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Ownership by Individual: The Requirement That a Landlord Be an Individual Meaning Human Being
Question: Can a corporation use the N12 eviction process to reclaim a rental unit from a tenant?
Answer: No, the N12 eviction process requires that the landlord be an individual; it cannot be utilized by corporations, even if owned by an individual, due to the Residential Tenancies Act, 2006, which mandates that the rental unit must be at least partially owned by a human landlord for personal use evictions. Understanding these nuances is crucial for navigating landlord-tenant relationships effectively.
Can a Tenant Be Evicted Via the N12 Process If the Landlord Is a Corporate Person Rather Than a Human Person?
A Corporate Landlord is, Generally, Unable to Use the N12 Eviction Process to Reclaim a Rental Unit From a Tenant. Some Exceptions May Be Applicable.
Understanding the Requirements and Exceptions Involving Individual Ownership When Pursuing An Eviction For Own Use By Landlord
A residential rental unit may be owned by a for profit corporation, a non-profit corporation, an unincorporated organization, a creature of statute, or an individual human being; and thus, the nature of the landlord may be a concern in matters where a landlord seeks to reclaim a rental unit for personal use purposes of the landlord or certain prescribed family members of the landlord. Where the nature of the landlord is something other than as an individual, meaning a legally defined person that is other than a human person, difficulties with the N12 eviction process may occur.
The Law
The Residential Tenancies Act, 2006, S.O. 2006, Chapter 17, is the statutory legislation that addresses issue of concern involving landlord and tenant relationships including the qualifiers applicable to circumstances where a landlord wishes to reclaim a rental unit for the personal own use of the landlord or family members of the landlord. In such a circumstance, the Residential Tenancies Act, 2006, S.O. 2006, Chapter 17, specifically states:
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
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. The unavailability of the N12 eviction for own use process when the rental unit is corporately owned was explained within C.#.O.I. v. B.B, et al, TSL-85025-17 (Re), 2018 CanLII 42621, as well as M.D. v. P.B., TSL-01347-18-RV (Re), 2020 CanLII 30947 wherein each of these cases it was respectively stated:
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.
As shown, it does seem to appear that as long as a rental unit owned in party by an human person as an individual rather than entirely by a corporation or other entity, an eviction for own use remains available. 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.
Conclusion
An entity landlord, meaning a corporation or other form of organization that is other than a human person meaning an individual, is unable to make use of the N12 eviction process for the purpose of removing a tenant so to enable take over of the rental unit for the personal use of the landlord or certain prescribed family members of the landlord.