Vacant Possession Clause Ontario: VAC-1 for Agents

Published 11 September 2026 · By Jatin Dua, Broker of Record, RE/MAX Quantum Realty

Last updated 11 September 2026. Written by Jatin Dua, Broker of Record at RE/MAX Quantum Realty, 799 The Queensway, Etobicoke · For Ontario registrants · 10 min read

The short answer

VAC-1 (Vacant Possession/Notices) is a direction to serve notice, not a promise of an empty house. Once the agreement goes unconditional, the seller is directed to serve the tenant with the notices the legislation calls for, seeking an empty property on a stated date so the buyer or a close family member can live in it, and to hand the buyer copies of what was served. Then comes the part buyers do not read: a tenant still in place on completion day is a tenant the buyer takes on. A seller cannot guarantee vacant possession in Ontario, because whether a tenant actually goes is not within the seller’s control. The clause allocates that risk. It does not remove it.

Nobody can promise vacant possession, and the clause does not pretend to

The complaint I see on these files always sounds the same. The buyer bought a tenanted duplex, they were moving into the upper unit, the agreement said vacant possession, and on closing day the tenant is still there. The buyer thinks they have been defrauded. The seller thinks they did everything asked of them. Both are partly right, and the agent who wrote the word vacant into a listing without understanding it is the one everybody is now looking at.

Here is the reality that VAC-1 is built around. Under Ontario’s residential tenancies legislation, a landlord can serve the required notice, and a tenant who does not agree can simply stay and require the matter to be determined. That determination is not on a timeline that a closing respects. So a seller who signs an agreement promising vacant possession is promising an outcome that depends on a third party who has not agreed to anything and on an adjudicative process nobody controls.

The short version

The seller’s obligation under VAC-1 is to serve. It is not to deliver an empty property. If your buyer’s plan collapses when a tenant stays, the clause is not the protection they think it is, and you need to have that conversation before the offer, not on closing eve.

What VAC-1 actually does, function by function

Pull the current wording from your own OREA member copy. What follows is the anatomy — the five jobs the clause does and what each one costs you if you handle it carelessly.

What the clause does	The decision it forces	The failure mode
Directs the seller to serve the tenant with the notices the legislation calls for	Nothing — but it only bites once the agreement is unconditional	Agents assume notice goes out on acceptance. It does not. Conditions have to be gone first
Seeks an empty property from a stated date, for occupation by the buyer or a close family member	The date goes in a blank, and it has to work with both the closing and the notice requirements	A date picked from the closing backwards without checking what notice the legislation requires
Obliges the seller to hand the buyer copies of whatever was served, promptly	Nothing, and this is the most useful line in the clause	Nobody follows up, and the buyer has no idea whether anything was served until it is too late to react
Allocates the costs and expenses of the notices to one named party	Seller or buyer — a blank you must fill	Left blank, or filled reflexively, without anyone pricing what those costs can include
Says that a tenant still in place on completion day becomes the buyer’s tenant	Whether your buyer can actually live with that outcome	The buyer never understood this was in the clause they signed

Read the last row again, because that is the clause’s real content. VAC-1 is not a condition. It does not give the buyer a right to walk if the tenant stays. It converts a failed vacant possession into a completed purchase of a tenanted property, at whatever rent that tenancy carries, with whatever rights that tenant has.

YOUR BUYER MAY CLOSE ON A TENANTED HOUSEUnder VAC-1 the fallback is not termination, it is assumption. If the tenant has not left by completion, your buyer closes and inherits the tenancy at the existing rent. A buyer who is selling their own home, has movers booked and cannot afford to carry a second housing cost needs to understand that outcome in writing, before the offer goes in.

The blanks, and what happens when you fill them badly

The effective date. This is the date vacant possession is required for. It has to be consistent with the closing and achievable given what the legislation requires by way of notice period and form. That last part is not your call. How much notice is required, in what form, and what must accompany it are questions under the residential tenancies legislation, and they belong to a lawyer or licensed paralegal. Refuse to write a date into an agreement until somebody qualified has confirmed it is workable.

