Selling or buying a property with existing tenants raises questions that many parties underestimate before sitting down with their notary. Who takes over the leases? Must the seller notify the tenants? What happens to the rent deposit? These are legitimate concerns — and addressing them before signing prevents a great deal of unnecessary complications.
Lease Continuity: A Foundational Principle
Under the Civil Code of Québec, a residential lease does not automatically end when a property is sold. A buyer who acquires a tenanted property takes over the existing leases as they stand at the time of the transaction. In practical terms, this means the conditions negotiated between the seller and the tenants — rent amount, duration, terms — are binding on the new owner, who cannot modify them unilaterally simply by virtue of becoming the new owner.
This principle protects tenants, but it also creates obligations and rights that both parties to the sale need to fully understand before committing.
What the Seller Needs to Plan For
Disclosure Obligations Toward Tenants
Under Québec law, the seller has certain obligations toward tenants when carrying out a transaction. In some circumstances, an existing tenant may have a right of first refusal — that is, the right to be informed of the sale and given the opportunity to purchase the property on a priority basis. Me Petrulian will walk you through the specifics during your consultation, including the applicable timelines and conditions depending on the nature of the property.
Providing Complete Information to the Buyer
The seller must also prepare a comprehensive leasing file covering all existing leases: signed lease copies, payment history, any outstanding notices (rent increases, non-renewals, planned work), and any security deposits held. These elements allow the buyer to accurately assess what they are taking on.
What the Buyer Acquires Along With the Title
Acquiring a rental property — whether in Laval or elsewhere in Québec — automatically includes assuming the rights and obligations tied to the existing leases. The buyer becomes the new landlord as of the signing of the deed of sale. This includes:
- honouring the current rent amounts through to their term;
- assuming any notices already issued by the seller (for example, a rent increase notice given prior to the sale);
- continuing the landlord-tenant relationships, including the tenants' rights to maintain occupancy.
If deposits were collected by the seller, their transfer to the buyer must be explicitly addressed in the transaction.
The Notary's Role in Drafting the Deed of Sale
Selling a property with sitting tenants requires that the notarial act accurately reflect the reality of the existing leases. The notary ensures that the clauses of the deed account for the current leases, the obligations being transferred, and the terms agreed upon between seller and buyer regarding rent proration, deposits, and outstanding notices.
This is also the notary's opportunity to confirm that the buyer has received all necessary information about the property's rental status before signing.
Practical Due Diligence Before Signing
Before closing a real estate transaction involving existing tenants, several items warrant careful attention:
- Lease status: confirm that all copies are complete, signed, and current;
- Outstanding notices: identify any rent increase, non-renewal, or repossession notices already served on tenants;
- Security deposits: verify their existence and arrange for their transfer under the agreed conditions;
- Prepaid rent: clearly establish the proration applicable as of the sale date;
- Special tenancy situations: check for any unusual circumstances, such as vacant units, tenants in arrears, or active proceedings before the Tribunal administratif du logement.
These steps are not optional — they allow both parties to enter the transaction with a clear and accurate picture of the situation.
Consult Groupe Synergie Notaires
Before listing or acquiring a tenanted property, a consultation with Groupe Synergie Notaires will help you clarify your obligations and approach the transaction with full confidence. The firm, founded by Me Mirabela Petrulian and located at 67 Samson Boulevard in Laval (Sainte-Dorothée), guides both sellers and buyers through every stage of the process.
Contact the firm at (514) 399-1009 or info@gsnotaires.com.
Frequently Asked Questions
Can a tenant be evicted when a property is sold?
No. Under Québec law, the sale of a property does not terminate an existing lease — the tenant retains the right to remain in the unit under the same conditions. A notarial consultation will help you fully understand the rights and obligations that apply to your specific situation.
Is the buyer required to honour a lease signed by the previous owner?
Generally, yes: the buyer assumes the existing leases as originally concluded, with the same terms and conditions intact. Me Petrulian will explain the specifics during your consultation based on the particular nature of your transaction.
Does the seller have to inform tenants that the property is being sold?
Under Québec law, certain disclosure obligations apply to the seller with respect to tenants, particularly in smaller residential buildings. It is strongly advisable to consult a notary before taking any steps toward a sale in order to understand your precise obligations.
This text is provided for informational purposes only and does not constitute legal advice. As each situation is unique, it is recommended that you consult a professional to obtain advice tailored to your particular situation.