How Can Landlords and Real Estate Agents Manage Tenant Rights When Selling a Tenanted Property?
Selling a property that is occupied by a tenant requires more than just standard real estate practices. Both landlords and real estate agents must operate within the framework of the Residential Tenancies Act, 2006, while also respecting professional obligations under real estate regulations.
Failure to do so can lead to serious legal consequences—not only for the landlord, but also for the agent and brokerage involved.
If you are navigating a sale involving a tenant, Babbar Legal can assist in ensuring compliance and avoiding missteps that may delay or jeopardize your transaction.
Duties of Sellers and Agents: Compliance Is Not Optional
A landlord may expect their real estate agent to act diligently and maximize the value of the property. However, that objective must be balanced against the legal rights of the tenant, which remain fully in place throughout the sale process.
Real estate agents are also bound by the Code of Ethics under O. Reg. 580/05, which requires that they:
- Act honestly and fairly toward all parties
- Demonstrate competence and sound judgment
- Avoid any conduct that could be considered abusive or harassing
These obligations apply not only to dealings with clients, but also to tenants who may be affected by the sale.
Legal Risks: Vicarious Liability
Landlords and brokerages should be aware that they may be held responsible for the actions of a real estate agent.
This concept—known as vicarious liability—means that if an agent engages in improper conduct while acting within their authority, liability can extend to the seller and brokerage. This principle was affirmed in Scholl v. Royal Trust Corp. of Canada (1986).
In practical terms, this means that careless or aggressive behaviour toward a tenant can expose multiple parties to legal claims.
Tenant Security of Tenure
Tenants do not lose their rights simply because a property is being sold.
Under section 38 of the Residential Tenancies Act, 2006, when a fixed-term lease ends, it automatically continues on a month-to-month basis unless properly terminated. This ongoing right of occupancy is a fundamental protection in Ontario law.
If a buyer wishes to take possession of the property for personal use, the proper legal process must be followed. This typically involves:
- Serving an N12 Notice of Termination
- Providing at least 60 days’ notice
- Proceeding through the Landlord and Tenant Board if the tenant does not vacate
Importantly, this process must be carried out in good faith. If a tenant believes the notice is being used improperly, they may challenge it. Bad faith evictions can result in significant penalties, including substantial fines.
Because these situations are highly scrutinized, it is strongly recommended to seek legal advice before initiating any eviction process. Babbar Legal can assist in ensuring that all steps are properly taken and defensible.
Real Estate Agents Must Avoid Providing Legal Services
A common but serious issue arises when real estate agents step beyond their role and begin assisting with legal processes.
Under the Law Society Act, only licensed lawyers and paralegals may provide legal services. This includes:
- Preparing or completing Landlord and Tenant Board forms
- Advising on legal rights or eviction strategies
- Initiating legal proceedings
If an unlicensed individual prepares documents such as an N12 or L2 application, those documents may be deemed invalid.
This was confirmed in Parmar v. Chanski, where an application was dismissed because the forms were completed by someone without proper authorization.
For landlords, this can mean delays, dismissed applications, and increased costs. For agents, it can lead to regulatory complaints and liability exposure.
To avoid these risks, legal processes should always be handled by qualified professionals. Babbar Legal routinely assists landlords in properly preparing and advancing applications before the Landlord and Tenant Board.
Proper Notice for Showings
Tenants are required to allow access for showings—but only when proper notice is given.
Under section 27 of the Residential Tenancies Act, 2006:
- At least 24 hours’ written notice must be provided
- The notice must specify the date, time (between 8:00 a.m. and 8:00 p.m.), and purpose of entry
The time window should be reasonable and specific. Repeated or vague notices may create frustration and could potentially lead to disputes.
Respecting scheduled times and minimizing disruption is essential to maintaining compliance.
Tenant Privacy: Photography and Marketing
A tenant’s right to privacy continues during the sale process.
In Juhasz v. Hymas (2016), the Court made it clear that landlords and their agents cannot take photographs of a tenant’s unit for marketing purposes without consent.
While photographs may be taken for legitimate purposes such as maintenance or evidence in a dispute, using images of a tenant’s belongings in listings or promotional materials without permission can violate privacy rights.
As a result, landlords and agents should always obtain clear consent before taking or publishing photographs.
Avoiding Harassment and Interference
The Residential Tenancies Act, 2006 prohibits conduct that interferes with a tenant’s reasonable enjoyment of their home or amounts to harassment.
This includes behaviour that is:
- Persistent or intrusive
- Coercive or threatening
- Lacking a legitimate purpose
In L.N. v. R.E. (2019), harassment was described as conduct that a person knows—or should know—is unwelcome and serves no proper purpose.
During a sale, tenants may feel uncertain or pressured. Overstepping boundaries can quickly lead to legal claims. Maintaining professionalism and clear communication is essential.
The Buyer Inherits the Tenant
One of the most misunderstood aspects of selling a tenanted property is what happens after the sale.
Under section 18 of the Residential Tenancies Act, 2006, the buyer takes the property subject to the existing tenancy. This means:
- The lease terms continue unchanged
- Rent remains the same (subject to lawful increases)
- The tenant does not need to sign a new lease
Any suggestion that a tenant must agree to new terms or vacate simply because ownership is changing is incorrect and may be considered misleading or coercive.
If a tenant is pressured into agreeing to unfavourable terms, those agreements may later be challenged or deemed unenforceable.
Final Thoughts
Selling a tenanted property requires careful coordination between real estate practices and tenancy law. Missteps—whether intentional or not—can result in delays, financial penalties, or legal claims.
Landlords and agents must remain mindful of:
- Proper eviction procedures and good faith requirements
- Notice obligations for entry
- Tenant privacy rights
- Avoiding harassment or undue pressure
- The limits of a real estate agent’s role
These situations can become complex quickly. Babbar Legal can provide guidance at every stage of the process, helping ensure that both the transaction and tenant rights are handled properly.