The payer. The clause makes you name who bears the costs and expenses of the notices. Agents treat this as a formality because they are picturing a piece of paper. It is not only a piece of paper. Depending on the route taken, ending a tenancy for a purchaser’s own use can carry a compensation obligation to the tenant, and there can be professional fees on top. Get the figures from somebody qualified, and do not let your client agree to an open-ended amount without knowing what it is.

The purpose. The notice is grounded in occupation by the buyer or a close family member. That phrase is doing heavy lifting. It is not a general repossession for renovation, not for a friend, not so the property can be relisted vacant in the spring. If your buyer’s actual plan is something else, this is the wrong clause and the wrong route, and you need to stop and get advice rather than drafting around it.

What I make my agents do

Before a vacant possession date goes into an agreement, the buyer speaks to a lawyer or licensed paralegal about whether the date is achievable and what the seller will have to do to get there. Ten minutes of someone qualified beats a date chosen from a closing calendar every time.

Timing: the notice cannot go out until the deal is unconditional

Nothing happens under this clause until the agreement goes unconditional. That is deliberate — no sensible seller serves a tenant with a notice to vacate on the strength of an offer that still has a financing condition on it, because if the deal falls apart the seller has damaged their own tenancy for nothing. So the sequence is: offer accepted, conditions satisfied or waived, deal firm, and only then does the notice go out.

Now count the days. Five business days of financing, a few days of inspection, then the notice period the legislation requires, then a closing after that. If your buyer wanted a sixty-day close, there is a good chance the arithmetic does not work, and the time to find that out is while you are drafting the offer. On a tenanted purchase the condition period and the completion date are one decision, not two.

Which brings up an obvious point that hardly anybody acts on: your buyer needs proof. The clause requires the seller to deliver copies of the notices to the buyer immediately after they are served on the tenant. Chase that. Put a calendar reminder for the day after the deal goes firm and ask for the copies. If nothing arrives, you have found out early, while there is still time for the lawyers to do something, instead of on the last week when the only remaining options are bad ones.

The buyer’s indemnity, and the good-faith problem behind it

There is a second obligation in VAC-1 that runs the other way, and buyers rarely notice it. Once the property is empty, the buyer or the close family member named is committing to move in and live there without delay — and on completion the buyer hands the seller a written indemnity covering claims that arise if that does not happen.

That indemnity exists for a reason. The seller served the notice, so the seller is the one exposed if the stated purpose turns out not to have been genuine — if the buyer never moved in, if the property was relisted vacant a month later, if the unit was re-rented at a higher rent. What that exposure amounts to is a legal question for a lawyer or licensed paralegal. What you need to take from it is that your buyer is signing a promise about their own future conduct, and it is not a formality.

So if a buyer tells you the plan is to get the tenant out and then decide what to do with the property, you have a problem that is not a drafting problem. Say plainly that the clause is built around the buyer or their immediate family actually occupying, that they are giving a written indemnity about it, and that they should speak to a lawyer before proceeding. Then stop talking. You are not qualified to tell them how far they can push it, and an agent who coaches a client through that conversation has taken on something they cannot carry.

Your exposure: the listing, the advice, and the line you do not cross

The listing. If you advertise a tenanted property as offering vacant possession, you are making a statement about an outcome the seller cannot control. RECO’s advertising guidance in Bulletin 5.1 defines a misleading statement as one that causes someone to have a wrong idea or impression, and it does not matter that some readers would not be misled. Advertising vacant possession available when what the seller can offer is a commitment to serve notices is exactly that kind of statement. Write what is true: the seller will serve the required notices on firm, and the risk of the tenant remaining is allocated in the agreement.

The advice. Explaining the residential tenancies regime to a client — what notice is required, what compensation applies, what happens if the tenant disputes it, how long a hearing takes — is not advice you are licensed to give, and it is the single most common way agents get themselves into trouble on tenanted files. Refer it out. Every time. The correct sentence is that this depends on requirements under the residential tenancies legislation and your client should speak to a lawyer or a licensed paralegal before the offer goes in.

The self-represented party. Tenanted small properties attract unrepresented sellers, and the TRESA regime is strict. Confirm the person intends to proceed without representation, deliver and explain the RECO Information Guide and the Information and Disclosure to Self-Represented Party form, tell them plainly that you represent your client and not them, and make reasonable efforts to obtain a written acknowledgement of that form. Then do not advise them on price, terms or clauses — and a vacant possession clause is squarely a term.

