so the terms the tenant agreed to with the previous owner continue to apply.

Nothing needs to be signed for this to happen. The tenant does not need to agree to it, and the buyer cannot decline it.

One consequence is worth naming early. If an application is already before the Landlord and Tenant Board when you close, you may inherit it partway through.

Our real estate law services in Toronto and Scarborough can help you understand what you are taking on before conditions come off.

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What Comes With the Property and What Does Not
A tenancy attaches to the property rather than to the owner, so most of what the previous landlord carried moves to the buyer automatically on closing.
Transfers to you on closing
The tenancy itself
The buyer becomes the landlord on closing.
The lease and its remaining term
Written or verbal, on the same terms.
The rent currently charged
Together with the date of the last increase.
The last month’s rent deposit
Held for the final rental period.
Interest owed on that deposit
Accrues annually and follows the tenancy.
Outstanding repair obligations
Maintenance duties the previous owner carried.
A pending Board application
A live file may be inherited partway through.
Stays with the seller
Compensation on a notice already served
Owed by the landlord who gave the notice, and it does not revert to the purchaser.
The promise of vacant possession
A term of the agreement of purchase and sale, not a term of the tenancy.
7
items transfer to the buyer
0
signatures required for it to happen
s. 18
covenants run with the land
Source: Residential Tenancies Act, 2006, S.O. 2006, c. 17, ss. 2(1), 18, 106 and 107 — ontario.ca/laws/statute/06r17.
Nihang Law Professional Corporation · Law Society of Ontario

The Only Route to Vacant Possession

Vacant possession for a purchaser's own use is available through one route only: an N12 notice under section 49 of the Residential Tenancies Act, 2006. That notice is given by the seller on behalf of the buyer, before closing, and only where the property contains no more than three residential units.

Vacant possession means the property is delivered empty on closing, with no tenant in place and no right of occupancy outstanding.

Who gives the notice, and when

This is the point most buyers get wrong. The seller gives the notice, not the buyer, and only once an agreement of purchase and sale exists. It is served before closing, while the seller is still the landlord.

That window runs from the signing of the agreement of purchase and sale to the closing date, while the seller is still the landlord. A buyer who closes first and then looks for a way to remove the tenant has missed it.

The three-unit ceiling

Section 49 applies only where the residential complex contains no more than three residential units. A residential complex is the building or group of buildings in which a rental unit is located. Above three units, the purchaser's own-use route is unavailable, and an application based on it may be dismissed. Ask how many units a property contains before you write an offer.

Who may actually move in

The Act sets out who the unit may be required for: the purchaser, their spouse, a child or parent of either, or a person providing care services to one of them. A corporation cannot occupy a residential unit, so a purchase through a numbered company has no own-use route.

A notice is not an eviction. If the tenant does not leave, the landlord must apply to the Landlord and Tenant Board for an order, and Board timelines run independently of any closing date. See also our guide to what Ontario tenants are entitled to.

Section 48 Versus Section 49: Two Different Notices

Ontario has two own-use notices, and which one applies depends on whether the sale has closed. Section 49 covers a notice given by a seller on behalf of a purchaser before closing. Section 48 covers a notice given by someone who is already the landlord and requires the unit for their own use.

After closing, you are the landlord. If you then decide you want the unit for yourself, you are no longer a purchaser under section 49. You are a landlord under section 48, with its own requirements, its own compensation rules, and its own good-faith test.

The two are often described as one notice because both use the same Board form. They are not the same route, and the difference decides who gives the notice, when it may be given, and who pays the tenant.

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Two Own-Use Notices, Side by Side
Both use the same Landlord and Tenant Board form. Which section applies depends on whether the sale has closed.
 
SECTION 49
Purchaser’s own use
SECTION 48
Landlord’s own use
Who gives the notice
The seller, on behalf of the purchaser
The owner, who is already the landlord
When it may be given
Before closing, while the seller is still the landlord
After closing, once you are the landlord
What must exist first
A signed agreement of purchase and sale
Ownership. No agreement of purchase and sale is required
Unit-count limit
No more than three residential units in the residential complex
No unit-count limit
Available to a corporation
No. A corporation cannot occupy a residential unit
No. Section 48 applies only to landlords who are individuals
Notice period
At least 60 days, to the end of a rental period
At least 60 days, to the end of a rental period
Who compensates the tenant
The landlord who gave the notice, which on a sale is the seller (s. 49.1)
The landlord who gave the notice, which is the current owner (s. 48.1)
120-day compensation waiver, from September 21, 2026
Not available. Section 49.1 is unchanged by Bill 60
Available where the notice gives at least 120 days and ends a rental period
If the tenant does not leave
The landlord may apply to the Landlord and Tenant Board
The landlord may apply to the Landlord and Tenant Board
3
unit ceiling under section 49
60
days minimum notice, either route
s. 49.1
compensation stays with the seller
Source: Residential Tenancies Act, 2006, S.O. 2006, c. 17, ss. 48, 48.1, 49, 49.1 and 51 — ontario.ca/laws/statute/06r17. Landlord and Tenant Board Interpretation Guideline 12 — tribunalsontario.ca.
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Compensation, Good Faith, and What Changed in September 2026

