What Should You Check Before Buying a Tenanted Duplex in Ontario?

If you are buying a duplex in Cobourg with tenants already in it, the thing to understand first is that closing does not reset anything. The tenancies carry across to you on the terms the vendor set. Four of the things you will care about are fixed before the deal closes rather than after it.

Those four are vacant possession, the lawful rent, the rent deposit, and the clocks that were already running when you signed. Each is cheap to establish while the vendor still wants your money. Each is expensive or impossible to establish once the vendor has it. This post sets out what to ask for, which provision makes it matter, and where a buyer's assumptions break.

The short version.

• Section 18 of the Residential Tenancies Act, 2006 makes the covenants run with the land, so you inherit the tenancy, the rent and the breaches together.
• If you want to live in the unit yourself, the notice has to come from the vendor before closing, under section 49. That has to be negotiated into the agreement of purchase and sale.
• A section 49 notice carries compensation of one month's rent, or another rental unit the tenant accepts, and that obligation stays with the vendor. The 120 day route that removes compensation applies to section 48 notices only, which are the ones you would serve after closing.
• The lawful rent is not the number on the rent roll. Discounts, a void increase and an inherited above guideline order can all move it, and you will be the one swearing an affidavit about it.
• The deposit, the twelve month rent increase clock and the one year limitation periods belong to the tenancy rather than to the owner. None of them restarts when you take title.

What has to be settled before the deal closes?

Five things, and they are settled by documents rather than by inspection.

Get the written tenancy agreement for each unit, or written confirmation that there is none.

Get the rent deposit amount, the date it was paid, and the record of every interest payment made on it. Get the last notice of rent increase served on each tenant, with proof of when it was given.

Get any Landlord and Tenant Board order affecting the property, including any above guideline order that has not finished taking effect. And if you want one of the units empty on closing, get the section 49 notice into the agreement of purchase and sale as an obligation of the vendor.

Everything below explains why each of those five matters, and what happens to you if it is missing.

What does closing actually transfer to you?

More than the building. Section 18 of the Act is headed "Covenants running with land" and reads: "Covenants concerning things related to a rental unit or the residential complex in which it is located run with the land, whether or not the things are in existence at the time the covenants are made."

The definition of "landlord" in section 2 (1) then reaches you directly. It is an inclusive definition, and clause (b) brings in "the heirs, assigns, personal representatives and successors in title of a person referred to in clause (a)". A purchaser is a successor in title. You become the landlord of a tenancy you did not create, on terms you did not negotiate.

Nothing restarts. If a tenant is on a fixed term that is about to expire, section 38 (1) does not hand you a vacant unit: "If a tenancy agreement for a fixed term ends and has not been renewed or terminated, the landlord and tenant shall be deemed to have renewed it as a monthly tenancy agreement containing the same terms and conditions that are in the expired tenancy agreement and subject to any increases in rent charged in accordance with this Act."

So an expiring lease is not a plan. It converts to a month to month tenancy by operation of law, carrying the same terms, and the tenant keeps every protection they had the day before. The seller's side of this transaction is set out in our post on what happens to tenants when you sell a rental property. It is worth reading alongside this one, because the two of you are looking at the same facts from opposite ends.

Can you get vacant possession for yourself?

Sometimes, and only if the vendor serves the notice while the vendor is still the landlord.

Section 49 (1) is headed "Notice, purchaser personally requires unit".

It permits "A landlord of a residential complex that contains no more than three residential units who has entered into an agreement of purchase and sale of the residential complex" to give a notice of termination "on behalf of the purchaser ... if the purchaser in good faith requires possession of the residential complex or the unit for the purpose of residential occupation by ... the purchaser", the purchaser's spouse, a child or parent of either of them, or a person providing care services.

Read the first limb carefully, because it is the one that decides whether this route exists at all.

It counts residential units, not rental units, and the Act defines a residential unit as any living accommodation used or intended for use as residential premises. The half the owner lives in counts. A duplex is two and a triplex is three, so both are inside. A fourplex is outside section 49 entirely, and so is a building where an unpermitted basement unit has quietly made a duplex into something else.

