Buying a House With A Tenant In Ontario – 5 Tips To Avoid A Headache

Avoid The Headache Of Evicting A Tenant Or Becoming a Landlord By Knowing The Law

Real estate transactions are complex, to say the least. Buying a home with tenants in Ontario can be an even greater challenge. Besides buyer and seller, you have to deal with a third party, the tenant. You should be aware of all the legalities involved in buying a tenanted property to have a smooth and successful purchase. Find out how you can evict a tenant and buy or continue being a landlord. This article will give 5 tips for buying a tenanted property like a pro. 

Table of Contents

1. Define Your Goals Before You Purchase The Rental Property

Do you want to occupy the property as a primary residence yourself or let one of your family members occupy it? Do you want to assume the tenant and use the house as an income property? Before you sign on that dotted line, decide your future course of action. 

If you wish to occupy a vacant property, you might put that as a condition of your offer. This way, the seller will be responsible for the termination of tenancy. Another way to occupy a vacant property is to negotiate a closing date that corresponds to the expiration of the tenant’s lease. 

 If you wish to take the tenant and continue using it as a rental property, you must add the Assumption Of Tenancy Clause in your purchase agreement. This clause states that you as a buyer agree to take tenants and continue to use it as a rental property.   

Define Your Goals Before You Purchase The Rental Property

2. Know The Rights Of Existing Tenants Before Becoming a Landlord

Becoming a lord can be exciting as well as challenging. The following are some rights of tenants from Residential Tenancies Act that you should be aware of.

  • You can’t raise the rent more than 2.2% per year. 
  • If the tenants are renting it on monthly basis, you can ask them to sign a new lease. Be aware that they are under no obligation to do so and they can continue renting it on previous terms.  
  • You must provide 24 hours’ notice to tenants before showing the home to any potential buyers. 
  • If you wish to end the tenancy, you must give the tenants a 60 days notice before the lease ends. 
  • Tenants can choose to stay in the property if they believe the landlord has committed a bad faith eviction. It means that the landlord is not evicting tenants so that he or his family could occupy it. He is doing it to raise the rent. A bad faith eviction can have legal or financial consequences. 
Know The Rights Of Existing Tenants

3. Steps For Ending A Fixed Term Tenancy

Can You Break A Fixed-Term-Tenancy After Purchasing The Property? The short answer is “No.” If there’s a fixed-term tenancy, like one year lease signed between the seller and his tenant, you as a buyer cannot evict the tenants immediately after purchasing it. When you buy a tenanted property, you are assuming the tenant(s), including the lease and the terms of their lease. 

The following are some ways in which you can end a fixed-term tenancy: 

  • The tenant agrees to leave voluntarily. 
  • You can negotiate a closing date that is closer to the end of the lease. While handling an existing lease, it is important to follow the Landlord and Tenant laws. 
  • If you purchase a property and wish to end a fixed-term tenancy, you need to give at least 60 days’ proper notice before the end of the lease. The termination date cannot be before the last day of the fixed term. 
Steps For Ending A Fixed Term Tenancy
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4. Steps For Ending Month-To-Month Tenancy

What if your dream home comes with month-to-month tenants?

We’ve all been there—the house you’ve always wanted is on the market, but it’s got a tenant who doesn’t want to leave. What do you do?

After a residential lease expires, the tenants are automatically shifted to a month-to-month tenancy. When a tenant is on a month-to-month agreement, you can take possession of the home through several options. 

One way is to specify in your offer if you want vacant possession. This way you can make the seller responsible for working with the existing renters for ending their tenancy. 

Another way to legally end the tenancy is if you, a family member, or a caregiver intends to take over the vacant unit. Here’s how it works: 

  • Give an N12 notice (a notice of eviction for personal use) to the landlord. An N12 notice indicates that the rental unit will be occupied by the buyer or a close relative of the buyer. 
  • Fix the date of termination for tenancy. 
  • If a tenant is on a month-to-month tenancy basis, there should be a 60 days notice that should end after the last day of the monthly rental period. For example, if the notice is provided to the tenant on March 1st, the earliest the termination date on the notice can be is May 1st.  
  • Once the notice for eviction is given, the tenant can terminate the tenancy earlier by giving the landlord a ten day’s written notice (N9 notice)
  • The landlord may apply to LTB for an eviction order as soon as the notice has been given. At the hearing, the LTB will decide on the date for eviction. 
  • You may be required to provide one month’s rent to the tenant, as compensation for terminating the rental agreement. 

It is important to remember that you can’t evict tenants to increase rent and get new tenants. If an N12 notice is given and the property is not occupied by the landlord or his close family member, the tenant can sue you for wrongful eviction. 

One way of ending the existing tenancy to find new tenants is called “cash for keys.” You can make a financial offer to the tenants to make their move worthwhile. It might cause an immediate financial loss but you are free to get new tenants and increase the rent. If the existing tenant decides to take your offer and leave, he would be required to sign an N11 notice (Agreement to terminate tenancy) 

5. How To Maximize ROI From A Tenanted Property?

It can be difficult to sell a house to tenants, particularly if they are uncooperative or do not maintain the place according to the expectations of the landlord. The following tips can help you to maximize your ROI from an investment property. 

  1. Work with an experienced real estate agent who specializes in rental properties. The expertise and understanding of a real estate agent can help you get the best value for your investment by finding the right buyers.
  2. Consider performing upgrades or renovations. You can replace appliances, repaint walls, replace the flooring, add expansions or improve the curb appeal. Depending on your budget you can plan renovations or repairs. 
  3. Consider the market situation before choosing to sell your property. If the market is steady, consider it a good time to sell the property. Hiring a real estate agent can give you tons of help as a real estate agent can read the market and keep up with the local investment and selling trends.  
  4. Consider the location of your rental property. Examine nearby houses to determine the trends. Try to understand what is considered more valuable by the buyers and plan upgrades accordingly.  


To conclude, these are all the things you need to know, to own a house with tenants in Ontario, and the steps you need to take if you want to evict them.


In Ontario, it is unlawful to evict a renter before the end of their contract. This implies that if you acquire a rented home in March and the existing tenant’s lease does not expire until June 30, you cannot move in until at least July 1. According to Ontario law, you have no options throughout the term of the lease. Therefore, if you purchase a property with an existing tenant, you cannot modify the conditions of the existing lease, such as the lease expiration date or the rental rate. 

A landlord has to give a 60-day notice when selling a property in Ontario. 

This term is used to describe landlords that provide a tenant with an N12 notice but who do not use the rental property as stated on the form.

Unfortunately, not every landlord follows the guidelines, leaving renters scrambling for answers in certain instances. In the event of a bad-faith eviction, tenants should submit a T5 form and a description of their condition to the Landlord and Tenant Board. The Board will inquire as to why the tenant believes the landlord is behaving in bad faith, to which the tenant may answer with supporting evidence. Note that the board takes swift action against the landlords found guilty of bad faith eviction. 

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