EVICTION BECAUSE THE Landlord IS MOVING IN (Possibly in bad faith)
the new rules
The Residential Tenancies Act and at least the last two previous versions of the residential tenancies law in Ontario has allowed a landlord to evict a sitting Tenant for no reason other than the landlord wanting to take over the rental unit for themselves, their family members (the relationship being designated in the law), or for care givers. The notice period was then and still is 60 days to the end of term. The notice form is a form N12.
Tenancies can be terminated regardless of any fault or lack of fault on the part of the tenant. Good tenants are as likely to be evicted as bad tenants. The N12 (Landlord’s Own Use) process does not require the tenant to have done anything to justify termination for this purpose.
Historically, tenants have challenged the N12 (Landlord’s Own use) on the basis of the landlord “wanting” the rental unit for their own use or “needing” the rental unit for their own use. The difference between “want” and “need” is significant and where the landlord by accident allowed the analysis to become about “need” then the Ontario Landlord and Tenant Board would look at the legitimacy of the “need” and assess whether the expressed need was legitimate and asserted in “good faith”.
When landlords did not stumble into asserting a “need” but simply stood firm on “wanting” the rental unit the analysis at the Landlord and Tenant Board focused more or entirely on the question of whether the landlord required the rental unit “in good faith” for residential purposes. The LTB would analyze the evidence to determine why the N12 was served and whether the landlord or the person he indicated on the form was apparently going to move into the rental unit. An affidavit from the person who was claiming to move in was also provided to the LTB in the application process.
Unfortunately, the LTB’s ability to analyze the landlord’s intent was rather limited. If a landlord swears “We’re moving in” and there are no surrounding facts available to the tenant to prove otherwise the application was normally granted. For many years, the LTB did not worry too much about granting the Order because the RTA provided a remedy if the landlord did not move in. However, with the passage of time it became readily apparent that the remedy for a false N12 was easily averted and tenants who moved out only to find their unit up for rent again (at a higher rent), ended up with no effective recourse or remedy.
The Landlord’s Own Use notice was increasingly a silver bullet that could kill any tenancy. Proving that a landlord has served an N12 in bad faith is a very difficult thing to do if the landlord is careful and doesn’t say too much. While a tenant’s suspicions may be strong, the burden to prove that the N12 was served in bad faith rests with the tenant. If the tenant is unable to prove that bad faith then the eviction order was/is very likely to be granted albeit normally with a little bit of extra time.
ABUSE OF THE N12
Over many years it became obvious to those of us working in residential landlord and tenant law that the N12 (termination for landlord’s own use) was being abused by landlords as a simple way to evict a tenant without any real consequence. In fact, I had and still have many cases where licenced realtors are giving advice to landlords to serve an N12 to get possession to make it easier to sell a property. This is entirely contrary to the RTA but it was quite common.
The N12 (Landlord’s own use) was in the early years interpreted strictly. At one time it was impossible for a corporate landlord to take up residence in an apartment. It was believed that a corporation couldn’t live in an apartment. Over time that changed and where a corporation was closely held (one shareholder) it was determined that the shareholder could move in and then it was determined that the shareholder’s family member could move in. The effect was an expansion of the number of ways that a tenant (who was doing nothing wrong) could be evicted from their home.
THE CHANGES
The abuses finally became too much and the Residential Tenancies Act has been amended with respect to a “Landlord’s Own Use” application [Form N12]. The applicable residential tenancies act section is section 48. This section has now been amended to make the N12 more difficult and more costly to use.
These are the major changes:
1. When serving an N12 the landlord or his family member designate must require the rental unit for residential purposes and must intend on living there for at least one year (section 48(1) RTA);
2. Once the landlord serves an N12 for landlord’s own use the landlord must pay the tenant compensation equal to one month of rent or offer the tenant an alternate and acceptable rental unit (section 48.1 RTA);
3. The N12 may only be served if the rental unit is owned in whole or in part by an individual (section 48(5)(a));
4. The landlord is an individual (section 48(5)(b)).
The requirement that the N12 notice be served in “good faith” and that the rental unit is required for residential purposes continues to be a prerequisite to serving the N12.
As you can see from these changes the use of an N12 is now more onerous. It is not impossible, but there is now a greater basis on which the tenant can challenge an N12. Corporate landlords may no longer serve an N12. If the landlord on a lease is a property management company it is arguable that an N12 can not be served. There appears to be a greater barrier to landlord’s using the N12 to evict tenants. The requirement that a landlord or his family member live in a rental unit for at least one year makes temporary living arrangements impossible. The one year requirement allows for a greater questioning of prospective landlord occupiers, especially children who are often the intended beneficiaries of N12’s.
The compensation requirement is another interesting and new requirement. I read the section as requiring payment upon service of the N12 regardless of whether the landlord follows through on the N12. As soon as the N12 is served, compensation equal to a month’s rent is due to the tenant. I believe this is a fair interpretation of this section given the apparent intent to limit the improper use of N12’s. Requiring compensation to be paid is a good way to stop frivolous use the N12 or using the N12 as a threat. I have seen too many times where landlord’s serve N12’s just to see what happens and to see if a tenant will leave because of it. Currently, landlord’s are arguing that the compensation does not need to be paid if the Landlord does not apply to the LTB on the N12. I disagree with this position. As far as a I know there is no binding authority on this point at the time of writing this article.
THE HEARING PROCESS
The process before the Board remains as it always has. A landlord may apply to the LTB, based on an N12, at any time after service of the N12. The notice period of 60 days (to the end of term), continues to only be a minimum notice period and not a maximum. Hence a landlord who absolutely needs to know when they are getting the rental unit should apply to the Board immediately after serving the N12. The LTB is fully authorized to extend the 60 day notice period to a future date that seems fair under the circumstances. Because the tenant is not at “fault” in an N12 situation the Board looks favourably at tenants and their particular needs. If a tenant has a child in school and wants a few extra months to allow the child to finish school then that extension of time is likely to be allowed. There are many many reasons for the LTB to extend the termination date even if the landlord is found to have served the N12 in good faith.
Because you can not know for certain when the LTB will terminate the tenancy it is a good idea to apply sooner than later, even if the tenant advises that they will be moving. Regardless of what the tenant says, it is only lawful to evict the tenant with an Order of the LTB.
Michael K. E. Thiele
www.ottawalawyers.com
