Evicting a Tenant: For the Purpose of Selling the Property as Vacant Premises

Question: Can a tenant be evicted when a landlord is selling the property?

Answer:   In Ontario, the rules governing eviction for the purpose of a property sale are quite specific and procedural.  A landlord must provide proper notice using the N12 – Notice of Termination for Landlord's, Landlord's Family Member, or Purchaser's, Own Use form, and this notice must adhere to guidelines set by the Residential Tenancies Act, 2006, S.O. 2006, Chapter 17.  For assistance navigating this complex process, Anderson Aylwin Begg & Co. Legal Services Professional Corporation is here to help ensure you understand your rights and responsibilities.

Determining Whether a Tenant Has the Right to Stay When a Landlord Is Selling the Property

The law in Ontario says that when a landlord is selling a property, and the property has tenants residing within the unit, the tenants can stay should the new owner want to take on those tenants; however, within the market today, many purchasers prefer, and are seeking, vacant possession, meaning an untenanted property, when purchasing.

When a landlord promises vacant possession to a purchaser, the landlord needs to keep in mind that the landlord only has control over part of the process, being the process of issuing, and serving upon the tenant, an N12 – Notice of Termination for Landlord's, Landlord's Family Member, or Purchaser's, Own Use form.  A landlord must also keep in mind that a Notice of Termination for Purchaser’s Own Use form may only be issued and served at the end of a lease term.  Furthermore, such a termination is inapplicable, and thus invalid, where the premises contains more than three (3) rental units.  Additionally, the rules of eviction when selling a property disallow eviction if the landlord is selling a property to a relative of the landlord.

The process of purchasing a property with vacant possession, usually, occurs as part of a process set out within the Agreement of Purchase and Sale documentation.  The process begins with the seller, being the landlord, properly completing and serving the N12 – Notice of Termination for Landlord's, Landlord's Family Member, or Purchaser's, Own Use form prescribed by the Residential Tenancies Act, 2006, S.O. 2006, Chapter 17.  This form requires that the seller provide due notice to the tenants at least sixty (60) days in advance of the termination date.  The tenant can choose to move out by the date on the notice or, if the tenant believes that the notice was given in bad faith, the tenant may contest the notice at a hearing at the Landlord Tenant Board.  It is notable that once the landlord as seller provides notice to the tenant, the landlord can then file the notice with the Landlord Tenant Board immediately utilizing the L2 - Application form.  Furthermore, such a termination is inapplicable if the premises contains more than three (3) rental units.  Additionally, the rules of eviction when selling a property disallow eviction if the landlord is selling a property to a relative of the landlord.

Rules Regarding Notice

When a landlord is seeking to evict for the purpose of selling to a purchaser that intends 'own use' of the premises, the rules regarding the eviction notice period are very specific.  Often a landlord fails to follow the rules due to failure to provide the proper notice document with the proper advance notice, among other things; accordingly, issuance of the absolutely necessary N12 form as required by the Residential Tenancies Act, 2006, S.O.  2006, Chapter 17 and the Landlord Tenant Board as well as the proper and timely service of the N12 form are important. Additionally, filing of the proper documents with the Landlord Tenant Board is necessary. Making an error on the notice form can be detrimental to the point of having to start again from the very beginning. Furthermore, a landlord should remain mindful that once a date for a hearing at the Landlord Tenant Board is scheduled, the landlord needs to involve the purchaser whereas the purchaser will need to provide an Affidavit as sworn, or affirmed, under Oath and attend at the hearing to testify, also under Oath, that the purchaser intends to move into the premises upon taking possession of the property promptly following closing of the purchase from the landlord.

A landlord is unable to force a tenant to leave; however, a landlord may negotiate a 'cash for keys' agreement with the tenants. A 'cash for keys' agreement occurs when a landlord, without use of undue pressure, enters into a deal to buy out a tenant.  In such an effort, it is advisable that the landlord obtains the assistance of a legal professional to negotiate the agreement as the terms must be negotiated within the law.  Trying to negotiate such a deal, or allowing a real estate agent to negotiate such a deal, is ill advised. Often when the landlord or a real estate agent takes on this task, failures to abide by the precise law lead to breach of the rights of the tenant with a possibility that such rights will be pursued by the tenant via applications seeking protections and remedies brought to the Landlord Tenant Board. Note also that a real estate agent is legally unable to provide legal services without holding a proper license from the Law Society of Ontario.