The care services limb carries a condition that is easy to read past. It applies only where the person receiving the care services resides or will reside in the building, related group of buildings, mobile home park or land lease community in which that rental unit is located. The condition sits after the comma at the end of the limb. Dropping it states a wider rule than the Act does.

The notice period is in section 49 (3), not in (1): "The date for termination specified in a notice given under subsection (1) or (2) shall be at least 60 days after the notice is given and shall be the day a period of the tenancy ends or, where the tenancy is for a fixed term, the end of the term." Two requirements, not one. Sixty days is the floor, and the date still has to land on a period end.

If the property is a condominium unit rather than a house, the route is section 49 (2) instead, on its own conditions.

Why is the purchaser's route more expensive than it looks?

Because the compensation is unavoidable, and because the comparable route after closing is cheaper in a way that changed very recently.

Section 49.1 (1) requires a landlord to "compensate a tenant in an amount equal to one month's rent or offer the tenant another rental unit acceptable to the tenant" where the notice was given on behalf of a purchaser under section 49 (1) or (2). Note the alternative. It is not one month's rent and nothing else.

Who pays is answered in terms. Section 49.1 (2) reads: "Despite section 18, the obligation to compensate the tenant under subsection (1) remains an obligation of the landlord who gives the notice of termination of the tenancy on behalf of the purchaser and does not become an obligation of the purchaser." The legislature pointed at section 18 and switched it off for this one obligation. The vendor owes it, and it does not travel with the land to you.

Now compare the route you would use after closing, which is section 48, the landlord's own use notice. Two differences cut against you and one cuts for you.

Against you: section 48 (1) requires the occupation to be "for a period of at least one year", words that appear nowhere in section 49 (1).

And section 48 is gated by section 48 (5), which applies it only where "(a) the rental unit is owned in whole or in part by an individual; and (b) the landlord is an individual." Section 49 has no equivalent gate, so a numbered company buying the duplex is not shut out of section 49 on the face of the provision, while it would be shut out of section 48.

For you: section 48.1 (1) opens "Subject to subsection (2)", and subsection (2) removes the compensation requirement where a section 48 notice meets three cumulative criteria.

The notice must be given on or after the day the amending provision came into force, the termination date must be "at least 120 days after the notice is given", and that date must be "the day a period of the tenancy ends or, where the tenancy is for a fixed term, the end of the term". All three, not any one.

Here is the asymmetry that matters to a buyer. Section 49.1 (1) carries no "subject to" opening at all, and nothing in section 48.1 reaches a section 49 notice. The 120 day escape from compensation exists on the owner's own use route and does not exist on the purchaser's route. The amendments that came into force on 2026-09-21 touched section 48.1 and left section 49 and section 49.1 alone.

So the real choice is between two notices. One is faster and less conditional, served by the vendor at the vendor's cost. The other is slower and more conditional, served by you after closing, and it can be made to cost nothing. Which is better depends on whether you need the unit on the closing date or can wait, and it belongs in the price negotiation either way.

What happens if the notice turns out to be in bad faith?

The exposure is real on both routes, but the machinery is not the same, and this is a place where a careless reading costs a buyer money.

Section 57 (1) (b) lets a former tenant apply on three things together. The landlord gave a section 49 notice in bad faith. The tenant vacated as a result of the notice, or of an application to or order made by the Board based on it. And no person in the section 49 list occupied the unit within a reasonable time.

Section 57 (2) gives the former tenant one year from vacating to apply.

The orders available include, under paragraph 1.1 of section 57 (3), "An order that the landlord pay a specified sum to the former tenant as general compensation in an amount not exceeding the equivalent of 12 months of the last rent charged to the former tenant. An order under this paragraph may be made regardless of whether the former tenant has incurred any actual expenses or whether an order is made under paragraph 2."

What does not apply is the presumption. Section 57 (5) is headed "Presumption, notice under s. 48" and opens "For the purposes of an application under clause (1) (a)", which is the section 48 limb.

The presumption that arises from advertising the unit or the building for sale, or from re renting it, is confined to section 48 notices. So is the further presumption in section 57 (6.1). On a section 49 notice the former tenant has to prove bad faith rather than rely on a presumption.

