An untenanted unit can often fetch a higher price than a tenanted one. This puts some pressure on landlords and their agents to potentially induce tenants to vacate for the sale. If a notice of termination was issued before a firm agreement of purchase and sale was even entered into (with somebody who genuinely intends to occupy the unit for residential use), the notice would be deemed to have been given in "bad faith" at the LTB (and adjudicators verify those dates), but some landlords still try to give such notices informally in the hopes that the tenant might move out. While aggressive tactics like threats can get tenants' backs up and can be illegal, you would often see more subtle methods of inducing tenants to vacate, e.g. by verbalizing the offer to move out as something supposedly in the tenant's best interest (e.g. in exchange for a nice reference letter or in exchange for 1 month's rent compensation, which is already part of the legal requirements for an N12 anyway).
Sometimes a landlord would give an informal notice over text or email or letter or just ask their tenant to vacate and/or to sign an agreement of termination (e.g. an N11), sometimes even presenting that agreement as a "notice", instead of issuing a proper N12. See an article about this by Browne & Associates Legal Services. Sometimes the reason behind this move is an attempt to avoid committing, to avoid paying compensation for an N12 and, especially, to avoid liability for issuing an N12 in bad faith (the available remedies are now 12 months' worth of rent, difference in rent for 1 year, moving / storage / other reasonable out-of-pocket expenses, sometimes rent abatement and administrative fines). Sometimes getting a tenant to sign an N11 agreement actually backfires on the landlord later (e.g. read this post about Pinto v. Regan and White v. Regan). While the landlord might still sometimes have liability even if he doesn't issue a proper N12, it is in the tenant's best interest to wait for the proper legal process AND, most importantly, to get legal advice as soon as possible.
Here are some of the general things I would consider:
1)
Wait for any paperwork and read all the fine print, as well as read information on the N12 process. Do NOT sign anything without going over it with *your* (never the landlord's) legal counsel (especially any agreements of termination - e.g. N11), regardless of what the landlord's side might say, because it's not uncommon to see people misrepresenting the law and/or their intentions when it suits their interest). But don't just refuse any documents, *save* them for your evidence (since the landlord might deny these interactions later) and for review with your legal counsel.
As a general rule of thumb, the more somebody pressures you into signing something (before you even get a chance to get legal advice and weigh up your options), the more you should understand that your signature is likely *required* and the other side likely wants you to sign away some of your legal rights to their advantage. So slow down and get legal advice immediately. Sources of legal help.
2)
RECORD all interactions with the landlord, prospective buyers, their real estate agents, any other relevant parties at all times (tenants don't need to inform them of the recording, as long as the tenant is a participant in the conversation, see 'one party consent' rule). I would actually consider politely asking the landlord or relevant parties lots of questions every step of the way (since their answers might change over time), to lock them into their positions every step of the way and to see if there are any inconsistencies, flip-flopping, odd avoidance / non-replies that might be pointing to some potential weaknesses in position, etc.
Questions like:
- Who is moving in? (See who is eligible for N12 in this post.)
- When?
- Why? (What are their plans / projects in that location and why is it preferable to their current home?)
- For how long? (See what type of use might not qualify for N12 in this post.)
- Who is joining them?
- What are the plans for the property?
- What other units they might have, etc.
Of course, they may not necessarily answer and you might not have a good moment to ask this anyway, but I would simply focus on these questions in general when looking for information.
I would not waste any time arguing or schooling others on the legal process. That isn't the goal and would be counterproductive. The goal is digging for information that can eventually help test the good faith claim (i.e. the genuineness of their intention to occupy the unit for residential use), so don't put them on the defensive unnecessarily and don't let them derail you with their own questions, but let them speak and record.
It doesn't even necessarily matter if they are telling the truth or not, because, in many cases, this can be tested later. In general, the more data points of any kind are collected (sometimes the relevance of those data points takes shape only much later), the better the chances would be for testing the good faith claim.
If the landlord is ignoring valid maintenance requests during this time or is asking to increase rent, harassing, etc, RECORD that, as well. This can eventually become relevant for challenging the good faith claim and for RTA subsection 83(3) purposes (i.e. there have been some cases of N12s being dismissed at the LTB when the landlord was in "serious breach" of his duties (RTA ss. 83(3)(a)) or when the tenant proved that the tenant's attempt to enforce his legal rights was the reason why the landlord pursued an eviction (RTA ss. 83(3)(c)).
