1. Core Principles of Tenancy Rights

Security of Tenure

• No Automatic Termination: Landlords cannot evict a tenant simply to sell a property, because a tenant refuses showings, or because the initial lease term is ending.
• Automatic Continuation: Under Ontario law, tenants have security of tenure. When an initial fixed-term lease expires, the tenancy automatically shifts to a month-to-month agreement under the same terms.

The 3 Legal Ways a Tenancy Can Be Terminated

1. Tenant Notice: The tenant decides to leave voluntarily and provides formal notice.
2. Mutual Agreement: Both the landlord and tenant enter into a mutual agreement to end the tenancy.
3. Board or Court Order: An official order is issued by the Landlord and Tenant Board (LTB) or a court.

Note: Without mutual agreement or notice from the tenant, a landlord must have specific legal cause/grounds to submit an application to the Landlord and Tenant Board (LTB). Without proper cause, the LTB will not issue a termination order.

2. Vacant Possession & Agreement of Purchase and Sale (APS)

• No Vacant Possession Guarantees: There is no legal guarantee of vacant possession when buying or selling a tenanted property, as the process relies entirely on tenant compliance or formal legal board processes.
• Built-in Standard APS Terms: Standard Agreement of Purchase and Sale contracts include a completion date clause stating: “Upon completion, vacant possession of the property shall be given to the buyer unless otherwise provided for in this agreement.”. Depending on representation, this clause can significantly impact seller liability or buyer expectations.

3. Key Requirements for Buyer Agents Drafting Offers

Clear Buyer Intent

• Explicitly state in Schedule A whether the buyer intends to assume the existing tenancy or requires the property for personal use.

Request Documentation

• Always request a full copy of the current lease agreement (whether an Ontario Standard Lease, OREA Form 400, internet draft, or written promissory note) to verify all original agreed-upon terms.

Essential Schedule A Clauses

1. Existing Lease Terms: Obtain a copy of all current terms (especially for month-to-month tenancies) to prevent buyers from assuming an agreement with unfavourable or one-sided terms.
2. Tenant Acknowledgement: Secure a signed confirmation from the tenant detailing:
   • Current monthly rent amount.
   • Existing rent/key deposit balances held.
   • Identified legal tenants and listed occupants.
   • Inclusions, utilities, and specific obligations outlined in the lease.
3. Direction to Tenant: Require the seller to sign a formal notice directing the tenant to recognize the buyer as the new landlord upon closing and instructing them on where and to whom future rent payments should be made.

4. Operational Takeaway on Assuming Tenancies