The limit sits in the operative words of each subsection, which open "For the purposes of an application under clause (1) (a)". Under section 70 of the Legislation Act, 2006 a heading is a reference aid and does not form part of the Act. The opening phrase is what carries the point, rather than the heading above it.

That is a difference in difficulty, not a safe harbour. The application still exists and the one year clock still runs from the day the tenant vacates. On a purchaser's own use notice, the person whose good faith is in issue is you.

Which rent is lawful, and how would you prove it?

The lawful rent is a legal conclusion, not a number on a spreadsheet, and three things can make it lower than the rent roll says.

The starting point is section 113: "Subject to section 111, the lawful rent for the first rental period for a new tenant under a new tenancy agreement is the rent first charged to the tenant." From there, Ontario Regulation 516/06 does the arithmetic.

First, a higher rent in the first rental period. Section 111 (4) of the Act sends that case to the regulation, and section 13 of Ontario Regulation 516/06 does the arithmetic.

Say the rent charged for the first rental period is greater than the rent charged for later periods in the twelve month period beginning on the day the tenancy commenced. The lawful rent for each rental period in that twelve months is then found in three steps. Add all the rents actually charged or to be charged in the period, subtract the rent for the first rental period, and divide by the number of rental periods in the period minus one.

A rent free period runs the other way, and a buyer who assumes it cuts the lawful rent will underprice the building. Section 111 (2.1) provides that the lawful rent is not affected by a discount of up to three months rent in any twelve month period. The discount has to be given in the form of rent free periods and to meet the prescribed conditions, which section 10 of the regulation sets out.

So a unit advertised at a headline rent with the first month free can still carry that headline rent as its lawful rent. The number to ask the vendor for is the rent the written agreement makes payable, together with the written terms of any incentive, rather than the average the tenant actually paid.

Second, a defective increase. Section 116 (1) provides that "A landlord shall not increase the rent charged to a tenant for a rental unit without first giving the tenant at least 90 days written notice of the landlord's intention to do so", and section 116 (4) provides that "An increase in rent is void if the landlord has not given the notice required by this section, and the landlord must give a new notice before the landlord can take the increase."

A void increase means the rent you think you are buying was never lawfully reached.

Third, and this one cuts the other way, a defect can heal. Section 135.1 (1) provides: "An increase in rent that would otherwise be void under subsection 116 (4) is deemed not to be void if the tenant has paid the increased rent in respect of each rental period for at least 12 consecutive months."

Section 135.1 (2) switches that cure off where the tenant has applied within one year of the increase first being charged, in an application putting the validity of the increase in issue. Section 136 is headed "Rent deemed lawful" and runs on a matching one year clock.

So an inherited defective increase may already have hardened into lawful rent, or it may be eleven months into hardening and still open to challenge. The difference between those two states is a date on a notice, which is why you want the notices and the Board file rather than a summary of them.

Then there is a document that matters in one narrow case. Section 15 of Ontario Regulation 516/06 provides: "If an application is made by a new tenant under subsection 115 (1) of the Act, the landlord shall file with the Board, at or before the hearing, an affidavit sworn by the landlord setting out the last lawful rent charged to the former tenant and any available evidence in support of the affidavit."

Section 115 (1) does not reach every incoming tenant. It opens with "A new tenant who was entitled to notice under section 114", and section 114 is triggered only where an order under paragraph 6, 7 or 8 of subsection 30 (1) is in effect against the unit when the new agreement is entered into. Those are the orders that prohibit a rent increase until work is done.

So ask the vendor whether any such order has ever been made against either unit. If one has, and that unit turns over after closing, you are the landlord who has to swear what the last lawful rent charged to the vendor's tenant was. You were not there, and the evidence exists in the vendor's filing cabinet on the day before closing rather than anywhere afterwards.

Is this duplex outside the guideline, and who has to prove it?

Possibly, and you do.

