Category: Real Estate Law

Categories
Residential Real Estate

Alberta Court Orders Eviction of Tenant on Urgent/Emergency Basis After Assault Allegations

An Alberta court recently ordered the eviction of a tenant on an urgent/emergency basis after the landlord alleged she had assaulted another tenant.

What Happened?

The landlord, a company, administers low income housing in Calgary which includes subsidized housing. 

The tenant was a long-time resident of the property, for which she had a written lease for her month-to-month tenancy. She had lived there since 2002. Originally, she lived there with her son, but he moved out in 2006.

The landlord sought to evict the tenant. The landlord alleged that she had failed to properly maintain the premises, had disagreements with her neighbours, and other issues which had added up over time including an allegation that she was “over housed”. 

The court originally issued an eviction order on February 5, 2020, after the tenant did not appear for the hearing. 

However, the court later determined that there had been issues relating to service of court documents. As a result, the court set aside the original eviction order and directed that the matter be adjourned to March 31, 2020, to be heard on its merits.

COVID-19 Context

However, due to the COVID-19 pandemic, all court matters were adjourned, including the landlord’s case, indefinitely. Additionally, the Alberta government had announced a moratorium on evictions until May 1, 2020.

New Events

Later, however, the landlord alleged that new events transpired in April, 2020, during the pandemic-related adjournment and moratorium.

The landlord claimed that the tenant assaulted a tenant of a neighbouring property.

As a result, the landlord sought to have its application heard, along with the new assault allegations, pursuant to the Alberta Court’s Urgent/Emergency application procedure, which had been implemented during the period in which regular sittings had been suspended due to the pandemic. 

Leave to have the matter heard was granted by the court, and on May 27, 2020, the court heard the new application.

At Issue

The main issue was whether or not there was an assault or interference with the occupants of the neighbouring property by the tenant.

Decision

The court began by stating that, in addition to consideration under the Residential Tenancies Act and the relevant regulatory framework, there was a critical clause in the lease for the purpose of considering the assault or interference with neighbouring resident issues. The clause provided that:

9(1) The tenant shall not do any act or permit any act to be done by any occupant or invitee, either in the premises or in the building or common areas of the property of which the premises form a part, that interferes with the rights of the Landlord or other Tenants in the property, or that interferes with the right of adjacent residents to the quiet possession of their premises. (Emphasis added)

At the hearing, the landlord had submitted affidavits from witnesses to the alleged assault. 

The tenant submitted her own affidavit claiming that she had in fact been the victim of an assault.

However, as part of the affidavits submitted on behalf of the landlord, two video segments were included. The videos had been shot by another neighbour. The court concluded that the videos clearly showed that the tenant was the aggressor during the interaction between the parties and that aggression extended to physically chasing the victim down the alley when she was trying to get away from the tenant. Additionally, the videos showed the tenant spraying water from a hose as well as the tenant attempting to push the victim. The court also found that there were no elements of self-defence on the part of the tenant appearing in the videos. 

The court concluded that on the day of the alleged incident, the tenant was clearly the aggressor and that she interfered significantly with the victim’s quiet enjoyment of her premises.

Therefore, the court concluded that the tenant’s behaviour and actions constituted a sufficient breach of clause 9(1) of the lease for the tenancy to be terminated. 

As a result, the court ordered that the tenant deliver up possession of the premises by 4:00 pm on July 15, 2020 with a civil enforcement agency enforcement clause and a police assistance clause in the order. 

Get Advice

Baker & Company has adopted all of the COVID-19 safety precautions and vulnerable employees have been invited to work from home. We are fully operational and continuing to work on client assignments. Where possible, meetings are being held via video link or by telephone conference.

At Baker & Company in Toronto, our real estate lawyers take the time to speak with you and understand your unique needs in order to guide you through your real estate matter, whether commercial or residential. We rely on our broad base of experience and expertise to provide exceptional legal advice and risk management in a variety of leasing issues. Call us at 416-777-0100 or contact us online for a consultation.

Categories
Residential Real Estate

Landlord and Tenant Agreement Cannot Carve Out Exception to Quebec’s COVID-19 Eviction Moratorium

In a recent Quebec decision, the tribunal refused to ratify part of an agreement between a landlord and a tenant that was contrary to the government’s order implementing a moratorium on evictions.

What Happened?

On April 15, 2020, the landlord applied to the Régie du logement to terminate her tenant’s lease and order the immediate eviction of the tenant. 

