Buying a house with a tenant? Here’s what you need to know

For many homeowners, renting out the basement or other areas of their home is an
attractive idea. After all, having a tenant helps cover mortgage costs, making the purchase
easier to afford. In exchange, all you (hopefully) have to do is fix the occasional leaky faucet.
But having a tenant in a single-family home can add a few extra layers to the sale process.
If you’re the buyer of a home with an existing tenant, the most important thing you need to
know is that the decision whether to keep the tenant is yours and yours alone. Just because
a tenant is living there doesn’t mean you’re obligated to maintain that relationship.
According to the Residential Tenancies Act, 2006, which governs landlord and tenant
relations, as a home buyer you are within your rights to ask for the tenant to be evicted so
that you may occupy the space yourself.

What you cannot do is demand that the tenant be evicted so that you can re-rent it at a
higher price when you take possession of the home.

If you opt not to be a landlord, be aware that the seller is required by law to give a
minimum of 60 days written notice to terminate the tenant, which could affect your closing

Should you decide to buy a house with a tenant, be aware of these three things when becoming a landlord:

1. Know who you’re inheriting.

Do your due diligence to find out what you can about the
existing tenant. After all, if you’re now going to be living under the same roof, you will want
to make sure that the tenant is someone you can live with.

2. The existing lease cannot be changed.

When you take over a tenant, you take over the
existing lease for the remainder of the term. It cannot be changed even if you think the rent
is too low.

3. Understand what you’re getting into.

Familiarize yourself with your responsibilities as a
landlord but also make sure that the apartment is in fact legal. Is the home zoned for a
multi-unit dwelling? Does it meet building code and fire code requirements? Don’t assume
that the rental space meets all of the requirements — once the sale is complete, it will
become your problem to make it compliant.

Have a question about any of this? We have the answer.


*The content of this article is intended to provide a general guide to the subject matter. It is
not intended to replace actual legal advice. Specialist advice should be sought about your
specific circumstances.*