Can a Landlord Evict a Tenant and Take Over the Rental Unit?

A Landlord Must Have a Good Faith Intention to Move Into the Rental Unit For At Least a Year When Evicting a Tenant For Own Use Purposes. The Landlord Must Provide At Least Sixty Days Notice and Provide Compensation Equal to One Month of Rent.

Understanding the Duty of Good Faith As Required Within An N12 Eviction For Own Use By the Landlord or Family Member

Notice to Evict for Own Use By Landlord or Family Member Document When a landlord seeks to evict a tenant for the own use purposes of the landlord, or certain close family members of the landlord, the landlord must genuinely possess a good faith intent to do so; and to do so for a period of at least one year.  This good faith requirement ensures that a landlord is precluded from using the own use process under false pretenses, such as where a landlord may prefer to evict a tenant and lease to a fresh tenant at a higher rent.

The Law

The right to terminate the tenancy, when in good faith, for own use purposes is provided within section 48 of the Residential Tenancies Act, 2006, S.O. 2006, Chapter 17 wherein it is said:

48 (1) A landlord may, by notice, terminate a tenancy if the landlord in good faith requires possession of the rental unit for the purpose of residential occupation for a period of at least one year by,

(a) the landlord;

(b) the landlord’s spouse;

(c) a child or parent of the landlord or the landlord’s spouse; or

(d) a person who provides or will provide care services to the landlord, the landlord’s spouse, or a child or parent of the landlord or the landlord’s spouse, if 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 the rental unit is located.

(2) The date for termination specified in the notice 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.

(3) A tenant who receives notice of termination under subsection (1) may, at any time before the date specified in the notice, terminate the tenancy, effective on a specified date earlier than the date set out in the landlord’s notice.

(4) The date for termination specified in the tenant’s notice shall be at least 10 days after the date the tenant’s notice is given.

(5) This section does not authorize a landlord to give a notice of termination of a tenancy with respect to a rental unit unless,

(a) the rental unit is owned in whole or in part by an individual; and

(b) the landlord is an individual.

Requirements
Proper Notice

As indicated per section 48 of the Residential Tenancies Act, 2006, the landlord is required to provide at least sixty (60) days notice to the tenant.

Compensation

Additionally, per section 48.1 of the Residential Tenancies Act, 2006, the landlord is also required to provide compensation to the tenant in an amount equivalent to one (1) month of the usual rent or offer the tenant another rental unit within the rental complex as suitable to the tenant.  Specifically, section 48.1 says:

48.1 A landlord shall compensate a tenant in an amount equal to one month’s rent or offer the tenant another rental unit acceptable to the tenant if the landlord gives the tenant a notice of termination of the tenancy under section 48.

Good Faith

As above, a landlord must have good faith intentions when evicting for own use.  Of course, reading the mind of the landlord so to determine whether intentions are pure is an impossibility and therefore where there is a hearing at the Landlord Tenant Board the challenge for the adjudicator is to gauge whether the good faith requirement is genuine.  Per the case of K.M. (Landlord) v. J.N. and J.R.HOL-0238818 (Re), 2018 CanLII 111837:

13.  The obligation of the Board in considering applications for Landlord’s own use is to consider the circumstances of each case in relation to the criteria laid out by the leading cases of the Divisional Court:

Beljinac v. Salter2001 CanLII 40231 (ON SCDC), [2001] O.J.  No.  2792 (Div. Ct.), (“Salter”) when referring to Justice Steele’s reasons in Feeney v. Noble (1994), 19, O.R.  (3d) (Div. Ct.), stated that:

…the test of good faith is a genuine intention to occupy the premises and not the reasonableness of the landlord’s proposal.

And in the more recent decision of Fava v. Harrison2014 ONSC 3352 (CanLII) the Divisional Court, in considering this issue in the context of the Act found as follows:

We accept, as reflected in Salter, supra, that the motives of the landlord in seeking possession of the property are largely irrelevant and that the only issue is whether the landlord has a genuine intent to reside in the property.  However, that does not mean that the Board cannot consider the conduct and the motives of the landlord in order to draw inferences as to whether the landlord desires, in good faith, to occupy the property.

As such, the reason why the landlord is seeking to occupy the rental unit is, generally, irrelevant and only the intent to occupy is under consideration; however, as indicated, the conduct and motives of the Landlord may be indicators as to the truth of a stated intent to occupy.

Where certain facts fail to jive or where it is demonstrable that the landlord is untruthful about various things, such dishonourable conduct may be a strong indicator that the stated intent to occupy is similarly disingenuous.

Full-Time

While the Residential Tenancies Act, 2006 lacks such detail, case law decisions show that the occupany by the landlord, or by the close family member of landlord, must be a full-time occupancy.  Accordingly, a landlord that wishes to evict a tenant for the purpose of part-time occupancy, such as for the use of a son or daughter while attending college or university on a less than year-round basis, may find difficulty with an eviction intended for such a purpose.  The requirement of full-time occupancy was addressed within the case of Kohen v. Warner, 2018 ONSC 3865 wherein the Division Court reviewed a decision of the Landlord Tenant Board and it was said:

[9]  The Landlord submits that the Member erred in law in determining that he was bound to dismiss the application by virtue of the decision in MacDonald v. Richard, [2008] O.J. No. 6076 (Div. Ct.), which he said was “binding precedent providing that occasional occupation is not what is intended” by s. 48(1) of the Act.

