Buying a Home with Tenants in Ontario

A common scenario in the world of Real Estate, buying a house in Ontario with tenants. Whether it is buying it for yourself to live in or as an income property. There are certain steps and considerations involved in the process of buying a property that is tenant occupied:


1.  Legal Obligations: As a buyer, you inherit the existing tenancy agreement and become the new landlord. It's essential to familiarize yourself with the Residential Tenancies Act of Ontario and understand your legal obligations towards the tenants. A change of ownership does not cancel a lease. Even if you intend for it to be your primary residence, you can’t evict with an existing lease in place.

2. Review the Tenancy Agreement: Request a copy of the existing tenancy agreement from the current owner or property management. You need to review the terms, including the lease duration, monthly rent, and any specific clauses regarding the renewal or termination of the tenancy.

3.Communicate with Tenants: Once you're the new owner, promptly introduce yourself to the tenants and address any concerns or questions they may have. Clarify your contact information and inform them of any changes, such as a new method of rental payment.

4.Security Deposits: The previous owner should transfer the tenants' security deposits to you upon completion of the sale. Ensure the proper documentation is in place to facilitate this transfer.

5. Provide Notice of Rent Increase: If you plan to increase the rent, you must follow the guidelines set out in the Residential Tenancies Act. Typically, the rent can only be increased by a certain percentage once every 12 months.

6.Renovation and Termination: If you intend to renovate or occupy the property yourself, you will need to follow the regulations for providing proper notice to the tenants as per the Act. The rules differ depending on whether the tenancy is month-to-month or under a fixed-term lease.

7. Rights and Responsibilities: It's crucial to understand the tenants' rights and your responsibilities as a landlord, including maintaining the property, providing proper notice for entry, and resolving any maintenance issues promptly.

8. Seek Legal Advice: It's recommended to consult a lawyer experienced in tenancy laws when buying a house with existing tenants. They can guide you through the legal requirements and help ensure a smooth transition.

Remember, each situation may have unique circumstances, so it's always advisable to seek professional advice from your Real Estate agent as well as your lawyer, tailored to your specific case.

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Brock Rosettani
November 1, 2023