The landlord asked the tribunal to make the order despite the Quebec Minister of Health and Social Services’ Order dated March 17, 2020 (the “Ministerial Order”), which read as follows:

“The effects of any judgment by a tribunal or any decision by the Régie du logement authorizing the repossession of a dwelling or the eviction of the lessee of a dwelling are suspended, as are the effects of any judgment or any decision ordering the eviction of the lessee or occupant of a dwelling, unless the lessor rented the dwelling again before the coming into effect of this Ministerial Order and the suspension would prevent the new lessee from taking possession of the premises. Despite the foregoing, the tribunal or the Régie du logement may, when exceptional circumstances justify doing so, order the enforcement of one of its judgments or one of its decisions, as the case may be.”

The Agreement 

However, at the hearing, the tenant and landlord entered into an agreement and asked the tribunal to ratify it. 

In the agreement, the landlord and tenant agreed that the lease would terminate no later than August 10, 2020, at which point the tenant would be required to move out. The agreement also allowed the tenant to move out earlier, with 10 days notice to the landlord.

COVID-19 Context

Additionally, the agreement included the following paragraphs:

5. The Tenant acknowledges that the Termination Date is mandatory and the Tenant must therefore move no later than the Termination Date. The Tenant expressly and irrevocably renounces invoking force majeure, including the COVID-19 pandemic, to justify not being able to give vacant possession of the Accommodation to the Landlord no later than the Termination Date.

8. The Tenant agrees to comply at all times with the containment and distancing measures put in place by the Landlord in connection with COVID-19.

13. The Tenant, in the event that the latter contracts COVID-19, undertakes to comply with all the measures necessary for the protection of other residents according to the directives of Public Health, the Ministry of Health and services social, CIUSS and CLSC. 

19. [T]he parties recognize that the exceptional circumstances justify that the court or the Régie du logement order the execution of the conclusions of this agreement in the event of non-compliance, as provided for in Ministerial Order no. 2020-005 of March 17, 2020. [translated]

Decision

The tribunal took issue with paragraph 19 of the agreement. 

While that paragraph stated that the parties recognized that there were exceptional circumstances at hand, the tribunal found that it was premature to use its discretion to make an order implementing the agreement against the Ministerial Order.

The tribunal explained that the Ministerial Order aimed to suspend the effects of any decision ordering the eviction of the tenant of a dwelling in order to protect the health of the population in the context of the state of health emergency decreed on March 13, 2020 by the Government of Quebec under the Public Health Act in connection with the COVID-19 pandemic.

While the Ministerial Order provided for the possibility for a court or tribunal to lift the suspension of the execution of one of its decisions if exceptional circumstances justified it, the tribunal found that the parties could not, by mutual agreement, replace the discretion of the court and determine for themselves whether or not exceptional circumstances existed to justify the execution of an order. The tribunal explained that it was not bound by such an agreement, stating: 

“In these proceedings, given that the termination of the lease will be effective no later than August 10, the tribunal does not see how it can determine, in advance, whether or not there will be exceptional circumstances which may justify overriding the Ministerial Order at the time when the eviction of the tenant becomes effective, as the case may be.

Furthermore, the tribunal has no idea whether the Ministerial Order will still be effective as of August 10, 2020.” [translated]

As a result, the tribunal ratified the agreement as an enforceable decision, with the exception of paragraph 19 of the agreement. 

Get Advice

Baker & Company has adopted all of the COVID-19 safety precautions and vulnerable employees have been invited to work from home. We are fully operational and continuing to work on client assignments. Where possible, meetings are being held via video link or by telephone conference.

At Baker & Company in Toronto, our real estate lawyers take the time to speak with you and understand your unique needs in order to guide you through your real estate matter, whether commercial or residential. We rely on our broad base of experience and expertise to provide exceptional legal advice and risk management in a variety of leasing issues. Call us at 416-777-0100 or contact us online for a consultation.

Categories
Commercial Leases

Court Grants Injunction Against Commercial Landlord Who Locked Out Tenant During COVID-19 Pandemic

As a result of the COVID-19 pandemic, a March 19, 2020 Order of Chief Justice Morawetz suspended all residential evictions and/or writs of possession until further notice. However, commercial tenancies were not included in that Order and remain subject to normal rules.

However, in addition, Ontario courts have suspended the hearing of all matters unless they are deemed “urgent”. As a result, any commercial lease disputes must prove to be urgent to be heard by a court, as was the case in a recent Ontario decision, in which the landlord locked his tenant out of the premises in the midst of the COVID-19 pandemic.

