As a multi-family real estate investor or landlord in Ontario, turning over a property is a big topic that comes with a lot of potential, but it is also fraught with legal pitfalls. If you want to turn over some tenants without getting into trouble, the first rule is simple: hire a licensed paralegal.

Recently, on The Property Investment Channel, I sat down with Beta Delisi, a licensed paralegal at Stonegate Legal Services who specializes strictly in Ontario landlord and tenant law. We discussed the three primary methods for legally managing tenant turnover in the province—and the massive fines you could face if you attempt to cut corners.

The “Cash for Keys” Approach

Cash for keys is offering a tenant a financial buyout in exchange for terminating their tenancy. This compensation could be even the forgiveness of thousands of dollars in rent arrears $5,000, $10,000, or even more.  

To make this successful, the settlement must provide the tenant with the actual tools they need to secure a new place: first month's rent, last month's rent, and money for moving costs and incidentals. Further, there needs to be an additional amount to make it worth if for the tenant.  The tenant is not there to do the landlord a favour in this instance.  

A smart strategy is to pay a portion of the agreed amount upfront so they can secure a new lease, and the balance on closing once you have the keys back.

Crucial Tips for Cash for Keys:

• Do it before listing: Execute this agreement prior to listing your property on the market. This guarantees vacant possession and eliminates massive headaches regarding staging, open houses, showing access, and videos.
• Use the correct paperwork: Do not just rely on an N11 document. You must have a legal representative draft a "Terms of Settlement" document. This outlines the rules of the agreement, including a full and final release clause ensuring neither party can come after the other once the tenancy ends. If the tenant takes the money and refuses to leave, these documents allow you to file with the Landlord and Tenant Board for an eviction order without a hearing, which usually takes three to six weeks.

Extensive Renovations (The N13 Notice)

Another popular turnover vehicle is significant construction, but you must be incredibly careful. Under amendments like Bill 97, the Landlord and Tenant Board is severely cracking down on bad-faith evictions. Fines for unlawful evictions are increasing up to $100,000 for small landlords and up to $500,000 for corporations.

To legally serve an N13 notice, the renovations must be so extensive that the unit cannot be occupied while the work is being done.

• What qualifies: Gutting the property to the studs, pulling out the plumbing, or removing asbestos.
• What does NOT qualify: Painting, changing floors, or minor cosmetic updates where tenants can just shuffle around.

If you pursue an N13, you must give the tenant 120 days' notice and provide compensation. Furthermore, tenants have the "right of first refusal". If they notify you in writing before the termination date, you must allow them to move back into the renovated unit at the exact same rent they were previously paying. The only way to legally increase the rent in this scenario is if you add a brand-new amenity, like a dishwasher or laundry machines, and even then, the tenant must agree to a reasonable increase.

Here is a link to the N-13 form. 

Family Members Moving In (The N12 Notice)

Serving an N12 notice for a family member to move in is highly scrutinized and often catches landlords acting in bad faith.

The key here is genuine intent. If your family member intends to move in, but later simply "changes their mind," this does not fly with the Landlord and Tenant Board. If a former tenant's "nosy neighbor" discovers the unit is empty or re-rented to a stranger, you could be hit with an illegal lockout application or a bad-faith application. If you are acting in good faith, always consult your paralegal to keep your nose clean.

Need Help Navigating Your Ontario Real Estate Investments?

Tenant turnover doesn't have to be a legal nightmare, but you do need the right team in your corner to avoid costly mistakes. If you have any real estate questions or need a hand buying or selling your next investment property, I want to hear from you.

I can be reached at Reach out to me, Terry Riddoch, at https://terryriddoch.ca/ today to discuss your portfolio and investment goals.

(Please note: While the information above is sourced directly from the provided interview transcript, your contact website link, https://terryriddoch.ca/, was drawn from our previous conversation history and is not explicitly in the video transcript.)