Selling a Tenanted Property in Ontario: What Changed in September 2026
If you own a tenanted property in the GTA and you are thinking about selling, the question that
decides your price is not what the place is worth. It is whether it can be sold vacant, and who is
allowed to make that happen.
The answer is more restrictive than most owners assume, and it changed for part of this in
September 2026.
You can sell any time. The tenancy comes with it.
Start here, because it removes a lot of confusion. Selling a tenanted property is completely
normal and requires no one’s permission. What you cannot do is sell it and hand over vacant
possession just because a buyer would prefer that.
The tenancy survives the sale. The buyer becomes the landlord on the same terms, at the same rent,
with the same rights. If the tenant has been there eight years at well below market rent, the buyer
inherits exactly that.
The only common route to vacant possession
Section 49 of the Residential Tenancies Act. It lets a landlord give notice on behalf of a
purchaser where the purchaser, or their spouse, child, parent or a person providing care, in good
faith requires the unit for their own residential occupation. The form is the N12.
The important limits:
- It is for people, not plans. A buyer who wants to renovate, or re-rent at a
higher price, or run it as a short term rental, does not qualify. It has to be genuine occupation. - Sixty days, ending at the end of a rental period. You cannot pick an arbitrary
date mid-month. - Compensation is owed. Section 49.1 requires the landlord to compensate the
tenant one month’s rent, or offer another acceptable unit. - The obligation is the seller’s. The landlord who serves the notice owes the
compensation, not the buyer. This gets negotiated and it should be explicit in the agreement. - Bad faith is expensive. Section 57 lets a former tenant apply against a
landlord who gave the notice in bad faith. If the unit gets listed for rent shortly after, that
application tends to succeed.
The Fighting Delays, Building Faster Act, 2025 added a new subsection 48.1(2) to the Residential Tenancies Act, in force September 21, 2026. Where a landlord gives notice for their own use under section 48, the one month compensation no longer applies if the notice gives at least 120 days and ends at the end of a rental period or fixed term. So a landlord now has a choice: 60 days and pay a month, or 120 days and pay nothing. Note carefully what did not change. This is section 48, the landlord’s own use. Notices given on behalf of a purchaser under section 49 still carry the section 49.1 compensation. If you are selling, that is the one that applies to you.
What this does to your price
Be honest with yourself about which buyer you have.
- Buyer pool is investors
- Priced off the rent it produces
- A below market rent lowers the price directly
- No N12 needed, cleaner and faster
- Buyer pool is everybody
- Priced off comparable sales
- Usually a materially higher number
- Requires a genuine s.49 purchaser, plus notice, plus compensation, plus time
In the GTA the gap between those two numbers on the same property can be very large, particularly
where the rent is well under market. That gap is what tempts people into arrangements that do not
survive scrutiny at the Landlord and Tenant Board.
Do not agree to serve an N12 for a buyer who has told you they intend to renovate and re-rent.
The notice has to be given in good faith on behalf of a purchaser who genuinely requires the unit
to live in. If that is not true, the exposure under section 57 lands on the person who served it,
and that is you, after you no longer own the property.
The route people forget
An N11 is an agreement to end the tenancy, signed by both sides. Tenants sometimes want to go, and
a negotiated departure with real money attached is faster, cheaper and far safer than a contested
N12.
It has to be genuinely voluntary. But a tenant who was planning to move anyway, offered a sum that
makes their move easy, is a completely legitimate outcome that serves both sides. I have seen this
resolve in a week what an application would have taken many months to do.
What I would actually do
- Get the tenancy documented before you list. Lease, rent, deposit, increase
history, any arrears. Investors will ask, and vague answers cost you money. - Price both scenarios. Know what the property is worth tenanted and vacant
before you decide which sale you are running. - Talk to the tenant like an adult. They are going to find out. A tenant who is
informed and treated decently makes showings possible. One who feels ambushed can make selling
genuinely difficult, and they are within their rights to. - Get the compensation into the agreement of purchase and sale. Who pays the
month, when, and what happens if the buyer’s plans change before closing.
Residential tenancy law is technical, the forms are unforgiving, and it changed in September
2026. A paralegal or lawyer who does Landlord and Tenant Board work is inexpensive relative to a
failed application, and should be involved before any notice is served.
Where This Comes From
Written from the Residential Tenancies Act, 2006, S.O. 2006, c. 17, sections 48, 48.1, 49, 49.1 and 57, read on Ontario’s e-Laws site including the amendments made by Schedule 12 of the Fighting Delays, Building Faster Act, 2025, in force September 21, 2026.
Frequently Asked Questions
Can you sell a house with tenants in it in Ontario?
How do I get vacant possession to sell?
Who pays the tenant compensation, the buyer or the seller?
What changed for own-use evictions on September 21, 2026?
What happens if the buyer never moves in?
Related Reading
- Ontario Landlords Are Selling
- Garden Suites in the GTA
- Power of Sale in Ontario
- How to Retire From Real Estate
If you own a tenanted property and want to know what it is worth both ways, tenanted and vacant, before deciding which sale to run, that is a comparison I will put together for you with no obligation.