Compensation on a section 49 notice is owed by the landlord who gave it, which on a sale means the seller. The obligation does not pass to the buyer on closing. The landlord must pay the tenant one month's rent, or offer another rental unit the tenant finds acceptable, by the termination date on the notice.

Ontario changed part of this rule on September 21, 2026, and the change is narrower than it first appears. A landlord giving a notice under section 48, for their own use after closing, may avoid the compensation requirement by giving at least 120 days' notice instead of 60. That amendment was made to section 48.1.

It does not reach section 49. A purchaser's own-use notice still carries the one-month obligation however much notice is given. A buyer who reads that Ontario has removed N12 compensation is reading about the landlord's own-use route, not this one.

Good faith is a separate requirement that does not change. The purchaser must genuinely require the unit for residential occupation. A tenant who believes a notice was given in bad faith may apply to the Board, and maximum fines under the Act were doubled in 2026. Our litigation team handles disputes before the Landlord and Tenant Board.

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The Purchaser’s Own-Use Notice, and What the September 2026 Change Does Not Do
Ontario removed the compensation requirement for some own-use notices from September 21, 2026. The change was made to section 48.1 and reaches only notices given under section 48.
SECTION 49
Purchaser’s own use, given by the seller
Notice given
60 days minimum
Compensation
One month’s rent
Compensation of one month’s rent, or another rental unit the tenant finds acceptable, by the termination date. Section 49.1 was not amended by Bill 60, so this applies however much notice is given.
SECTION 48
Landlord’s own use, given after closing
Notice given
60 or 120 days
Compensation
Waived at 120 days
For a notice given on or after September 21, 2026, the compensation requirement does not apply where the notice gives at least 120 days and the termination date is the end of a rental period or fixed term. Section 48.1, as amended by Bill 60, Schedule 12.
The section 49 sequence
1
Agreement of purchase and sale is signed
Section 49 becomes available to the seller.
2
Notice is given to the tenant
At least 60 days, ending on the last day of a rental period.
3
Compensation is paid
One month’s rent, or another acceptable unit, by the termination date.
4
Termination date
The date named on the notice.
5
If the tenant remains
The landlord may apply to the Landlord and Tenant Board.
s. 48.1
the section Bill 60 amended
s. 49.1
unchanged, compensation still owed
120
days, section 48 notices only
Source: Residential Tenancies Act, 2006, S.O. 2006, c. 17, ss. 48.1, 49, 49.1 and 57 — ontario.ca/laws/statute/06r17. Bill 60, Fighting Delays, Building Faster Act, 2025, Schedule 12, s. 2 — ola.org.
Nihang Law Professional Corporation · Law Society of Ontario

Before You Waive Conditions: A Buyer's Roadmap

Six things are worth settling while your conditions are still in place. Each is answerable before you are committed, and difficult afterward.

  1. 1
    Count the residential units.This number decides whether an own-use route exists at all.
  2. 2
    Ask for every lease and the rent roll in writing.A rent roll is the schedule of what each unit rents for and when the rent was last increased.
  3. 3
    Confirm the last month's rent deposit and the interest owed on it.Both follow the tenancy and typically become a closing adjustment.
  4. 4
    If vacant possession has been promised, ask how.A signed agreement to end the tenancy is a document you can review. An assurance is not.
  5. 5
    Have the agreement of purchase and sale reviewed before conditions come off, including what happens if the property is not empty on closing..
  6. 6
    Keep the condition period open until the answers arrive.Waiving conditions on an expectation is hardest to undo.

If you are buying with a spouse, sibling, or parent, how you take title is a separate decision worth making at the same time. Our guide to how co-buyers hold title together covers the options.

The Rent and the Deposit You Inherit

A sale does not reset the rent. The tenant keeps paying what they were already paying, the 12-month period between increases continues on its existing schedule, and the annual provincial guideline keeps applying to units covered by rent control.

For investors, this is the number the purchase has to work on. A unit renting below market stays there until a lawful increase is available, and pricing an offer on any other assumption is where tenanted purchases go wrong. Our explainer on Ontario's rent increase rules sets out the current guideline.