What Happened?

The landlord owns a commercial building in Waterloo. The tenant had leased a portion of the building beginning in the 1990s. The parties entered into a written lease dated November 1, 2017. The lease was for a period of five years with an option in favour of the tenant to renew the lease for a further term of five years. 

The lease was for the main floor and a room on the second floor of the leased premises. The tenant operated a licensed restaurant and bar on the main floor and the second floor room was used as an office and storage room.

The lease provided for payment of base rent in the amount of $1,400 per month. The lease also provided for additional rent covering utilities, maintenance costs and other operating costs. Finally, the lease provided that any bona fide offer to purchase the property would be subject to the terms of the lease.

In September, 2019 the landlord advised the tenant that he was interested in selling the property. 

On October 28, 2019, the landlord delivered a handwritten note to the tenant purporting to unilaterally amend several of the terms of the lease including additional rent. The note stated that the tenant was in breach of a zoning bylaw as result of its use of the second floor room as an office. The note ended with an assertion that if the tenant did not immediately pay the additional rent the locks to the premises would be changed.

On January 29, 2020, the landlord wrote again to the tenant claiming numerous breaches of the lease and purporting to terminate the lease effective March 31, 2020. The reasons for terminating the lease included nonpayment of base rent, nonpayment of additional rent, and breach of the Planning Act in relation to the use of the second floor room. On February 14, 2020 counsel for the tenant wrote to the respondent asserting that the applicant had not breached any of the provisions of the lease.

The tenant paid rent on April 1, 2020.

Howewever, on April 7, 2020, the landlord locked the tenant out of the leased premises and posted a Notice of Termination and Forfeiture of Lease on the front door of the building. 

The tenant brought an application pursuant to the Commercial Tenancies Act for various types of relief including that he be allowed immediate access to the leased premises and that the landlord be restrained from entry or re-entry to the leased premises.

A triage judge determined the matter was urgent and it was heard by video conference.

Decision

The court began by explaining that the test for granting an interlocutory injunction is as follows: 

1) The applicant must show that there a serious issue to be tried;

2) The applicant must show that it will suffer irreparable harm if the injunction is not granted; and

3) There must be an assessment regarding which of the parties would suffer the greater harm by the granting or the refusal to grant the injunction.

The court found that the tenant had met each of the three parts of the test for the granting of an interlocutory injunction.

The court found that the landlord’s allegations about the tenant being in breach of the terms of the lease were vague and unsupported by written evidence. In fact, it found that the landlord’s complaints only surfaced after he decided he wanted to sell the property without burdening the new owner with the tenant’s lease. The court found that the tenant had not breached any terms of the lease.

Further, the court found that the tenant would suffer irreparable harm if the injunction was not granted, stating: 

“The action of the [landlord] in locking the [tenant] out of the premises effectively puts an end to the business. The [tenant] will likely suffer a loss of goodwill if it is not allowed to continue in business. […]

[I]f the injunction is refused, the [tenant] will be put out of business. Conversely, if the injunction is granted, the [landlord] will receive exactly what he contracted for when he signed the lease dated November 1, 2017.”

As a result, the court ordered an interlocutory injunction granting the tenant the right to re-enter the property and prohibiting the landlord from re-entering the premises and from interfering with the tenant’s use and enjoyment of the property.

Get Advice

Baker & Company has adopted all of the COVID-19 safety precautions and vulnerable employees have been invited to work from home. We are fully operational and continuing to work on client assignments. Where possible, meetings are being held via video link or by telephone conference.

At Baker & Company in Toronto, our real estate lawyers take the time to speak with you and understand your unique needs in order to guide you through your real estate matter, whether commercial or residential. We rely on our broad base of experience and expertise to provide exceptional legal advice and risk management in a variety of leasing issues. Call us at 416-777-0100 or contact us online for a consultation.

Categories
Real Estate Law

Court Decides Whether Tenancy is Residential or Commercial After Landlord Locks Tenant Out During COVID-19 Pandemic

In a recent Ontario decision, the court had to decide whether a tenancy was residential or commercial after the lessor locked the lessee out of the premises during the COVID-19 pandemic.

What Happened?

On March 23, 2019, the lessee signed a two-year commercial lease for the premises in Markham. The premises consisted of a two-story heritage house, a yard including a large driveway, and a large two-car garage. The property was zoned “rural residential housing”, but a “business office” was explicitly permitted. The lease began April 1, 2019, and the agreed upon monthly rent was $3,500.00 plus HST for a total of $3,955.00. 