How I run a vacant possession file

Establish what the buyer actually needs. Occupying it themselves or with immediate family is one file. Anything else is a different conversation and probably a different clause.
Send the buyer to a lawyer or licensed paralegal before the offer, with the specific question: is this vacancy date achievable given when the deal can realistically go firm?
Draft the condition period and the completion date together, not separately. On a tenanted purchase they are one arithmetic problem.
Fill the payer blank deliberately and make sure whoever is bearing the cost knows what can be in it.
Calendar the day after the deal goes firm and chase the copies of the served notices. Do not wait to be told.
Build in a right to get back into the property before closing — INSP-14 or INSP-15 — so your buyer can actually see whether the unit is being vacated rather than finding out on the day.
Have the assume-the-tenant outcome acknowledged by the buyer in writing, in plain language, before the offer is submitted.

That sixth step is one hardly anybody takes and it is nearly free. A right of inspection before completion costs you a clause and gives your buyer sight of reality two weeks out instead of two hours out. If the unit is still fully furnished and lived in on the visit, everybody’s lawyers have time to do something about it. There is more on how those access rights are drafted in home inspection condition wording.

Questions agents actually ask

Can a seller guarantee vacant possession in Ontario?

No. A seller can serve the notices the residential tenancies legislation requires, but whether the tenant actually leaves is not within the seller’s control, and a disputed matter is not resolved on a closing timeline. That is precisely why VAC-1 is drafted as a direction to serve notice with a fallback, rather than as a promise of an empty property. Treat any agent promising a guarantee as someone who has not read the clause.

What happens under VAC-1 if the tenant does not leave?

The buyer assumes the existing tenant on completion. The clause does not give the buyer a right to terminate, and it is not a condition. Your buyer closes on a tenanted property at whatever rent that tenancy carries, with whatever rights the tenant has. That outcome needs to be explained and acknowledged in writing before the offer goes in, not discovered in the final week.

When can the seller serve the notice?

Once the agreement becomes unconditional. That is deliberate, because no sensible seller disrupts a tenancy on the strength of an offer that still has conditions attached. It also means the notice period runs after your condition period, which is why the condition dates and the completion date have to be drafted as one decision on a tenanted purchase rather than as two separate ones.

Who pays the costs of the notices?

Whoever is named in the blank, which is a real negotiation rather than a formality. Ending a tenancy for a purchaser’s own use can carry obligations to the tenant beyond the paperwork itself, and there may be professional fees. Get the actual figures from a lawyer or licensed paralegal before your client agrees to bear them, and never leave the blank empty.

Can I advertise a tenanted property as offering vacant possession?

Be very careful. RECO Bulletin 5.1 treats a misleading statement as one that causes someone to have a wrong idea or impression, regardless of whether every reader would be misled. A seller cannot deliver vacant possession with certainty, so advertising it as available risks exactly that impression. Describe what is true: the seller will serve the required notices once the agreement is firm.

Why does the buyer have to give an indemnity?

Because the seller is the one who served the notice, so the seller is the one exposed if the stated purpose turns out not to have been genuine. VAC-1 has the buyer or their immediate family commit to taking possession and occupying promptly, and to provide a written indemnity on completion if they do not. What that exposure amounts to is a legal question for a lawyer or licensed paralegal.

The clause checklist I make my own agents use

A one-page pre-submission check for conditions and schedules — the dates, the notice route, and the eight things that get missed. Built for Ontario agents. Free, and there is no drip campaign behind it.

Separately — if you have ever wondered what your last twelve months would have paid on a different split, run it through Quantum Leap. Six questions, no signup wall.

Tenanted deals go wrong in the drafting

Vacant possession files fail on arithmetic nobody did at the offer stage. Every agreement my agents write gets read before it goes out, and on a tenanted purchase the first thing I check is whether the dates were ever capable of working.

Book a 15-minute call or call or text 833-330-1925.

If the honest answer is that your current brokerage is fine, I will tell you that.

Vacant Possession Clauses in Ontario: Getting the Notices Right