On September 21, 2026, Ontario's Landlord and Tenant Board began applying a new set of rules under the Residential Tenancies Act. They come from two pieces of legislation: the Fighting Delays, Building Faster Act (Bill 60) and the Helping Homebuyers, Protecting Tenants Act, 2023 (Bill 97).
Most of the headlines have been written for landlords. The changes matter just as much when an owner decides to sell a property with a tenant in it. That includes investor condos, basement apartments, duplexes and small multiplexes. On a sale, the question that decides the deal is whether the unit will be empty on closing day.
Before we get to the changes, one thing has not changed at all.
The rule that did not change: a sale does not end a tenancy
In Ontario, selling a property does not end the lease. If nothing is done, the tenant stays and the buyer becomes their landlord on closing, on the same terms and at the same rent.
A seller who wants to deliver the property empty has three lawful ways to get there:
The tenant chooses to leave. They give proper notice themselves, or the landlord and tenant sign a mutual agreement to end the tenancy (Form N11). That agreement is often paired with a negotiated payment, sometimes called "cash for keys."
The buyer needs the unit for themselves. Once there is a firm agreement of purchase and sale, the seller can serve an N12 notice on the buyer's behalf. That notice is sometimes called a "purchaser's own use" N12.
An LTB order. The Board orders the tenancy to end on some other lawful ground.
Neither a listing agreement nor the buyer's closing date gives the seller any power to remove a tenant. Self-help eviction, such as changing the locks or cutting off services, is illegal in every scenario.
The 120-day N12 change: why it does not help most sellers
This is the change that has caused the most confusion.
For N12 notices served on or after September 21, 2026, a landlord who gives at least 120 days' notice no longer has to pay the tenant compensation or offer them another acceptable unit. That exemption applies only when the landlord needs the unit, for their own use or a qualifying family member's.
The LTB states plainly that it does not apply to purchaser's own use. When a seller serves an N12 because the buyer is moving in, the compensation rules are unchanged:
| Item | Landlord's own use (s. 48) | Purchaser's own use (s. 49) |
|---|---|---|
| Who moves in | The landlord or a qualifying family member | The buyer, their spouse, or a child or parent of either one (or a qualifying caregiver) |
| Compensation | Not required if at least 120 days' notice is given (notices served on or after Sept 21, 2026) | Still required: one month's rent, or another rental unit acceptable to the tenant, no matter how much notice is given |
| Property type | Residential rental units generally | A residential complex with no more than three units, or a condominium unit |
| Pre-condition | Good-faith intention to occupy | A signed agreement of purchase and sale, plus the buyer's good-faith intention to occupy |
| Termination date | At least 60 days' notice, ending at the end of the lease term or rental period | At least 60 days' notice, ending at the end of the lease term or rental period |
A seller who hears "no more compensation for N12s" and budgets on that basis will be wrong, and so will their buyer. If the buyer is moving in, plan for one month's rent in compensation.
A word of caution on "moving back in"
Some sellers will wonder whether they can serve their own-use N12 with 120 days' notice, avoid compensation, and then sell the unit vacant. That is not what the notice is for. A landlord's own-use N12 has to be based on a real intention to live in the unit. As the next section explains, the new rules make a failure to move in much easier for a tenant to challenge.
The 60-day occupancy rule and the bad-faith presumption
Under the new rules, the person named in the N12 must move in within 60 days of the termination date in the notice. If they do not, and the former tenant files a T5 application claiming the notice was given in bad faith, the Board will presume bad faith. The landlord can try to rebut that presumption at the hearing, but the burden now effectively sits with them.
The LTB presents this requirement under N12 notices generally. On a sale, the practical advice is the same either way: a buyer who asks for vacant possession because they are moving in should be ready to move in promptly, and should keep records showing when they did.
The other September 21 changes sellers and buyers should know
| Change | New rule | Why it matters on a sale |
|---|---|---|
| N4 (non-payment of rent) | Notice period cut from 14 days to 7 days for N4s served on or after Sept 21, 2026 | Arrears can be addressed faster. Buyers inheriting a tenant should ask for the rent ledger. |
| Persistent late payment | Rent paid more than 7 days late at least 3 times within 6 months (the LTB notes other patterns may also qualify) | Gives a clearer test for the payment history a buyer takes on. |
| Rent arrears hearings (s. 82) | For arrears applications filed on or after Sept 21, 2026, a tenant who wants to raise maintenance or other issues must generally pay half the claimed arrears and give written details to the landlord and the LTB at least 7 days before the hearing | Makes arrears hearings more predictable for both the seller and an incoming buyer. |
| N13 (renovation / repair) | For work completed on or after Sept 21, 2026, the landlord must give a returning tenant written estimated completion dates, notice of any changes, and 60 days' notice to move back in. The T5 deadline is extended to two years after move-out or six months after the work is finished, whichever is later. | A buyer planning a major renovation takes on these obligations and a longer window of potential liability. |
| LTB forms | New versions were issued Sept 21, 2026. Previous versions will not be accepted after November 30, 2026. | A notice on an outdated form can derail a closing timeline. Download forms fresh from the LTB every time. |
The most important advice: never promise the tenant will be out by closing
Real Estate Magazine's coverage of these changes makes this point, and our own experience backs it up: no one should promise a seller, landlord or buyer that a tenant will be out by closing.
