Your landlord is selling your rental home. Now what?

Tenants in Ontario are afforded numerous protections under the Residential Tenancies Act (RTA) and the law may provide more safeguards than many realize.

Chief among those rights is that a tenant cannot be evicted by a landlord – only the Landlord and Tenant Board (LTB) has the authority to order an eviction in Ontario.

One of the common scenarios where a landlord may want to evict a tenant is to sell the home.

“The very first and most important point is you don’t actually have to leave,” explains tenant lawyer Dania Majid from the Advocacy Centre for Tenants Ontario. “You can wait and have a hearing before the landlord and tenant board and have the board ultimately decide that matter.”

Majid says that when a tenanted property is purchased, that new owner assumes and takes over all existing leases.

“[The purchaser] becomes the new landlord and the relationship will then continue with the new landlord. [The new landlord also assumes] all the rights and responsibilities under the Residential Tenancies Act and any type of agreements that the previous landlord and tenants had. All those things stay in place under the new purchaser.”

In order to evict tenants for the purpose of sale, landlords must follow a strict process outlined in the RTA, which also applies if the landlord wants the unit for their own personal use.

“So the landlord can’t bully you, pressure you to move out. They have to give you a notice. The notice has to be on one of the board forms, so it can’t be a handwritten message or a text message which a lot of tenants do receive,” says Majid.

The form required is an N12, titled “Notice to end your tenancy because the landlord, a purchaser or a family member requires the rental unit.”

When served with an N12, Majid says tenants should be aware of the following details:

• Grounds of the eviction: Whether the landlord is selling the home, moving in themselves or moving in a family member
• Who is moving in: This can either be the landlord, the purchaser or their family members. The family member has to be either the purchaser or landlord’s parent, child or spouse or the spouse’s child or parent and any caregivers
• Termination date: It has to be at least 60 days from when notice is served and at the end of a rental period
• Compensation: The landlord is required to provide the tenant with one month’s compensation before the termination date. If compensation is not provided in time, the N12 is void.
• The tenant must be given a copy of the signed purchase and sale agreement and/or declaration by the person who is actually moving in saying that they are going be using the unit as their primary residence for a minimum of 12 months.

Once a tenant receives an N12, they have the following options:

• Leave by the termination date
• Leave early, before the termination date, and give the landlord at least 10 days notice
• Exercise their right to a hearing before the LTB to explain why they believe they should not be evicted

Majid reiterates that an N12 is only a notice to end tenancy. The landlord must also file an L2 form with the LTB – titled “Application to end a tenancy and evict a tenant.”

“What the board will do once they receive that form is issue a notice of hearing to both the landlord and tenant. So if a tenant receives a notice of hearing, they should really read that package very, very carefully because it explains all the rules around evidence and when to submit your materials. And it also gives you, most importantly, the date of the hearing. And a tenant should be at the hearing if one is ordered.”

At a hearing, landlords must present the signed purchase and sale agreement and/or declaration of the person moving into the unit.

Tenants have the opportunity to explain any compelling personal reasons or hardships that they believe the board should consider when making a decision to grant eviction.

“A lot of times what we do see at the board is when those compelling reasons arise, the move out date or the termination date can be extended by months,” she says.

“For instance, if someone has young children, they might wait till the end of the school year so as not to disrupt the child’s education. If someone’s going through cancer treatment and they’re in a hospital nearby, they might wait till the chemotherapy treatments have concluded before the move out date is set. And in some instances, the circumstances might be so dire, that the board may not elect to grant an eviction,” although a delayed move-out date is most common.

If the tenant believes they are being evicted in bad faith, evidence to prove that belief can be presented at the hearing as well.

Bad faith evictions

Under Ontario’s RTA, the purchaser or the landlord/landlord’s family member must reside in the home for a minimum of one year after the tenant is evicted under an N12.

Landlords are not allowed to use an N12 to evict tenants only to re-rent the unit for a higher rate within less than a year, but Majid says it is a common occurrence.

“Bad faith eviction is a notice that is given in bad faith, or in other words for not truthful or non-legal purposes. So we are seeing this happening in Ontario as we’ve seen how rents are skyrocketing,” explains Majid.