It is also important to save evidence of looking for other housing options, as well as documenting the rent differential between the current rent that the tenant pays and the market rent. Any evidence of the tenant's disabilities, financial difficulties in finding adequate housing in today's market, support systems being connected to the neighbourhood (hospitals, schools, etc), evidence of any cultural connections to the neighbourhood, etc should be saved as well for RTA section 83 purposes. (See LTB Interpretation Guideline 7: Relief from Eviction)
3)
Get the names and business cards of the real estate agents. Who knows, they might be summoned later for an N12 hearing (where the burden of proof would be on the landlord) and/or for a T5 hearing for bad faith eviction later, if the tenant actually vacates or is evicted. If possible, get contact information for other tenants / neighbours in the residential complex as early as possible (sometimes tenants start vacating under pressure for a sale (see information on tenant displacement), but you want to have their contact information if this goes to N12 and/or T5 hearing. These tenants might have information that would be useful later or they might be "fed" stories (to help accommodate the real estate deal) that could be very different from the information that you were provided. And the other tenants should be recording all their interactions with the relevant parties, as well. Depending on context, I would talk to other neighbours, too.
4)
Keep cameras running during real estate viewings, and, generally, I would be present during the viewings, because there might be ways of gauging if the prospective buyer is more likely to be an investor or not (this is important since an N12 is for personal residential use by individuals). If you have witnesses, ask them to take and email very detailed and specific notes to themselves as soon as possible (for a time stamp and while their memories are still fresh).
5)
Once an N12 or any other notice of termination is issued or if the tenant is being pressured, etc, I would immediately get legal counsel. Community legal clinics offer free legal advice to tenants.
6)
Check your N12 notice for any obvious errors. Run it by a legal professional or by a legal clinic.
Some of the common serious errors that could lead to dismissal of the N12 before even getting into the merits of the case are:
- not identifying the unit correctly;
- not naming all the tenants;
- not stating the termination date correctly;
- not using a proper method of service while being unable to prove that the notice came to the intended recipient's attention in time.
Another common error that gets N12s dismissed on a preliminary issue is RTA subsection 83(4), i.e. failure to pay 1 month's rent compensation (or another unit acceptable to the tenant) under RTA section 48.1 (landlord's use) or RTA section 49.1 (purchaser's use) by the termination date listed on the N12 (as per RTA section 55.1). (More information about this aspect is below, under Step 13).
7)
I would check who the purchaser really is (e.g. to see if it's an individual or a corporation) and, once you get the name (it would aso be on the sworn affidavit / declaration, filed with the L2 application eventually), check other properties that the purchaser owns or that any relevant parties own. It is public information, available to anyone at the Ontario Land Registry Offices (their OnLand online platform or Teranet). If things look suspicious, e.g. multiple properties while the purchaser is claiming that they are just moving into Ontario and have nowhere to live, I would dig further.
Other properties may sometimes become relevant. For example, if the purchaser lives in a much bigger property that isn't for sale, or if the purchaser owns multiple vacant units that could potentially be more suitable but yours would provide a greater rent differential if they evicted and re-rented the unit.
The same landlord may register different properties under his name and his relatives' names, so you may need to run multiple searches.
Ontario Land Registry Offices:
Teranet: https://www.teranet.ca/
Sample Parcel Register:
These LRO / Teranet searches are ~$35 per search, but real estate agents can usually access that information more easily using Geowarehouse. Additionally, one would sometimes find that information for free (and open to the public) by using local Tax Assessment Rolls (though that MPAC-based data is not as up-to-date as LRO / Teranet data).
Your legal counsel should do this for you.
8)
Search the names and the addresses of these properties on CanLII, N12 Registry and on RenovictionsTO websites.
You might be able to find some relevant information on the landlord's past use of N12s and N13s.
CanLII is a database that contains rulings, and N12 Registry (Ontario-wide) and RenovictionsTO (Toronto-wide) are crowd-sourced by tenants themselves. Information on past use of N12s and N13s can become helpful later.
Screenshot from RenovictionsTO map:
9)
Check periodically if any N12-based L2 applications were filed against the address, by contacting the LTB. If an L2 application was not filed after the N12 was issued, I'd wonder why. There is real time pressure to file as soon as possible especially for a sale, so the delay in filing might look suspicious, perhaps pointing at lack of willingness to commit? Who knows? Maybe there are issues with getting the sworn affidavit / declaration from the purchaser and/or the unconditional agreement of purchase and sale?
On September 1, 2021 the law changed, and now landlords have to file the sworn affidavit / declaration at the same time when they file the L2 application, AND they have to indicate their past use of N12 and N13 over the past 2 years, and the Board would dismiss an application in cases of non-compliance. (See RTA section 71.1.)
This is where information from previous tenants and neighbours, as well as from CanLII, N12 Registry and RenovictionsTO databases (see Step 8 above) could come in handy if the landlord is misrepresenting those facts. For example, if you can find any information that the landlord left out about past N12s or N13s over the last 2 years, you should prepare that evidence for the hearing, e.g. get notices of termination that were given to the other tenants and bring them to the hearing, and those tenants should also be ready to give testimony at the LTB.
