Buying house with a tenant adds layers
I’m seriously thinking about buying a house that has a tenant, but I don’t want to become a landlord. What are my options?
Any time you buy or sell a property that houses tenants, it’s important to remember: a) tenants have rights, and b) the Ontario Landlord and Tenant Board takes those rights very seriously.
I recommend speaking to a lawyer who understands landlord and tenant issues, and working closely with a real estate salesperson who has handled similar transactions. Be sure to ask specific questions about their experience when you interview potential candidates.
The Real Estate Council of Ontario regulates the conduct of real estate salespeople, brokers and brokerages. We don’t adjudicate landlord and tenant cases, but we expect anyone who is registered with us to be aware of all relevant laws — including the fundamentals of the Residential Tenancies Act.
A landlord has the right to put their property up for sale at any time, and a tenant can’t prevent potential buyers from viewing their home. But there are some defined rules on the subject. For example, a tenant must receive at least 24 hours of advance written notice before a showing, and it can only occur between 8 a.m. and 8 p.m. You’re not allowed to photograph the property while it is occupied by a tenant unless they provide their express consent.
You mentioned that you don’t want to become a landlord. If you decide to purchase the house, it’s a good idea to obtain a copy of the tenant’s lease so you know how long they have been living in the building, and the terms of the agreement. You can’t evict the tenant until and unless their lease has expired. If the tenant is paying monthto-month — meaning the lease has expired — you must give them adequate notice to vacate the property.
As the owner, you are allowed to evict the tenant if you plan on living in their unit, or allowing a family member to use it. But you or the family member must intend to live there, and you’ll have to provide compensation and sufficient notice.
It’s illegal for a homebuyer to evict a tenant under a false claim of the “Landlord’s Own Use” rule. If you evict your tenant and they find out you weren’t truthful, the tenant could sue you for moving costs and the higher rent paid at their new home. Moreover, the Ontario Rental Housing Enforcement Unit may investigate the matter and press charges.
Check out the Landlord and Tenant Board website if you wish to learn more about a landlord’s rights and responsibilities.