Selling a Toronto house with tenants to a builder

This guide is for Toronto owners who rent out all or part of a house and want to sell it to a builder. It explains what happens to the tenancy when the house is sold, the ways a tenancy can end before the builder takes over, the notice periods and compensation in Ontario's Residential Tenancies Act, how to show a rented house, what happens if a tenant stays, and the City of Toronto rules that apply. Each rule comes from an Ontario, Landlord and Tenant Board or City of Toronto page read on November 10, 2026. Your lawyer gives the advice on your own sale.

Written by Anthony Palleschi · Updated November 10, 2026 · 9 min read

Key takeaways

A tenancy continues after a sale. It ends only in a way the Residential Tenancies Act allows.
A notice to end a tenancy for demolition gives at least 120 days and must end on the last day of a rental period or a fixed term.
In a building with fewer than five units, a demolition notice comes with one month's rent or another unit the tenant accepts.
Form N12 for a buyer's own use fits only a buyer or family member who will live in the unit, in a building of three or fewer units.
Only the Landlord and Tenant Board can order an eviction, and only the Sheriff can enforce it.
Showing a rented house to a buyer needs 24 hours' written notice, for a time between 8 a.m. and 8 p.m.

What happens to the tenancy when you sell

A house with a tenant can be sold, and the tenancy goes with it. Section 37 of Ontario's Residential Tenancies Act says a tenancy may be terminated only in accordance with the Act. Section 18 says covenants concerning a rental unit run with the land. So the lease binds the next owner too. A builder who buys the house becomes the tenant's landlord on closing, unless the tenancy ended first under one of the Act's rules.

The Landlord and Tenant Board's brochure How a Landlord Can End a Tenancy, released September 1, 2017, lists the ways a tenancy can end. The tenant gives notice and leaves. The landlord and tenant agree to end it. Or the landlord gives a notice for a reason the Act allows, and the tenant either moves or the Board orders an eviction. The brochure says a tenant who receives a landlord's notice does not have to move out, and the landlord must apply to the Board.

A builder who plans to take the house down needs it empty before work starts. That makes the tenancy part of the timeline, the closing date and the price. The guide on how builders price land explains how a builder accounts for that time.

Each rule below comes from the Act as published on Ontario's e-Laws site (the version in force from September 21, 2026), from the Landlord and Tenant Board, or from the City of Toronto, all read on November 10, 2026. I am a real estate sales representative and I do not give legal advice. Your lawyer reads your leases and drafts the terms of the sale.

Four ways to sell a rented house to a builder

Ways a tenancy can be handled on a sale to a builder, under Ontario's Residential Tenancies Act, read November 10, 2026
Way	What happens	Main rule
Sell with the tenant in place	The builder becomes the landlord on closing and gives any later notice itself	Sections 18 and 37
The tenant agrees to leave	You and the tenant sign an agreement with a move-out date	Subsection 37(3), Form N11
Notice for the buyer's own use	You give notice for a buyer or family member who will live in the unit	Section 49, Form N12, three or fewer units
Notice for demolition	The landlord gives at least 120 days' notice to demolish	Section 50, Form N13, compensation in section 52

Each way changes the closing date and who pays if a tenant stays. Choose one with your lawyer before builders make offers, so every builder prices the same plan.

Selling with the tenant in place

One choice is to leave the tenancy as it is. The builder takes over your leases on closing and becomes the landlord. Any notice to end the tenancy for demolition then comes from the builder, under the rules described below.

The rent deposit moves with the tenancy. Subsection 106(10) of the Act says a landlord must apply a rent deposit paid to the landlord or to a former landlord to the last rent period before the tenancy ends. Subsection 106(4) says a new landlord cannot ask for a second deposit when the tenant already paid one to the former landlord. Subsection 106(6) says the landlord pays interest on the deposit each year at the rent increase guideline rate. Bring each lease, the deposit amount and the date of the last interest payment to your lawyer, who sets out how they are handled on closing.

When the tenant agrees to leave

A landlord and a tenant can agree to end a tenancy on a date they both accept. Subsection 37(3) says no notice is needed in that case. The Board's brochure says the agreement can be oral, that a written one is best, and that the Board's Form N11, Agreement to Terminate a Tenancy, can record it.

