Ending the obligation to pay compensation to tenants for landlord's own use
Residential Landlord and Tenant law sure does evoke a lot of passion. One of the major passion evoking issues is a landlord's obligation to pay compensation to a tenant equal to one month's rent when evicting a tenant for landlord's own use. On the tenant side, the compensation is not a celebrated benefit as it comes at a time when a tenant is learning that they have to move out with a stipulated termination date of about 60 days hence. Compensation equal to a month's rent is hardly worth a celebration with the stress that comes in having to move.
On the other hand, my experience has been that Landlord's get rather indignant, upset, exercised, when told that they need to pay their tenant compensation. This requirement is often interpreted as "paying the tenant to live in the rental unit"--which is effectively opposite to the purpose of making housing available to tenants. Layer on to this the fact that "landlord's own use" is typically used by mom and pop landlord (i.e. Capreit isn't moving in) the impact of the compensation requirement can be quite significant relative to the expenses and business operation of the small time landlord.
So, it is with interest that we can see that the Ontario government, in Bill 60, has for all intents and purposes, eliminated the compensation requirement. There is a trick to this as it is not immediately obvious but I will explain. It will soon become screamingly obvious that there is only one way to proceed with landlord's own use notices and applications and that the correct approach will result in the de facto elimination of the compensation requirement.
At this time, Bill 60 is not yet law vis a vis the provisions related to the Residential Tenancies Act. We await proclamation of the amendments to section 48.1 (the text of which is known) by the Lieutenant Governor in Council on a coming in to force date. When that happens, I expect that the era of compensation for landlord's own use will effectively end.
Section 48.1 RTA is the section that imposes the requirement to pay a tenant compensation equal to one month's rent if a landlord intends to terminate the tenancy and move into the rental unit
To be very clear, Bill 60 does NOT remove a compensation requirement if a landlord is foolish enough to serve a Notice of Termination with less than 120 days notice. However, if a landlord provides a tenant with a lawful notice, that contains at least 120 days of notice of termination for landlord's own use, then the compensation requirement is eliminated. Here below (in italics) is the wording that will become the law--with a highlight on the notice period.
Same
(2) The requirement to compensate a tenant or to offer the tenant another rental unit under
subsection (1) does not apply if a landlord gives notice to a tenant under section 48 that meets
the following criteria:
1. The notice is given on or after the day subsection 2 (2) of Schedule 12 to the Fighting Delays,
Building Faster Act, 2025 comes into force.
2. The date for termination specified in the notice is at least 120 days after the notice is
given.
3. The date for termination specified in the notice is the day a period of the tenancy ends or,
where the tenancy is for a fixed term, the end of the term.
WHY DO I SUGGEST THAT COMPENSATION IS ELIMINATED?
While the Residential Tenancies Act will continue to trap unsuspecting landlord's into a compensation requirement we can hope that the revised N12 Form (or perhaps a new form number) will make it clear to landlords that the compensation obligation can be avoided with 120 days notice to the end of term.
I argue, or will argue, that the ability to eliminate compensation by giving 120 days notice versus 60 days notice will in fact establish 120 days as the de facto notice period for landlord's own use. I am certain that every lawyer and paralegal--and presumably every AI out there will soon tell Ontario Landlords to provide a minimum of 120 days notice.
Here is why I am so certain. The old time period of 60 days and the new period of 120 days, will still allow tenants to "not move out" (because that is what the notes on the form say). A tenant refusing to move out by the termination date on the form will be entitled to a hearing before the Ontario Landlord and Tenant Board if the landlord insists on terminating the tenancy and moving in. As it is with the current 60 day Notices, there is no indication that a landlord who gives a 120 day notice will not entitled to immediately apply to the LTB for an eviction Order. If this stays the same for 120 day notices then anyone who has ever done a case at the Ontario Landlord and Tenant Board will tell landlords to serve 120 day notices. There will be no advantage in serving the shorter notice (less than 120 day notice).
The reason is the Landlord and Tenant Board's inherent inefficiency. In practical terms (i.e. reality), the Landlord and Tenant Board is incapable on a consistent basis to receive an application and schedule a hearing within 60 days. To be fair, there was indeed a time long ago when hearings were scheduled immediately upon filing and heard within 20 days of filing. In fact, lawyers and paralegals as long in the tooth as I am will remember being offered multiple dates and start times to choose from during the course of filing the application! This kind of efficiency seems so unlikely now that my stating that this was once possible is characterized as a fairy tale or old man fable about walking 15 miles up hill in 4 foot snow banks to school in shorts. Honestly, the LTB was once a marvel of efficiency.
Anyway, for many years now it has been the case that the LTB is incapable of scheduling an N12 hearing within 60 days of the Application being filed. The reality is that hearings are regularly scheduled well beyond the 120 days that the new notice period contemplates. While there is a chance--albeit a small one--that a hearing could be scheduled before the 120 day termination date the fact is that scheduling is indeed quite different from hearing, deciding, and receiving an order within that time.
A hearing, once scheduled, still has a good chance of being adjourned at least once or for other reasons being delayed and rescheduled. Reasons include a tenant getting legal representation or that the hearing block runs out of time or for French language rights being exercised, or for negotiations, etc. etc. etc.. Procedural fairness, natural justice, and the ability to know the case and be heard (as required by the RTA) are factors impacting the commencement of hearings.