10)
Once an L2 application is filed, I would check the exact wording in the purchaser's affidavit / declaration and the agreement of purchase and sale if the landlord filed them at the LTB, since the LTB would release that information to the tenant or their legal counsel on request. Again, from there, one could dig further. The sworn affidavit / declaration would have the purchaser's legal name, making it easier to search (if you were not given that information earlier).
If the sworn affidavit or declaration was not provided at the time when the L2 application was filed on or after September 1, 2021, the application would have to be dismissed as per RTA section 71.1.
If the agreement of purchase and sale (APS) was not filed with the L2 application (despite general recommendations by the LTB - see LTB Interpretation Guideline 12), I would request the APS from the landlord directly (ideally, asking in person or over the phone and recording, to get their unscripted and unrehearsed response). Once the APS is obtained, I would check for any conditions of the sale, as well as whether the price may be well below market price with the purchaser being a relative or any other issues that could raise questions. And if they are not ready to provide the agreement of purchase and sale at all, I would wonder why (considering that it is actually in the landlord's best interest to convince the tenant to vacate by demonstrating the landlord's and purchaser's good faith as much as possible), so I would keep digging further.
11)
One could search social media (Facebook, Instagram, etc) for anything unusual posted by the buyer's or seller's accounts or by any relevant parties (e.g. relatives). Ask friends in landlord groups to be on the lookout for any suspicious posts asking for advice on how to dislodge tenants for a sale, etc. Posts / comments on social media can be (and often are) used as evidence at LTB hearings. For example, if the story they gave you is a purported plan to move for school nearby, but they are simultaneously posting about long-term projects overseas, that could be suspicious, and I would dig further. This can become helpful for cross-examination purposes.
12)
Check real estate listings to see if the landlord listed the property for rent or for sale on Kijiji, Facebook Marketplace, VRBO, AirBnB, etc. Immediately save screenshots of anything suspicious that you may find, because it might be taken down later.
13)
If the landlord doesn't pay compensation for N12 by the termination date listed on the N12, the N12 will probably be dismissed under RTA section 55.1 and RTA subsection 83(4) even if the landlord is prepared to pay right at the hearing (see, for example, TNL-03124-18 (Re), 2018 CanLII 57606 (ON LTB), <http://canlii.ca/t/hsp9n>, TEL-07267-19-IN (Re), 2020 CanLII 61125 (ON LTB), <https://canlii.ca/t/j9dv9>). There have been some rare exceptions in the past (TSL-93437-18 (Re), 2018 CanLII 120824 (ON LTB), <http://canlii.ca/t/hwm8d>), but the trend is clearly to dismiss such applications on the spot. If you tune in to LTB hearings, you will hear these types of summary dismissals quite frequently. But keep in mind that the landlord can pay by waiving 1 month's rent or rent arrears (e.g. West v Munroe, 2021 CanLII 94662 (ON LTB), <https://canlii.ca/t/jjfx0>, TNL-99749-17 (Re), 2020 CanLII 30974 (ON LTB), <http://canlii.ca/t/j6vgr>, TSL-07666-19-RV (Re), 2019 CanLII 134569 (ON LTB), <http://canlii.ca/t/j6vxc>), as long as he does so clearly (e.g. via a letter or an agreement with the tenant) and by the termination date on the N12. And the tenant should also be up to date on all rent payments to be able to claim reliably that there has been no waiving of rent as compensation.
14)
Consider private investigators, as well, though I would let the legal professional figure out if it's worth it or not in that case.
Some agreements of purchase and sale may raise questions, and RTA section 202 states that the Board "shall ascertain the real substance of all transactions and activities ... and the good faith of the participants" and "may disregard outward form" (essentially, substance over form).
For example, LTB Interpretation Guideline 12 states:
"The LTB may also dismiss the application if satisfied the purchase is a pretence created for the purpose of evicting the tenant. For example, a transfer to a family member or a sale for much less than market value may raise questions. Section 202 of the RTA directs the LTB to look at the real nature of any transactions. See for example: SOL-01897 (Re), 2007 CanLII 75946 (ON LTB); CEL-61051-16 (Re), 2016 CanLII 88110 (ON LTB)."
Below is a recent Divisional Court ruling that shows some examples of red flags that the Board may pay attention to:
"[10] In one area, however, the Board erred in law and the error gave rise to substantive unfairness to the tenant. The critical issue before the Board was the bona fides of the purported sale from the landlord to her brother. As a long line of cases before the Board shows, where the sale transaction is to a close family member, this is a warning sign, or flag, that the transaction may not be genuine. In this case, the unit was not exposed to the open market. No real estate agent was involved. It was a private deal. The agreement of purchase and sale was disclosed, but the price of the transaction was redacted. The appellant requested a complete copy of this critical document. This request was denied by the Board and no proper justification was given for denying this request.
