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What Happens To Existing Tenants In A Property Sale?


It is not uncommon that a purchaser wants to buy a property that is already housing tenants. In the case, where the purchaser is buying the property as a rental property and assumes the existing tenancy, the purchaser needs to ensure all the due diligence is conducted to ensure the legality of the tenancy. As the rent is highly regulated by law, the purchaser or the purchaser’s solicitor needs to ask for all the necessary documents to prove the legality of the rent.

In addition, the purchaser or the purchaser’s solicitor should require the seller to advise of any rent-increase orders, applications, and investigations. For purchaser’s protection, a clause should be inserted in the agreement of purchase and sale that allows the purchaser to terminate the agreement of purchase and sale if the purchaser is not satisfied that all rents currently being charged are legal, appropriate notices have been given to validate any rent increases, and that statutory payments have been made.

But What Happens If The Purchaser Is Purchasing The Unit For Personal Use?

Under section 49(1) of the Residential Tenancies Act, 2006, S.O. 2006, c. 17, it is provided that the “landlord of a residential complex that has no more than three residential units who has signed an agreement of purchase and sale of the residential complex may, on behalf of the purchaser, serve the tenant of a rental unit a notice terminating the tenancy”. However, the purchaser has to occupy the residential unit or complex by herself, her spouse, a child or parent of her or her spouse, or the person who provides care to any of the above-noted individuals.

Tenant’s Recourse If He/She Discovers That The Property Is Not Consumed For Personal Use?

If the purchaser manages to evict a tenant through the landlord and the tenant finds out that the property is not occupied by any of these individuals, the tenant may claim the moving costs and the difference between the higher rent and the old rent from the landlord.

Tenant’s Notice To End Tenancy

The termination date shall not be less than 60 days after the notice is served. The tenant can also terminate the tenancy any time before the date specified in the notice. However, the date for termination stated in the tenant’s notice must be at least 10 days after the date the tenant’s notice is served.

If the tenant does not move out, the purchaser will assume the existing tenancy unless the landlord files an application to evict the tenant to the Landlord and Tenant Board. At the hearing, the landlord must show that they have taken the right steps in their application, and that the purchaser honestly plans to move into the place.

Our Skilled Lawyers Can Guide You

If you face any tenancy issues and require any assistance either as a tenant or a landlord, we recommend you speak with our lawyers for advice tailored to your situation. Ayaz Mehdi Professional Corporation has experienced lawyers on staff who can assist you with your matter at cost-effective prices.

Disclaimer:  Kindly note that sending or receiving information through this site does not establish a solicitor-client relationship. Legal matters are fact-specific, and the law is variably changing. The views expressed and the content provided on this blog are general guidelines and cannot substitute for proper legal advice. Schedule your legal consultation by clicking here: Let’s meet!

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