[10] The Landlord submits that the proposed occupation of the unit by the landlord’s daughter in MacDonald was a temporary 4 month occupation only and that this use was distinguishable from the case at bar, as Sedat would be living in the unit occasionally (on weekends during the school year and during the summer months) for 5 years.  Amicus agrees with the Landlord that the Member was not bound by the MacDonald case, which involved temporary occupancy.  Amicus submits that Sedat’s indefinite part-time occupancy may well fit within the Landlord’s s. 48(1) rights if that use is regular and structured.

[11] In our view, it is clear from the Member’s reasons, read as a whole, that the Member did not misstate the law in MacDonald nor did he decide the outcome of this case solely on the basis of MacDonald.  The Member correctly stated s. 48(1) of the Act and the test in that section that applied.  The Member further referred to the cases cited in MacDonald, and to other Board cases, in which occasional occupation of a unit by a landlord’s family was held not to be sufficient to displace a tenant.  The Member then applied the principles from those cases to the facts before him to conclude that the proposed intermittent use of the unit by Sedat did not entitle the Landlord to terminate the existing tenancy pursuant to s. 48(1) of the Act.

Ownership By Individual

Prior to 2017, a rental unit that was corporately owned and controlled by a sole individual, or few close family members, could use the eviction for own use process; however, subsequently, whereas section 48(5) was added to the Residential Tenancies Act, 2006, the eviction for own use process is available only where the rental unit is owned, at least partly, by an individual; and accordingly, if the landlord is a corporation, even a small corporation owned by a sole individual, the eviction for own use process is unavailable.  This requirement well explained within the cases of C.#.O.I. v. B.B, et alTSL-85025-17 (Re), 2018 CanLII 42621 as well as M.D. v. P.B.TSL-01347-18-RV (Re), 2020 CanLII 30947 wherein each it was respectively said:

3.  The Tenants also raised the recent amendment to section 48 of the Act, which prevents a corporation from filing a landlord’s own use application. However, that amendment came into effect on May 30, 2017, several months after the Landlord’s application was filed and it does not apply to this application. In the present case, the Landlord corporation owns the residential complex. It filed an application seeking vacant possession of the rental unit so the son of the sole owner of the corporation can move into the unit. I am satisfied that the individual owner, CB, is the directing mind of the corporation. As such, I am satisfied that CB meets the definition of “landlord” in the Act because he is also an owner of the rental unit. Accordingly, CB will be referred to as the Landlord in the remainder of this order.  This approach is consistent with the court’s decision in Slapsys (1406393 Ontario Inc.) v. Abrams, 2010 ONCA 676.

1.  The Landlord requested a review of TSL-01347-19 issued on March 5, 2019.

2.  The Landlord sought a review on the ground that the member committed an error of fact which amounted to an error of law because when she dismissed the Landlord’s application for not being compliant with s. 48(5) because the landlord was corporation and as the section provides, a corporation cannot serve an n12 notice for Landlord’s own use.

3.  The Member’s found that the  rental unit is owned in part by the Landlord, MD and a numbered company.  This is correct, however, the actual Landlord id MD who has been the Landlord since the rental unit was purchased.

4.  The Landlord testified that he has owned the property since 2003 when he purchased it under power of sale.

5.  He acknowledged that in 2007, he transferred 50% of the ownership of the property to a numbered company that is owned in part by his father and in part by him and the transfer was done for cash flow purposes. The Landlord was unable to produce a parcel register to prove ownership, however he was able to produce other documentation that confirmed that the Landlord is the legal owner.

6.  Section 48(5) does not require the property to be wholly owned by an individual, 48(5)(a) only requires it to owned in part by individual.  I am satisfied that the rental unit is owned in part by an individual therefore his request to review is granted.

s. 48(5) provides:

Application

(5)  This section does not authorize a landlord to give a notice of termination of a tenancy with respect to a rental unit unless,

(a)  the rental unit is owned in whole or in part by an individual; and

(b)  the landlord is an individual.

Accordingly, it appears that so long as the rental unit is partially owned by an individual rather than corporation, an eviction for own use is possible.  With this said, and despite that section 48(5) is without details of what percentage must be owned by an individual, it is likely that a transfer of only a nominal portion of ownership from a corporation to an individual would be viewed as an attempt to circumvent the law and thereby fail as a loophole.  Without an actual case decision on this point, this view is anticipated on the basis of section 202 of the Residential Tenancies Act, 2006, which requires the Landlord Tenant Board to consider the true nature of all transactions.  Specifically, section 202 states:

202 (1) In making findings on an application, the Board shall ascertain the real substance of all transactions and activities relating to a residential complex or a rental unit and the good faith of the participants and in doing so,

(a) may disregard the outward form of a transaction or the separate corporate existence of participants; and

(b) may have regard to the pattern of activities relating to the residential complex or the rental unit.

Summary Comment

When a landlord wishes to occupy a rental unit for residential purposes of the landlord, or certain family members of the landlord, the landlord may issue, and serve, a Form N12 upon the tenant as the formal notice to evict for the own use by the landlord.  The Form N12 must provide at least sixty (60) days notice to vacate the rental unit.  Additionally, the landlord must provide the tenant with compensation equal to one (1) month of rent.  It is prudent that the landlord will provide the compensation when the tenant vacates and provides keys to the landlord.

If the tenant perceives that the eviction lacks good faith, meaning that the landlord is without genuine intentions to take possession of the rental unit for the purpose stated within the Form N12, then the tenant may refuse to vacate and instead await a hearing of the Landlord Tenant Board.  At the hearing, if the Landlord Tenant Board agrees with the tenant, the tenant may stay in the rental unit.  If the Landlord Tenant Board sides with the landlord, the tenant will be ordered to vacate by a specified date.


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