The lessee lived at the premises from the outset of the lease, running his business out of a home office on the first floor, and using the garage to park his truck and store a forklift. His fiancée lived with him and their two dogs. 

The lessee stated that the lessor knew of, and approved, these living arrangements but had told him that a commercial lease was required if any business activity was conducted at the premises. The lessee did not obtain independent legal advice before signing the lease. 

The lessor claimed that all the parties contemplated a commercial rental. The lessor also denied knowing that the lessee was living at the premises until he took steps to lock him out.

On March 24, 2020, a week after the Premier declared a state of emergency in Ontario due to COVID-19, the lessor locked the lessee out of the house on the premises. The lessor stated that he locked him out for using the premises as residential and for unpaid rent.

The lessee asserted that the lessor damaged the front door, and some of the lessee’s property inside the house.

Parties’ Positions

The lessee brought an application for a declaration that the Residential Tenancies Act, 2006 (the “RTA”) applied and governed the tenancy. He also sought to continue an interim injunction restraining the lessor from interfering with his reasonable enjoyment of the premises pending a determination of the status of his tenancy. Finally, the lessee sought damages in relation to the damage he alleges the lessor caused on March 24, 2020, and an order that he was owed $22,428 in relation to a set-off agreement with the lessor.  

For his part, the lessor sought a declaration that the Commercial Tenancies Act (the “CTA”) applied and governed the tenancy. He also sought an order for possession of the premises after the March 19, 2020 Order suspending all evictions and/or writs of possession is lifted. In addition, among other things, he sought judgment that he was owed $26,732 in relation to unpaid rent.

Issue

The central issue was the nature of the tenancy.

If the court decided that the tenancy was commercial, it had jurisdiction and could consider the other issues. If the court decided that the tenancy was not commercial, the Landlord and Tenant Board (the “LTB”) would have exclusive jurisdiction and the remaining issues would have to be decided by the LTB. 

Decision

The court found that the evidence overwhelmingly proved that the lessor knew that the lessee was living at the premises. Among other facts, the court accepted the lessee’s evidence that he had always intended to live on the premises, that he was open about this with the lessor from the outset, and the lessor assured him he did not care as long as the lessee paid the rent. Additionally, the court found that the lessor had not established on a balance of probabilities that the predominant purpose of the tenancy was commercial.

As a result, the court found that the RTA applied to the tenancy, and the LTB had exclusive jurisdiction over all applications in relation to the tenancy.

Given the court’s conclusion that the tenancy was residential and subject to the exclusive jurisdiction of the LTB, the tenancy was also subject to the March 19, 2020 Order of Chief Justice Morawetz suspending all evictions and/or writs of possession issued by the LTB.

Get Advice

Baker & Company has adopted all of the COVID-19 safety precautions and vulnerable employees have been invited to work from home. We are fully operational and continue to work on client assignments. Where possible, meetings are being held via video link or by telephone conference.

At Baker & Company in Toronto, our real estate lawyers take the time to speak with you and understand your unique needs in order to guide you through your real estate matter, whether commercial or residential. We rely on our broad base of experience and expertise to provide exceptional legal advice and risk management in a variety of leasing issues. Call us at 416-777-0100 or contact us online for a consultation.

Categories
Real Estate Law

Ontario Court Clarifies Scope of COVID-19 Eviction Moratorium

Even though Ontario issued a moratorium on evictions due to the COVID-19 pandemic, a landlord brought an emergency motion to court to enforce an eviction order. The court refused the landlord’s request.

What Happened?

The landlord had sold a condominium unit occupied by the tenant in August 2019, with an original completion date of October 31. The landlord was to deliver vacant possession, and thus sought to evict the tenant. The tenant unsuccessfully pursued the matter at the Landlord and Tenant Board. 

On November 13, 2019 the Board terminated the tenant’s residential tenancy. The Board ordered that the landlord could file the eviction order with the Court Enforcement Office (Sheriff) after November 25, 2019. Once the order was filed with the Sheriff, the Sheriff was directed to give vacant possession of the unit to the landlord.

The tenant sought a review by the Board. The Board affirmed the November eviction order. The tenant appealed to the Divisional Court and the eviction order was stayed pending appeal. 

During this time, the closing date for the sale was extended until April 30, 2020.

The tenant arranged to move. On February 17, 2020, the tenant signed a lease agreement for an apartment with a new landlord commencing on May 1, 2020. The tenant and the landlord then negotiated a resolution, which included entering into a consent order.