The last month's rent deposit is money a tenant pays at the start of a tenancy that may only be applied to the final rental period. It follows the tenancy rather than the landlord who collected it, and interest is owed on it annually.

Common Mistakes Buyers Make

  • Treating closing day as the day the tenants leave. The tenancy continues through the sale, and the buyer becomes the landlord rather than an owner with an empty house.
  • Offering on a property with four or more units while planning to move in. The own-use route is unavailable above three units, so the count belongs in the first conversation.
  • Accepting a verbal promise that the tenants are leaving. A signed agreement can be verified before conditions come off. A conversation cannot.
  • Underwriting on market rent instead of the rent being charged. A sale does not reset the rent or restart the 12-month clock.
  • Overlooking the last month's rent deposit and its interest. Both follow the tenancy and are better raised as a closing adjustment than discovered later.
  • Assuming the Board schedules around a closing date. Its timelines run independently of the transaction, and a notice is not an eviction order.
  • Relying on an own-use notice without genuinely intending to occupy. Good faith is a statutory requirement, and the exposure under the Act is substantial.

Frequently Asked Questions

If I buy a house in Ontario with tenants, do they have to move out?

No. A tenancy does not end because the property was sold. The buyer becomes the landlord on closing, and the existing lease continues on the same terms, including the rent. Removing a tenant requires a lawful ground and, in most cases, an order from the Landlord and Tenant Board.

Can I evict the tenant after I buy the property so I can live there myself?

Not under the purchaser's own-use route. That notice is given by the seller before closing under section 49 of the Residential Tenancies Act, 2006. Once you have closed, you are the landlord, and any own-use notice runs under section 48 instead, with different requirements.

Who pays the tenant compensation on an N12 — me or the seller?

The landlord who gave the notice pays. On a sale, that is the seller, and the obligation does not transfer to the buyer at closing. The amount is one month's rent, or another rental unit the tenant finds acceptable, due by the termination date on the notice.

What if the building has four apartments instead of three?

The purchaser's own-use route is not available. Section 49 applies only where the residential complex contains no more than three residential units. Above that number, an application based on it may be dismissed. Count the units before you make an offer.

Can I raise the rent once I own the place?

Not simply because ownership changed. The rent does not reset, the 12-month period between increases continues on its existing schedule, and the provincial guideline keeps applying to units covered by rent control. A change of landlord does not create a new tenancy.

What happens to the tenant's last month's rent deposit when the property is sold?

It follows the tenancy, along with the interest owed on it. The new owner typically holds the deposit and remains responsible for it, which is why it is usually dealt with as an adjustment on closing day rather than left with the seller.

The seller promised vacant possession, but the tenant is still there on closing day. What now?

A vacant possession clause is a contractual obligation on the seller to deliver the property empty by lawful means. Where that has not happened, the position depends on the wording of your agreement and the circumstances, and it is worth getting advice quickly.

Can I use an N12 to move my parents in?

Possibly. The Act allows a purchaser's own-use notice where the unit is required for the purchaser, their spouse, a child or parent of either of them, or a care provider for one of those people. Good faith and the three-unit limit still apply.

A related situation comes up when an owner dies rather than sells. Our guide on when a landlord dies during a tenancy covers how a tenancy continues through an estate.

Getting Advice Before You Sign

The most useful thing to know about buying a tenanted property in Ontario is that the decisions that matter happen before the offer is firm, not after closing. The number of residential units, and how vacant possession is to be delivered, are both answerable while conditions are still in place.

None of this makes a tenanted property a bad purchase. It makes it one that rewards asking the right questions early.

Qasim Ali, Principal Lawyer at Nihang Law, and our real estate team advise buyers across Toronto, Scarborough, and the GTA on tenanted purchases. You can speak with our team.

Thinking about a tenanted purchase?

Our real estate team advises buyers across Toronto, Scarborough, and the GTA on what a property comes with and how vacant possession is handled before conditions come off.

Speak with our team
This article is for informational purposes only and does not constitute legal advice. Every legal situation is unique — consult a licensed lawyer before making any legal decisions.
Qasim Ali — Principal Lawyer at Nihang Law Professional Corporation

About the author

Qasim Ali

Principal Lawyer · Nihang Law Professional Corporation · Toronto & Scarborough, Ontario · Law Society of Ontario

Qasim Ali is the Principal Lawyer at Nihang Law Professional Corporation, serving clients across Toronto, Scarborough, and the broader Greater Toronto Area. He provides full-service legal representation across immigration, real estate, family law, criminal law, civil litigation, employment law, wills and estates, and business law.

Nihang Law is particularly recognized for its depth in immigration and real estate law, a combination that serves newcomers and growing families navigating both legal systems simultaneously.

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