In her work with tenants, Majid says she has seen various scenarios that could constitute bad faith.

“In some instances, a purchaser or a landlord who has a building with a long sitting tenant might say, ‘I want this tenant out, so I can make some cosmetic changes to the unit and then re-rent the unit for much higher rents,'” she says as an example.

“We also see retaliation. So tenants who have complained about maintenance and repair issues, for example, the landlord’s like, ‘you know what, this is a troublesome tenant. I’m going to just say I’m moving in, or I’m selling the unit to get that tenant out.'”

If a tenant suspects bad faith, Majid says they should collect any evidence that might support their claim and exercise their right to have a hearing before the Landlord and Tenant Board.

Evidence may include requests for maintenance, higher market rents for similar units, any requests from the landlord for rent increases above the rent control guidelines, any removal of amenities and so on.

“[The tenant] can bring all that evidence to the hearing to explain [that] ‘I’ve complained about these repair issues or I refuse to pay an additional $200 in rent’ and try to build that case to show that maybe this is a bad faith eviction,” she says. “In some instances, tenants succeed and unfortunately, in many instances, tenants don’t.”

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If the tenant fails to convince the board that they should not be evicted and receives an order from the LTB to vacate the home, Majid says they should check it carefully for any errors and file a request to review it with the board. They can also escalate with an appeal at divisional court.

If all options are exhausted and the tenant must leave, Majid advises keeping an eye out on rental websites if they still suspect bad faith.

“A month later they see their unit being marketed on Kijiji or some other platform for double the rent, that is good evidence to show, ‘you know what, I might have been evicted for bad faith,'” she says.

In that case the tenant has up to a year to file a T5 form with the board – an application to determine if the landlord issued a notice of termination in bad faith.

“In that application, a tenant can ask for a whole series of remedies. It can be financial remedies, it could be general compensation for the, I would say the indignity and the trauma of being evicted from your home in bad faith. And they can also ask for a remedy called reinstatement. So they can ask the LTB to put them back into their unit that they were illegally evicted from, even if that unit is occupied,” explains Majid.

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Reinstatement would mean the new renter would have to vacate the unit. Majid explains that as per the law, if bad faith is proven, the person that was evicted is still the lawful tenant. The new renter is not recognized as a tenant of that unit but rather considered an “occupant.”

The occupant then has the right to legal remedies and could take the landlord to court for leasing out a unit that was not lawfully available for rent.

Cash-for-keys deals

Majid says that under the Landlord and Tenant Board’s dispute resolution processes, mediation is one route for landlords and tenants to negotiate settlements outside of a hearing room.

However, both parties could come to a settlement independently, without involving the LTB, in what is known as a “cash-for-keys” deal. It should be noted that such agreements do not fall under the RTA.

“Tenants could sit down and say, ‘listen, this is how much it’s going to cost me to move. This is what I’m looking at paying in the current rental market. This is [the amount] I would like in order to give you the keys back and avoid the hearing process,” she explains.

When negotiating such an agreement, Majid advises that tenants do their research on current market rents and any kind of financial strain they might incur in order to move.

“So $10,000 might seem like a lot of money for a tenant to get in lump sum, but when you start looking at what the asking rents are in the current market, you might realize that, well that actually only covers a few months rent. That might not correlate with really what a good or fair deal is for the tenant,” she says.

Majid adds that sometimes, a landlord might initiate a cash-for-keys deal.

“Knowing that it can take some time to have a hearing before the board or there might be a family emergency where they might need the unit much quicker … the landlord might be the ones offering that kind of lump sum to a tenant to move,” she says.

Currently, Majid says the LTB is prioritizing applications in relation to rental arrears. Applications like L2s are taking anywhere from nine months to a year to be heard before the board and T5s can take up to two years.

“Irrespective of who’s doing the offering, I think it’s really important that tenants know what options they have before them and if possible seek out legal resources in the community — be it at their local community legal clinic or the many resources that are available online — to understand what their rights are before they sign any agreement with the landlord outside of a board-mediated negotiation or at the board [hearing] itself.”

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