Section 6.1 of the Act takes some units outside the guideline, and outside the above guideline machinery with it, by disapplying a named list of sections. The common summary of it is looser than the provision. Paragraph 1 of section 6.1 (2) requires that "The rental unit is located in a building, mobile home park or land lease community and no part of the building, mobile home park or land lease community was occupied for residential purposes on or before November 15, 2018."

That is a test about the whole building and it is phrased as a negative. One unit occupied anywhere in the building on or before that date defeats it. That is why the building test shuts out a converted duplex wherever any part of the house was lived in before that date. Paragraph 2 of the same subsection reaches a unit entirely inside an addition to the building, on the same negative test applied to the addition.

The route that does reach a converted house is section 6.1 (3). It carries its own cumulative requirements. They cover the kind of house, the self contained character of the unit, when the unit came into existence, and where the owner was living when it was first occupied. We set that out at length in our post on whether your rental is exempt from rent control, and there is no point repeating it here.

The buyer's point is different and it is about evidence. Section 6.1 (6) provides: "For greater certainty, in an application to the Board in which the application of subsection (2) or (3) is at issue, the onus is on the landlord to prove that the subsection applies."

The facts that decide it are historical facts about the vendor's building and the vendor's own occupancy. You cannot create them, you cannot change them, and after closing you may not be able to prove them. If the unit is being sold to you as exempt, the proof of that is part of what you are buying.

What happens to a rent deposit you never received?

You inherit the obligation whether or not the money reaches you, so make sure it reaches you.

Section 105 (1) limits what can be held at all: "The only security deposit that a landlord may collect is a rent deposit collected in accordance with section 106." There is no damage deposit, no cleaning deposit and no pet deposit in Ontario residential tenancies.

Section 106 then does six things that bear directly on a purchase. Section 106 (4) provides that "A new landlord of a rental unit or a person who is deemed to be a landlord under subsection 47 (1) of the Mortgages Act shall not require a tenant to pay a rent deposit if the tenant has already paid a rent deposit to the prior landlord of the rental unit." You cannot collect it again from the tenant.

Section 106 (5) carves out one case. Say a person becomes a new landlord in a sale from a person deemed to be a landlord under that provision of the Mortgages Act. That new landlord may require a rent deposit, but only in an amount equal to the amount with respect to the former rent deposit that the tenant received from the proceeds of sale.

A purchase out of power of sale sits in the exception rather than the rule, and the exception is capped at what the tenant actually got back.

Section 106 (10) tells you what the money is for: "A landlord shall apply a rent deposit that a tenant has paid to the landlord or to a former landlord in payment of the rent for the last rent period before the tenancy terminates." The words "or to a former landlord" are the hinge. The tenant's last month is already paid, to somebody, and you are the one who has to credit it.

Section 106 (6) makes interest payable "annually on the amount of the rent deposit at a rate equal to the guideline determined under section 120 that is in effect at the time payment becomes due".

Section 106 (7) lets a landlord deduct from that interest the amount needed to top the deposit up to the current permitted maximum. The deducted amount is deemed to form part of the deposit. On a long tenancy those two can largely cancel out, which is useful to know before you treat the interest as a pure cost.

And section 106 (9) is the tenant's self help: where the landlord has failed to make the interest payment when it came due, "the tenant may deduct the amount of the payment from a subsequent rent payment". A tenant who has not been paid deposit interest for years can take it out of the rent without applying to anyone. The first you may learn of it is a short payment in your second month.

So the practical ask on closing is not only the deposit money. It is the deposit money, the date it was paid, and the record of what interest has been paid on it and when.

When can you take your first rent increase?

Later than the closing date, because the clock belongs to the tenancy rather than to the owner.

Section 119 (1) permits an increase only if at least twelve months have elapsed "since the day of the last rent increase for that tenant in that rental unit, if there has been a previous increase" or "since the day the rental unit was first rented to that tenant, if clause (a) does not apply." Neither anchor mentions the landlord. Buying the building does not restart it.

On top of that, section 116 (1) requires at least ninety days written notice. Section 116 (3) requires that notice to be in a form approved by the Board, and to set out the intention to increase the rent and the amount of the new rent. Section 116 (4) voids an increase taken without the notice this section requires.