Other possibilities include a default order resulting in a Request to Review--inability to participate, or other arguments that may also support a Review that leads to a stay and a new hearing being held. There are Appeal rights which may lead to an automatic stay of enforcement of an eviction Order.
Let us also not forget that once a merits hearing is held that the adjudicator who heard the case still needs to make a decision. Decision writing is a daunting task for many adjudicators who sit, sit, sit, hear, hear, and hear cases. Their work loads are heavy and writing time is inadequate. Anecdotally, I hear and understand from a few sitting adjudicators that there is very little LTB support or adequate time for adjudicators to write decisions. Getting decisions after hearings can take 30-60 days (nothing is considered late until at least 60 days after a hearing). There are many instances where the 60 day timeline is well passed. That this is likely an issue is probably reflected in the Motion that parties can file to transfer a file to a different adjudicator. A strange motion to exist at all, but take a look--it is an available motion to be brought on the LTB website and its availability reveals the existence of a problem at the LTB.
GIVING 120 DAYS will result in tenants delaying
In my experience tenants will leave early the second they have a place to go that is acceptable to them. They will not hang on to a rental unit that they know they will need to vacate just to annoy the landlord. Once they have a new home to move to, the tenants are going. They will give early notice of termination (leave before the 60 days or 120 days of notice given) as they will want to stop their rent obligation in the unit they are vacating. Until they terminate early their obligation to pay rent in the old place continues and no one likes to pay rent in two places.
So, a lot turns on a tenant being able to find suitable alternate accommodations. If they can find a good place shortly after getting the Notice they will give notice and leave. They will do so because they will be worried that a good new place will not be available when they are forced to vacate. If there is no good alternative, well then the tenant is not vacating at 60 days, 120 days, or any period until the LTB makes an Order. A tenant living in a rental unit will not vacate to the street in order to accomodate a landlord.
In my view, a 120 day notice is just as good as a 60 day notice for speedily getting a rental unit back. The vast majority of tenants will move when they can. The difference between 60 days and 120 days is not enough to cause tenants to deal with moving "later".
AND THEN THERE IS DISCRETION
It is a pet peeve of mine that too many lawyers, paralegals, and even Judges, will view the 60 day notice period or 120 day notice period as imposing an obligation on the tenant to vacate by that date. Too many folks regard the enforcement of the termination notice via an application to the LTB as a legal action to punish a tenant's malfeasance. There is this an entirely wrong sense--but commonly held view--that a tenant has a duty to vacate upon receiving a Notice of Termination and that failure to do so is a breach of the law by a tenant. Nothing could be further from the truth.
The fact is that a termination for landlord's own use is a unilateral action by the landlord. The right to terminate, on this ground, has significant legal constraints. Security of tenure is still the underlying public policy of the Residential Tenancies Act. In fact, if a landlord tries to use this termination right improperly a tenant has a right to significant financial compensation for a bad faith eviction. Further, a tenant is entitled, under the law, to test a landlord's "good faith" before an impartial decision maker (i.e. the LTB) before vacating the premises.
If a tenant wants to be sure or thinks that a landlord is gaming the system by using a Landlord's Own Use termination notice then they are encouraged and permitted to require a landlord to file an LTB application so that the landlord establishes on a balance of probabilities that the Notice of Termination has been served in good faith and that the underlying legal requirements are met. By the reality of the system, this means that the 60 day notice period (or even the 120 day notice period), is certain to come and go well before a decision is made.
This brings us to the reality of merits hearings. Suppose a tenant insists on a hearing and a landlord eventually obliges by filing an Application. A hearing is scheduled and both parties attend the hearing--lets say on day 50 (however unlikely this is) after the service of the Notice of Termination. At the hearing the adjudicator is satisfied that the landlord does require the rental unit and all is proper. Will the adjudicator terminate the tenancy in 10 days time to coincide with the termination date?
My experience is, and a review of a great many LTB decisions establishes that the vast majority of adjudicators will exercise their discretion to delay enforcement of an eviction decision. That delay is often months and months and in reviewing cases I see regular delays of 60 days before an Order can be enforced (this is from the date of the Order not from the date of the Notice being served). Rightly or wrongly depending on one's view, the fact is that the LTB does delay eviction enforcement after merits hearings even when the landlord wins the case.
CONCLUSION
In my opinion it makes no sense to give a tenant a 60 day Notice of Termination with compensation payable versus a 120 day notice without compensation payable. A tenant who is able to move within 60 days will likely do so even when provided with a longer notice. A tenant who is unable to move within 60 days or even 120 days is not going to move out and will remain in possession until a hearing is scheduled. The LTB, as it's hearing processes function, will very rarely be in a position to schedule a hearing within 60 days or even be able to maintain such a hearing date even if scheduled. The 60 day notice is in my view an upcoming artifact of history and the 120 day notice will be the new norm for those landlords who take legal advice or presumably use an AI to advise on the best course of action.
Michael Thiele
www.ottawalawyers.com
N.B. please remember in reviewing this article that we await proclamation and that the new law cited is not yet in force.