[11] This was no “fishing expedition”. The price was one of the critical indicia to consider in determining the bona fides of the transaction. So were payment terms and financial arrangements that were made to meet those payment terms. Although the prior applications to evict the tenant for “personal use” did not give rise to an issue estoppel or res judicata, they did provide context for the dispute. So, too, did the history of conflict, including evidence adduced by the tenant that the landlord had recently tried to impose another illegal rent increase and had threatened to sell the unit if the tenant did not accede to the improper demand for rent. Just days after this, the landlord purported to agree to the sale to her brother.
[12] There were many “alarm bells” that this was another attempt by the landlord to oust the tenant without a proper justification. The tenant was entitled to test the evidence relevant to this issue, and this included full details of the sale transaction. These were proper questions, the Board erred in disallowing them, and this error may have affected the outcome. If the price and the payment arrangements did not reflect reasonable commercial terms, the inference that the transaction was not genuine would have become more and more irresistible."
15)
If you want to negotiate a tenant buyout, I would do that with legal counsel, as well, because most people are pretty weak at negotiating for themselves, plus, your legal counsel should know all the strengths and weaknesses of your position well to get the best deal possible for you.
Sample Excel spreadsheet by RenovictionsTO.com that shows how one might approach the question of how far the tenant buyout would go.
Please note that the above example assumes rent increases of 2% every year and does not include initial outlay (moving / storage / other reasonable out-of-pocket expenses) or other considerations, but Excel spreadsheets are easy to adapt to one's needs. I would use a discounted cash flow model.
Even if ultimately the tenant ends up losing their home, collecting all this information is a form of "due diligence" that is going to lay some groundwork that can help with a T5 application about bad faith eviction under RTA section 57 later, if it comes to that, if the purchaser doesn't occupy the unit for residential use within a reasonable time after the tenant vacated. It is important to note that some of the information and evidence that would come up at the N12 hearing (especially the purchaser's position being "locked in" in the sworn affidavit / declaration, landlord and purchaser providing testimony, etc) would be very difficult, if not impossible, to come by outside of the LTB process, so following procedure is usually important.
More information on tenants' recourse / T5 application about bad faith:
Bottom line is: whoever is facing this situation should get legal advice.
________________
Here are some helpful articles on the subject of N12 evictions:
1)
By Hamilton Community Legal Clinic / Tools for Tenant Rights: https://www.toolsfortenantrights.com/n12
2)
By Steps to Justice / CLEO Legal Rights: https://stepstojustice.ca/steps/housing-law/1-check-problems-notice-1
3)
By Advocacy Centre for Tenants Ontario - ACTO:
Tip Sheet for Tenants: What can I do if my landlord or someone buying my place wants to move in?
4)
By the LTB:
Eviction for Personal Use, Demolition, Repairs and Conversion
LTB Interpretation Guideline 12:
5)
By Michael Thiele:
6)
By Global Business and Legal Services:
What is the correct test for bad faith?
7)
By Action Housing:
"Another way Action Housing can help if you receive an N12 or N13 Form:
Action Housing has created a form that anyone renting in Ottawa can fill out if they have received an N12 or N13 in the past year, and have moved out of their unit. Simply complete the following form and email it to info@action-logement.ca:
We will add the information collected with this form to our database; since we already look at online housing adverts every day, we can also look to see if any of the units in our database are advertised for rent on those housing search websites. It is important to include as much information as possible in the form, such as the names of the landlord and property manager.
If we see that the unit you registered with us is advertised for rent on housing search websites within a year of the move-out date appearing on your N12 or N13, Action Housing will make a copy of the advert and will contact the person listed as the contact on the form. It will be up to you and your legal representative to collect further evidence and mount a case against your landlord, if you decide to pursue further action.
Other things to do for a period of one year:
- Regularly check to see if your unit is listed for sale;
- Regularly check to see if your unit is listed for rent on short-term rental sites.
(Action Housing will not perform these checks for you.)"
Disclaimer:
You should not act or rely on any information provided in this blog. It is not legal advice, and the content is provided for general discussion and general information purposes only and to help encourage further research. To ensure your interests are protected, retain or formally seek legal advice from a licensed legal professional.
Never disclose details about your specific legal matters outside of situations when you have established solicitor-client relationship with a qualified legal professional. By using this blog, you acknowledge and accept this warning and agree to waive all liability for use of any information contained in this blog.
No comments:
Post a Comment