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Selling a property with tenants in Ontario can be complex, especially when navigating tenant rights, compensation requirements, and legal responsibilities. For tenants, understanding the Residential Tenancies Act (RTA) is essential to safeguarding their housing rights. This blog provides a comprehensive guide tailored to Ontario residents, detailing what tenants and landlords need to know during the sale process.

Tenant Rights During the Sale of a Property

When a landlord decides to sell a property, tenants’ rights remain intact under Ontario law. The new owner inherits the existing rental agreement unless they intend to occupy the unit themselves or move in immediate family members.

1. Fixed-Term Leases vs. Month-to-Month Agreements

• If tenants have a fixed-term lease, it remains valid after the sale, regardless of the buyer’s plans, until its expiration.

• Month-to-month leases offer more flexibility, but tenants are still protected under eviction and compensation regulations.

2. Evictions for Personal Use

A landlord can only evict tenants if the buyer or their immediate family members intend to live in the property. Evictions for other purposes, such as renovation or resale, are not permitted without proper notice or consent.

1. No Immediate Eviction
   Tenants cannot be evicted solely because the property is being sold. Any eviction must adhere to Ontario’s notice and compensation guidelines.

Notice Requirements for Tenants

Ontario law mandates specific notice requirements to protect tenants during the sale of a property. Landlords must use Form N12 to notify tenants of eviction for personal use by the buyer or their family.

Key Points About Notice:

• Minimum Notice Period: Tenants must receive at least 60 days’ written notice, starting from the first day of the next rental period. For instance, if notice is served on May 15, the 60-day countdown begins on June 1.

• Delivery of Notice: Notices must be delivered in person, by mail, or as otherwise specified under the RTA. Electronic delivery methods, such as email, are not considered valid.

Compensation for Tenants

When a landlord sells a property, tenants asked to vacate are entitled to compensation. The RTA outlines specific rules to ensure fairness in such situations.

1. Monetary Compensation
   Landlords must provide the equivalent of one month’s rent as compensation. This payment must be made before the tenancy ends. Failure to do so allows tenants to remain in the property.

2. Alternative Housing Offers
   Instead of monetary compensation, landlords may offer tenants a comparable rental unit. However, the tenant must agree to the arrangement, and the unit must meet their needs.

3. Additional Remedies for Bad Faith Evictions
   If a landlord or buyer provides false reasons for eviction, tenants may seek additional compensation. Ontario law allows for claims of up to 12 months’ rent in cases of bad faith, such as pretending to need the property for personal use while renting it to someone else.

What Tenants Can Expect During the Sales Process

Showings and Privacy

During the sale, landlords may schedule property showings, but they must respect tenant privacy:

• Advance Notice: At least 24 hours’ notice is required.

• Reasonable Hours: Showings must occur between 8:00 a.m. and 8:00 p.m., unless otherwise agreed upon.

• Tenant Consent: While landlords have the right to show the property, excessive or disruptive visits are prohibited.

Reviewing the Lease Agreement

Tenants should review their lease agreements to understand their rights and obligations. Fixed-term leases provide greater stability, as the new owner must honour them until they expire.

Relocation Support for Vulnerable Tenants

Ontario offers additional support for tenants in vulnerable situations, such as seniors or individuals with disabilities. These services may include financial assistance or help finding alternative accommodations.

Disputing an Eviction

If a tenant believes their eviction is unlawful or in bad faith, they have several options:

1. File a Complaint with the Landlord and Tenant Board (LTB)
   Tenants can challenge evictions that do not comply with notice or compensation requirements.

2. Seek Legal Advice
   Community legal clinics can provide guidance on filing disputes and understanding tenant rights.

3. Claim Additional Compensation
   Tenants wrongfully evicted may be entitled to financial remedies, including up to 12 months’ rent in damages.

Responsibilities for Landlords

To avoid legal issues and penalties, landlords must follow specific steps during the sale of a property:

• Provide Proper Notice and Compensation
  Failing to meet these requirements can delay the sale or result in financial penalties.

• Ensure Transparency
  Misleading tenants about eviction reasons can lead to legal disputes and additional compensation claims.

• Coordinate with Buyers
  Landlords should communicate openly with buyers about existing tenants and their rights.

Bad Faith Evictions

Ontario courts take bad faith evictions seriously. If a landlord falsely claims the buyer needs the unit for personal use, they may face significant penalties, including financial compensation to the tenant.

Additional Considerations for Landlords and Tenants

1. Renovations and Repairs
   Renovation evictions require additional permits and legal steps under Ontario law. Landlords cannot use renovation plans as a pretext for evictions.

2. Subletting and Assignment
   Tenants with fixed-term leases may sublet or assign their lease with the landlord’s consent. This can provide flexibility if tenants wish to move out before the lease ends.

3. Market Conditions
   In a competitive housing market, tenants may struggle to find comparable housing. Compensation can help offset moving costs, but tenants should start searching early to secure a new home.

Final Thoughts

Navigating tenant rights during the sale of a property can be overwhelming for both tenants and landlords. Knowing your rights, responsibilities, and legal options is essential for a smooth transition. Whether you're a landlord preparing to sell or a tenant concerned about housing stability, expert guidance makes all the difference.

At The Johnson Team, we understand the challenges of navigating Ontario’s real estate market. With years of experience and a commitment to personalized service, we’re here to help you every step of the way. Whether you’re buying, selling, or managing a rental property, trust us to provide the expertise you need.

Contact The Johnson Team today to connect with a trusted local agent. Let us guide you to success in Toronto’s competitive real estate market.