Ontario N12 Compensation Rules: How Much, When to Pay, and the 120-Day Exception

The Standard Rule: One Month's Rent

When you serve a Form N12 with the standard 60-day notice period, the Residential Tenancies Act requires you to pay the tenant compensation equal to one month's rent. The payment is due on or before the termination date listed on the notice (rules as at October 2026).

This applies to both personal-use notices under Section 48 and purchaser-use notices under Section 49. The amount is one month's rent at the current lawful rate — not what the tenant paid when they moved in, and not a negotiated figure.

The 120-Day Exception (Bill 60, Section 48 Only)

Since September 21, 2026, landlords serving an N12 for their own use or a family member's use under Section 48 have a second option. If you give at least 120 days' notice (termination date falling on the last day of a rental period), the one-month compensation requirement is waived entirely under Section 48.1(2).

This exception does not apply to purchaser use under Section 49. If you're selling the property and the buyer needs vacant possession, the 60-day notice with one month's compensation is the only route.

When and How to Pay

The compensation must be paid on or before the termination date. There's no statutory method required — cheque, electronic transfer, or crediting the last month's rent deposit all work. What matters is the timing and the documentation.

If you credit the last month's rent deposit toward compensation, make that explicit in writing. The deposit under Sections 105–106 of the RTA is meant for the final rental period, so the math needs to be clear: the compensation is a separate statutory obligation that you're satisfying by applying the deposit.

You Cannot Offset Against Damages or Arrears

This is where most N12 applications fall apart. Landlords frequently try to deduct the compensation from amounts they believe the tenant owes — property damage, unpaid utilities, above-guideline increases, or partial rent arrears.

The LTB's position is unambiguous: the statutory compensation must be paid in full by the termination date. You cannot unilaterally withhold or reduce it. The only exception is if the tenant provides explicit written consent to deduct a specific amount from confirmed rent arrears.

Without that written agreement, withholding any portion gives the Board grounds to dismiss your L2 application. You would then need to re-serve the N12 and restart the entire process — including recalculating the notice period from scratch.

What Failing to Pay Means in Practice

If you file an L2 application and the adjudicator finds that compensation wasn't paid by the termination date, the application is dismissed. The notice is treated as if it was never valid. You've lost the filing fee ($186 online), the months you waited through the notice period, and whatever hearing scheduling time elapsed.

There is no mechanism to cure this after the fact. Paying late doesn't fix a notice that was already defective on the termination date.

The Alternative Unit Option

Instead of paying one month's rent, you can offer the tenant an acceptable alternative rental unit. "Acceptable" means the tenant actually agrees to it — you can't force a different unit on them. If they decline, you revert to the cash compensation.

This option is more common in multi-unit buildings where the landlord has a vacancy, but it works anywhere both parties agree.

Keeping a Record

Whatever method you choose, document the payment. A bank record of the transfer, a receipt signed by the tenant, or a written acknowledgment serves as evidence if the tenant later claims non-payment at the hearing. The Certificate of Service covers the notice delivery — the compensation payment needs its own separate proof.

Our Ending a Tenancy in Ontario guide walks through both the 60-day and 120-day N12 paths, including the compensation calculation, payment documentation, and what to do when the tenant disputes the amount.

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