As many people know, the residential landlord and tenant relationship in Ontario bears a hallmark of security of tenure. Meaning, once a tenant is in possession of a rental unit it is very difficult for a landlord to regain possession of that unit from the tenant. Fixed term leases automatically renew on a month to month basis and landlords may only terminate a lease for cause or not for cause grounds as set out in the Residential Tenancies Act. Simply wanting a rental unit back from a tenant is not a valid nor legal reason to regain possession.
Certainly, terminating a tenancy and evicting a tenant on the basis of cause such as non-payment of rent, impaired safety, illegal act, substantial interference with reasonable enjoyment, is fairly intuitive. What, however, about the tenancy of a tenant who meets all of the conditions of a lease, always pays the rent, disturbs no one? For the most part, the tenancy of such a tenant is unassailable subject only to the narrow grounds set out in the Residential Tenancies Act.
One of those narrow grounds is the subject of this article today. That is, the right of a landlord to seek to terminate the tenancy of a tenant on the basis of landlord's own use. The twist to this topic today, and what is relatively new, is that a corporate landlord may terminate a tenancy of a tenant for the use of the mother of the single shareholder of the corporation.
It was not long ago that a corporate landlord could not terminate a tenancy to move into a rental unit. The thought was that a corporate entity had no personalty and hence could not occupy a rental unit for residential purposes. This position was changed by the Divisional Court in a case called Slapsys (1406393 Ontario Inc.) v. Abrams wherein the Court held that a Corporate landlord could indeed serve a Notice of Termination in Form N12 (Landlord's own use) where that use was for the benefit of a single shareholder of the corporate landlord.
In a more recent case this principle has been extended to include serving a Notice of Termination (in form N12) for the mother of the single shareholder of a corporate landlord. That decision is from the Divisional Court in Saleh v Bedford Properties Estates Limited decided on November 19, 2012.
It is apparent that the Landlord and Tenant Board and now the Divisional Court is eroding the security of tenure enjoyed by tenants in the "not for cause" realm. Based on this decision it is not too difficult to see the current limitation of "single" shareholder being erased altogether. If the Board is prepared to terminate a tenancy for the mother of a corporate shareholder it becomes increasingly difficult to reject, on a principled basis, a notice of termination for a second shareholder. Given that a single shareholder is now able to terminate for any of the relations identified in the N12 (children, spouse, care-giver, spouse's parent, spouse's child) aren't the grounds now so broad (given the number of people for whom a corporate landlord can terminate a tenancy) so as to limit the availability of termination to single shareholder corporate landlords decidedly arbitrary? The rationale for allowing a single shareholder of a corporate landlord to terminate for a large range of relations seems to be a rationale that can easily be suited to corporations that are closely held by the same group of people.
For example, a corporate landlord (owned by a single shareholder) is able to terminate the tenancy of a tenant where that shareholder wishes his spouse to move into the unit. However, at present, if that corporate landlord is owned by both the husband and wife as shareholders termination is not possible if the wife (or husband) wishes or needs to move into the rental unit (imagine a situation of impending divorce or separation). In both situations the same person is intended to occupy the rental unit for residential purposes--the only difference is the share structure of the corporate landlord. In my view, maintaining that position/distinction becomes a matter of form trumping substance which in the landlord and tenant context under the Residential Tenancies Act is precisely something that the Board is directed to disregard.
Michael K. E. Thiele
310 O'Connor Street, Ottawa, Ontario
Monday, 3 December 2012
Evicting a tenant to move in your mother: Corporate Landlord
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