The agreement has to be the tenant's choice. The brochure says a landlord cannot require a tenant to agree to end a tenancy. Subsection 37(5) makes an agreement void if it was made at the start of the tenancy or as a condition of renting. Any payment, help with moving or a later move-out date that you offer is part of the agreement, so write it down, sign it and give the tenant a copy.

If a tenant signs and later decides to stay, the brochure says the landlord can apply to the Board for an eviction order. A builder will want to know before closing whether an agreement is signed and when the tenant will leave.

The buyer's own use notice, Form N12

Section 49 of the Act lets a seller who has signed an agreement of purchase and sale give a tenant notice on behalf of the buyer. It applies only to a residential complex with no more than three residential units, and only when the buyer in good faith needs the unit for residential occupation by:

the buyer,
the buyer's spouse,
a child or parent of the buyer or the buyer's spouse, or
a caregiver to one of those people, who lives or will live in the same building.

The notice must give at least 60 days, ending on the last day of a rental period or a fixed term. Under section 49.1, the seller must pay the tenant one month's rent or offer another unit the tenant accepts, and subsection 49.1(2) says that payment stays with the seller and does not pass to the buyer. Under subsection 72(1), the Board will not order an eviction on this notice unless the person who needs the unit swears an affidavit that they need it for their own use.

The Board's September 21, 2026 update says the change that removes compensation for a notice of 120 days or more does not apply to notices for a buyer's own use, so a seller who gives one still pays one month's rent. A builder that buys the house to demolish it is outside the list in section 49, so this notice does not fit that sale. Ask your lawyer before you use it.

The notice for demolition, Form N13

Section 50 lets a landlord give notice when the landlord needs the unit to demolish it, to convert it to a use other than housing, or to do repairs so large that they need a building permit and an empty unit. The Board's form for these reasons is Form N13. The date in the notice must be at least 120 days after the notice is given, and it must be the last day of a rental period or, for a fixed-term lease, the end of the term. A tenant who gets the notice may leave earlier, with at least 10 days' notice to the landlord.

Compensation depends on the size of the building:

Fewer than five residential units: one month's rent, or another unit the tenant accepts (subsection 52(2)).
Five or more residential units: three months' rent, or another unit the tenant accepts (subsection 52(1)).

Section 55.1 says the payment is due no later than the termination date in the notice. Subsection 83(4) says the Board will not issue an eviction order until the landlord has paid it.

Under section 73, the Board will not order an eviction on a demolition notice unless it is satisfied that the landlord intends in good faith to demolish, and that the landlord has the permits needed, or has taken all reasonable steps to get them where they cannot be issued until the unit is empty. So the timing of a demolition notice depends on the builder's permit plans. Who gives the notice, the seller before closing or the builder after, and on what date, belongs in the agreement of purchase and sale. The guide to reading a builder's offer covers conditions and closing dates.

Under clause 57(1)(c), a former tenant who left because of a demolition notice given in bad faith can apply to the Board if the work was not done within a reasonable time. Subsection 57(3) lets the Board order the landlord to pay up to 12 months of the last rent as general compensation, the tenant's higher rent for one year, moving and storage costs, and an administrative fine. The tenant has one year after moving out to apply.

If the tenant does not move out

A tenant can stay after the date in a notice. The brochure says that if the tenant stays, the landlord files an application with the Board, Form L2 for these reasons, and the Board holds a hearing where both sides speak. For notices under sections 49 and 50, the brochure says the application must be filed no later than 30 days after the termination date in the notice.

Ontario's Renting in Ontario page, updated September 18, 2026, says a landlord must first apply for and receive an eviction order from the Board. The brochure says only the Court Enforcement Office, called the Sheriff's Office, can enforce that order, and that a landlord who changes the locks without giving the tenant a key breaks the law, unless the Sheriff has enforced an order or the unit was abandoned. Plan the closing date with this time in mind. A builder will ask what happens if the tenant is still in the house on closing day, and the answer belongs in the agreement.