So the earliest date you can take an increase is twelve months from the tenancy's own anchor, with a notice given at least ninety days before that date.

Three clocks, three different triggers, and they are worth writing down separately for each unit. The twelve months runs from the last increase or from the start of the tenancy. The ninety days runs from the day the notice is given. And the amount runs from the guideline for the calendar year in which the increase takes effect.

On the amount, write the rule rather than the number. The guideline is set each year by the Minister under section 120 (2), and paragraph 2 of that subsection caps it: "The guideline for a calendar year shall be not more than 2.5 per cent."

Ontario publishes the figure each year, and has published 2.1 per cent for 2026 and 1.9 per cent for 2027. A notice given late in one year takes effect in the next, so the following year's figure is the one that governs. Check the published figure for the year the increase takes effect, not the year you are standing in.

One more thing can be sitting in the file. An order under section 126 permitting an above guideline increase does not necessarily finish in one year.

Say the percentage justified by capital expenditures and security costs exceeds three per cent. Section 126 (11) then caps the part of that first year's increase attributable to those costs and expenditures at three per cent. It then directs the order to specify a further percentage, not more than three per cent, in each of the two following twelve month periods.

A buyer can inherit an order that is still unwinding, and that is a benefit as well as an obligation, so ask for it by name.

Which of the vendor's problems can still be brought against you?

Several, and they share a shape: the clock runs from the conduct, not from the sale.

A tenant's application about maintenance or interference runs on section 29 (2): "No application may be made under subsection (1) more than one year after the day the alleged conduct giving rise to the application occurred." The conduct may be entirely the vendor's. The application is made against the landlord, which by then is you.

A reduction in services is worse, because the remedy reaches backwards. Section 130 (5) gives a tenant one year from the reduction to apply, and section 130 (4) provides that "An order under this section reducing rent takes effect on the day that the discontinuance or reduction first occurred."

If the vendor closed the parking area or stopped providing a service nine months before closing, an order can reduce the rent from that day, together with a rebate of rent found to have been unlawfully collected.

Money collected in breach of the Act runs on section 135 (4): "No order shall be made under this section with respect to an application filed more than one year after the person collected or retained money in contravention of this Act or the Tenant Protection Act, 1997." A key deposit or an administration fee the vendor charged last spring is still live.

And there is a quiet one. Section 12 (1) requires every written tenancy agreement entered into on or after 1998-06-17 to set out "the legal name and address of the landlord to be used for the purpose of giving notices or other documents under this Act". Section 12 (2) requires a signed copy to reach the tenant within 21 days. Section 12 (3) sets a parallel 21 day written notice rule where the agreement is not in writing.

Section 12 (4) then provides that until a landlord has complied with subsections (1) and (2), or with subsection (3), as the case may be, "(a) the tenant's obligation to pay rent is suspended; and (b) the landlord shall not require the tenant to pay rent."

Section 12 attaches to the making of the tenancy agreement rather than to a change of owner, so closing does not start a fresh 21 day clock for you. What closing can hand you is a vendor who never complied, with the suspension in subsection (4) still running against the tenancy you bought.

Ask for the signed agreement and for proof that a copy reached the tenant, and give the tenant your own legal name and address in writing in any event. Section 12 (5) lets a landlord require the rent withheld under subsection (4) after complying with those subsections, so the fix is cheap and the delay is not.

Charges are worth a line of their own. Section 134 (1) opens "Unless otherwise prescribed" and then prohibits a landlord from collecting a fee, premium, commission, bonus, penalty or key deposit, "whether or not the money is refundable". Clause (c) also stops a landlord renting out portions of a unit for a combined sum greater than the lawful rent for the unit. That is the trap waiting for a buyer who plans to let a basement room separately.

Does the Act even apply to this duplex?

Yes, where the two units are genuinely self contained. It is worth two minutes to be sure, because the whole analysis above turns on it.

The exemption that catches owner occupied small buildings is clause (i) of section 5, which takes out "living accommodation whose occupant or occupants are required to share a bathroom or kitchen facility with the owner, the owner's spouse, child or parent or the spouse's child or parent, and where the owner, spouse, child or parent lives in the building in which the living accommodation is located".