Serving an N12 does not guarantee vacant possession. A tenant can stay past the termination date. If they do, the landlord has to apply to the LTB, wait for a hearing and an order, and then have the order enforced. None of that runs on a closing date's schedule.
In practice, that means:
Decide early whether you are selling tenanted or vacant. A well-documented tenancy with rent at market can appeal to investors. A vacant unit widens the buyer pool. Each path prices differently, and we can show you the comparable sales for both.
Write the agreement of purchase and sale for reality. If the buyer wants vacant possession, the agreement should spell out who serves which notice and when, who pays the compensation, and what happens if the tenant does not leave. Leave room between the notice's termination date and closing.
Talk to the tenant. Many of the smoothest tenanted sales we see come from a respectful conversation and, where it suits both sides, a signed N11 with a fair payment. It has to be voluntary: a tenant can say no.
Respect showing rules. The landlord, or a registered real estate salesperson with the landlord's written authorization, can enter to show the unit to a prospective buyer after giving at least 24 hours' written notice. The notice must state the reason, the date and a time of entry between 8 a.m. and 8 p.m. Tenant cooperation during showings is worth more than any clause.
Bring in a paralegal or real estate lawyer before any notice is served, not after a problem appears.
Related reading: The Complete Resale Home Seller's Guide for Toronto (416) and The Complete Toronto Landlord Guide.
Frequently Asked Questions
If I sell my rental condo, does my tenant have to leave?
No. The tenancy continues and the buyer becomes the landlord. The tenant only has to leave if the tenancy is ended lawfully, for example through a purchaser's own-use N12 once the conditions are met, a mutual N11 agreement, or an LTB order.
Does the new 120-day rule mean my buyer doesn't have to pay compensation?
No. The 120-day exemption applies only when the landlord (or their family) needs the unit. When the N12 is served because the buyer is moving in, one month's rent in compensation, or an acceptable alternative unit, is still required whatever the notice period.
Can I serve a purchaser's own-use N12 before the sale is firm?
The notice depends on a signed agreement of purchase and sale, and the LTB can refuse an application if it is uncertain the sale will close. Talk to your lawyer about exactly when to serve it relative to your conditions and closing date.
Does purchaser's own use apply to a fourplex?
No. Purchaser's own use is limited to a residential complex with three or fewer units, or a condominium unit. A buyer of a larger building cannot use this route to get a unit vacated.
What happens if my buyer doesn't move in after the tenant leaves?
The former tenant can file a T5 application alleging bad faith. Under the new rules, failing to move in within 60 days of the termination date creates a presumption of bad faith, and the landlord then has to rebut it at the hearing.
I served an N12 before September 21. Which rules apply?
The new N12 compensation rule is tied to notices served on or after September 21, 2026. A notice served before that date should be assessed under the rules in force when it was served. Confirm your specific situation with a paralegal or lawyer.
This guide is for general informational purposes and does not constitute legal, financial, or tax advice. Landlord and tenant rules change and turn on specific facts — always consult a licensed real estate professional, a paralegal or lawyer experienced in Ontario residential tenancy law, and a tax advisor before serving any notice or making any decisions.
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Frank Merigliano, Team Leader / Sales Representative, VIP Condos Toronto, RE/MAX PREMIER INTERNATIONAL INC., Brokerage — licensed since 1993, with RE/MAX since 1995, and a Top 50 RE/MAX team in Canada since 2015.
Sources: Real Estate Magazine, "Selling a tenanted property? Ontario's rules have changed" (Bita Di Lisi, September 25, 2026); Tribunals Ontario, LTB Operational Update: Legislative Changes Effective September 21, 2026; LTB Interpretation Guideline 12: Eviction for Personal Use; LTB Interpretation Guideline 19: The Landlord's Right of Entry into a Rental Unit.
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