Showing a rented house to builders

A tenant has rights about entry when you show the house. Subsection 27(2) of the Act lets the landlord, or a registered broker or salesperson with the landlord's written authorization, enter to let a potential purchaser view the unit. The tenant must get written notice at least 24 hours before. Subsection 27(3) says the notice must give the reason, the day and a time between 8 a.m. and 8 p.m.

Ask each builder whether the survey, the zoning and photos taken with the tenant's agreement are enough for a first offer. Fewer visits are easier for the tenant. The guide to choosing an agent covers how visits and advertising are agreed in a listing agreement.

Toronto's own rules

Two City of Toronto rules apply as well as the Ontario law.

The Rental Renovation Licence covers renovations. The City's page for landlords, modified July 9, 2026, says a licence is needed when a landlord gives an N13 notice for repairs or renovations that need the unit empty, that the application is due within seven days of the notice, and that the fee is $728.00 per unit from January 1, 2026. The same page says the licence does not cover demolitions, which follow the City's rental housing demolition and replacement process. If ownership changes during the renovation period, the page says the licence may be transferred to the new landlord, who must tell the City within 14 days.

The rental demolition by-law covers larger buildings. The City's 2024 application form for rental housing demolition and conversion, effective January 1, 2024, says a permit under Municipal Code Chapter 667 is needed for a proposal with six or more existing dwelling units, any of them rented. It says a proposal with five or fewer existing dwelling units does not need that permit. A house with a basement apartment and a main floor unit has two. The builder still needs its other City permits, and the tenancy rules in the Act still apply. The lot screening guide for builders lists the City checks a builder runs.

What to agree in writing before you sign

How many units the house has, who lives in each, the rent, the lease terms and the deposits held.
Whether the house is sold with the tenants in place or empty, and the date each tenancy is to end.
Who gives any notice to end a tenancy, which notice, and on what date.
Who pays any compensation the Act requires, and when.
What happens to the closing date and the price if a tenant is still in the house on closing day.
How showings are arranged, with 24 hours' written notice each time.

Questions to ask before you sell

Do I want the builder to take over my tenants, or do I want to sell the house empty?
Has my tenant said they would agree to leave, and on what date?
Does my house have fewer than five residential units, and how many does the City count?
Does the builder have its permit plans, and when will it apply?
If the tenant stays past the date, who pays the cost of the delay?

My work on a sale is the zoning review, the presentation to builders and the comparison of offers. The terms about tenants come from your lawyer, and the contact page is the way to reach me for a review of your lot. Before you compare builders' prices, ask one more question: how does each offer handle the people who live in the house?

Frequently asked questions

Can I sell my Toronto house while a tenant lives in it?

Yes. A sale leaves the tenancy in place. Section 37 of Ontario's Residential Tenancies Act says a tenancy may be terminated only in accordance with the Act, and section 18 says covenants concerning the rental unit run with the land, which means they pass to the new owner. The house can be sold with the tenant staying, or with the tenancy ended under one of the Act's rules first.

Can I give my tenant an N12 notice if I sell my house to a builder?

Form N12 for a buyer's own use fits only a sale where the buyer, the buyer's spouse, a child or parent of either, or their caregiver will live in the unit. Section 49 of Ontario's Residential Tenancies Act sets that list and limits it to a building with three or fewer residential units. A builder that buys the house to demolish it does not fit that list, so ask your lawyer which notice applies.

How much notice does a tenant get when a house is sold to be demolished in Ontario?

A tenant must get at least 120 days' notice when a landlord needs the unit back to demolish it. Subsection 50(2) of Ontario's Residential Tenancies Act also says the date must be the last day of a rental period, or the end of the term for a fixed-term lease. A tenant who gets the notice may leave earlier by giving the landlord at least 10 days' notice.

How much compensation does a tenant get when a Toronto house is demolished?

In a building with fewer than five residential units, such as a house with a basement apartment, the landlord must pay one month's rent or offer another unit the tenant accepts, under subsection 52(2) of Ontario's Residential Tenancies Act. In a building with five or more units, it is three months' rent. Section 55.1 says the payment is due no later than the termination date in the notice.

Who pays the tenant when I sell and the buyer wants to move in?