That is two cumulative requirements joined by "and", not one. Sharing on its own is not enough and owner residence on its own is not enough. A genuine duplex with two self contained units, each with its own kitchen and bathroom, stays inside the Act even where the owner lives in the other half. The exemption bites only where the units are not actually self contained, which in practice means a rooming arrangement wearing a duplex's clothes.

Check it on the floor plan rather than on the listing. A property marketed as a duplex that shares a kitchen is a different legal animal, and so is one with a third unit that was never mentioned.

What should the agreement of purchase and sale actually say?

Put the documents in the agreement rather than on a wish list, because a vendor's cooperation ends at closing.

Ask for copies of every tenancy agreement and every notice of rent increase, with proof of service. Ask for a statement of each rent deposit, the date paid and the interest history. Ask for every Board order and every open application. Ask for the evidence behind any claim that a unit is outside the guideline.

Ask for a direction that the deposits be credited to you on the statement of adjustments rather than discussed afterwards. And if you need a unit empty, make the section 49 notice an obligation of the vendor with a date in it, because you cannot serve that notice yourself.

If you are buying in Cobourg, Port Hope or anywhere else along the lake, the same list applies to a small building as to a large one. A duplex has fewer units than an apartment building and exactly the same amount of law attached to each of them. Our page on small multi family management sets out what we take on once the deal closes. Our Cobourg property management page covers what the local rental market looks like going in.

What does a manager do in the first ninety days?

The work is paper, and the deadlines on it are already running.

In the first weeks after closing, somebody has to introduce the new landlord in writing with the legal name and address, and re paper the rent collection. Somebody has to reconcile each deposit and its interest history. Somebody has to diarize the twelve month anchor and the ninety day notice date for every unit. And somebody has to read every inherited notice and order for defects while the vendor is still reachable.

None of that is difficult. All of it is easy to leave until the first problem arrives, by which point the vendor has moved on and the evidence has gone with them.

That is the part of a purchase where a manager earns the fee. It is also the part a buyer has least time for in the month they take possession. At KEILTY Realty Management we manage residential rentals across Eastern Ontario for a flat monthly rate per unit. The handover work on a newly purchased building is ordinary work rather than a project.

What do owners ask about buying a tenanted duplex in Ontario?

Can I give the tenant notice myself once I own the duplex? You can serve a section 48 own use notice, but not a section 49 purchaser's notice. Section 49 (1) hands the notice to a landlord who holds an agreement of purchase and sale, and has that landlord give it on behalf of the purchaser. After closing you are the landlord rather than the purchaser, so that route has shut.

Does the tenant's lease end when the property is sold? No. Section 18 makes the covenants run with the land, and section 38 (1) deems an expiring fixed term to continue as a monthly tenancy on the same terms. The sale is not a termination event.

Who pays the tenant compensation on a purchaser's own use notice? The vendor. Section 49.1 (2) says the obligation "remains an obligation of the landlord who gives the notice of termination of the tenancy on behalf of the purchaser and does not become an obligation of the purchaser", despite section 18.

Can I raise the rent to market once I take over? Not on a sitting tenant. Section 119 (1) anchors the twelve month clock to the tenant and the unit rather than to the owner, and section 116 (1) requires ninety days written notice. The amount is capped by the guideline for the year the increase takes effect, unless the unit is outside those rules under section 6.1.

What if the vendor cannot produce the rent deposit records? Treat it as a price issue before closing rather than a paperwork issue after it. You still cannot require the tenant to pay a fresh deposit under section 106 (4), and you still have to credit it to the last rent period under section 106 (10). Under section 106 (9) a tenant can deduct unpaid interest from a later rent payment without applying to anyone.

Buying a tenanted duplex and not sure what to ask the vendor for? Tell us about the property and A.J. Keilty will call you within 20 minutes in business hours.

This post is general information about Ontario residential tenancy law as of 2026-10-15, not legal advice. Legislation, regulations and tribunal practice change. For advice on a specific property or situation, speak with a lawyer or licensed paralegal.