The seller pays. When a seller gives a tenant notice on behalf of a buyer who will live in the unit, subsection 49.1(1) of Ontario's Residential Tenancies Act requires one month's rent or another unit the tenant accepts. Subsection 49.1(2) says this stays the obligation of the landlord who gave the notice. The Landlord and Tenant Board's update of September 21, 2026 says the new 120 day rule that removes compensation does not apply to these notices.

Can my tenant and I agree to end the tenancy before I sell my house?

Yes. Subsection 37(3) of Ontario's Residential Tenancies Act says no notice is needed when a landlord and tenant agree to end a tenancy, and the Landlord and Tenant Board's Form N11 can record it. The Board's brochure says a landlord cannot require a tenant to agree, and subsection 37(5) makes an agreement void if it was signed at the start of the tenancy or as a condition of renting. Put the date, any payment and both signatures in writing.

Can I show my rented house to builders before I sell?

You can show your rented house to a builder with written notice to the tenant at least 24 hours before the visit. Subsection 27(2) of Ontario's Residential Tenancies Act allows the landlord, or a registered broker or salesperson with the landlord's written authorization, to enter so a potential purchaser can view the unit. The notice must give the reason, the day and a time between 8 a.m. and 8 p.m.

What happens if my tenant does not move out after a notice in Ontario?

The tenant can stay until the Landlord and Tenant Board orders an eviction. The Board's brochure How a Landlord Can End a Tenancy says the landlord must apply, most applications must be made within 30 days of the termination date in the notice, and the tenant can attend a hearing. Only the Court Enforcement Office, also called the Sheriff, can enforce an eviction order.

What happens to my tenant's last month's rent deposit when I sell?

The deposit stays with the tenancy. Subsection 106(10) of Ontario's Residential Tenancies Act says a landlord must apply a rent deposit paid to the landlord or to a former landlord to the last rent period before the tenancy ends. Subsection 106(4) says a new landlord cannot ask for a second deposit when the tenant already paid one. Ask your lawyer how the deposit and its interest are handled on closing.

Does Toronto's rental demolition by-law apply to a house with a basement apartment?

No, when the house holds five or fewer homes. The City of Toronto's 2024 application form for rental housing demolition says a permit under Municipal Code Chapter 667 is needed for a proposal with six or more existing dwelling units, any of them rented. It says a proposal with five or fewer existing dwelling units does not need that permit. Other City permits and the Residential Tenancies Act still apply.

Can my former tenant claim money if the builder never demolishes the house?

Yes. Under clause 57(1)(c) of Ontario's Residential Tenancies Act, a former tenant can apply if a demolition notice was given in bad faith, the tenant moved out because of it, and the work was not done within a reasonable time. The Board can order up to 12 months of the last rent as general compensation, moving costs and a fine. The application must be made within one year of moving out.

When should I tell a builder that my house has tenants?

Tell every builder at the start, before offers come in, and give each one the same facts: the number of units, each lease's term and rent, the deposit held, and any notice already given. Section 50 notices need at least 120 days and must end on the last day of a rental period or a fixed term, so the tenancy affects the closing date the builder can accept.

Sources

Residential Tenancies Act, 2006, S.O. 2006, c. 17. Government of Ontario, e-Laws. Version in force from September 21, 2026. Accessed November 10, 2026.
LTB: Operational Update, Legislative Changes at the Landlord and Tenant Board, Effective September 21, 2026. Tribunals Ontario, Landlord and Tenant Board. Posted September 21, 2026. Accessed November 10, 2026.
How a Landlord Can End a Tenancy. Tribunals Ontario, Landlord and Tenant Board. Release date September 1, 2017. Accessed November 10, 2026.
Renting in Ontario: your rights. Government of Ontario. Updated September 18, 2026. Accessed November 10, 2026.
Rental Renovation Licence: Information for Landlords. City of Toronto. Modified July 9, 2026. Accessed November 10, 2026.
2024 Rental Housing Demolition and Conversion application. City of Toronto, City Planning. Effective January 1, 2024, form V23NOV2023. Accessed November 10, 2026.

Planning and development potential is property-specific and subject to zoning, approvals, site conditions, municipal review and other due diligence. This guide gives general information. For legal, tax or financial advice, ask your own lawyer and accountant.