On March 18, 2020, the court issued the Consent Order dismissing the appeal, vacating the stay, and ordering that the eviction order of the Landlord and Tenant Board should be enforced.

However, due to the COVID-19 pandemic, a provincial eviction moratorium had been issued, ordering that all eviction orders be suspended unless the court ordered otherwise upon leave being granted to a party by the court pursuant to the court’s procedures for urgent motions.

The landlord was granted leave to bring the motion on an urgent basis, which was heard by telephone.

Parties’ Positions

The landlord sought an order directing the Sheriff to enforce the eviction order, arguing that the continued tenancy may jeopardize the real estate closing scheduled for April 30, 2020.

The landlord argued that the eviction moratorium should apply only to tenants who would otherwise be evicted for non-payment of rent, to protect those who have lost income because of COVID-19.  

While the tenant had signed a lease for another apartment for May 1st, the new landlord had defaulted on it. The new landlord had stated that he could not evict the existing tenant but clarified that the apartment would be available on June 1st.

Decision

At the outset, the court disagreed with the landlord’s argument regarding the purpose and scope of the eviction moratorium, stating:

“There are no limiting terms in the Chief Justice’s order, except for urgent motions. It is not limited to those cases where eviction is related to COVID-19 non-payment of rent; it is not restricted to new evictions arising after March 17th. It applies to all evictions. Given its breadth, the clear intent of the Chief Justice’s eviction moratorium was, during the pandemic, to prevent evictions even though the moratorium could be expected to cause significant economic disruption and adverse financial effects. The Landlord and Tenant Board has also suspended eviction hearings except for those dealing with urgent issues such as illegal acts or threats to health […]. True emergencies will be dealt with. But the primary interest protected is ensuring that everyone stays home and stays healthy during the lockdown period.

The burden is on the landlord, as moving party, to establish that this is an urgent situation which requires eviction of the tenant in the middle of the pandemic. The landlord has not identified a truly urgent situation such as illegal acts by the tenant or threats to health caused by the tenant.”

Additionally, while the landlord had cited the loss of a real estate closing, the court found the evidence speculative and stated that the landlord had not met his burden of establishing irreparable harm or urgent and compelling circumstances. 

The court then stated: 

“[The tenant] lives with his wife and his two young children. He and his family cannot be put on the street. I take judicial notice of the fact that it is harder to visit potential apartments because of COVID-19 risks, and of the fact that if an existing tenant refuses to move, as is the case with the new apartment, it is challenging for a landlord to evict the tenant because of the provincial eviction moratorium.”

The court balanced the concerns of the tenant against the landlord’s evidence. It found that there was no evidence that the sale would not close.

As a result, the landlord’s motion was dismissed.

The court encouraged the tenant to confirm the availability of the new apartment and, otherwise, to search for another apartment. If the tenant failed to do so, the court stated that the landlord could bring a further motion for directions.

Get Advice

Baker & Company has adopted all of the COVID-19 safety precautions and vulnerable employees have been invited to work from home. We are fully operational and continuing to work on client assignments. Where possible, meetings are being held via video link or by telephone conference.

At Baker & Company in Toronto, our real estate lawyers take the time to speak with you and understand your unique needs in order to guide you through your real estate matter, whether commercial or residential. We rely on our broad base of experience and expertise to provide exceptional legal advice and risk management in a variety of leasing issues. Call us at 416-777-0100 or contact us online for a consultation.

Categories
Litigation Real Estate Law Residential Real Estate

Can I Back out of a Real Estate Contract Due to COVID-19?

As with everything else, the health pandemic has created a great deal of unease for those who entered into Agreements of Purchase and Sale for homes prior to our current situation. For various reasons, many people are left wondering if they have options to cancel contracts that were executed before the crisis hit. If not, people may be wondering what ramifications they would face for backing out of a closing. Below, we’ll address residential real estate contract obligations in light of COVID-19.

Property Values and Loss of Income

The two primary concerns buyers have with closing deals entered into in February or earlier are the potential drop in property values and loss of income. In many cases, both issues are a factor. With the closure of non-essential businesses throughout the province, many people have been laid off or are facing drastic reductions in income. Nearly one million Canadians applied for employment insurance benefits during the week of March 16th alone. Given the ongoing economic crisis, people have serious concerns about what effect this will have on property values in Ontario going forward. Considering we are still in the midst of a state of emergency, the long-term effects on housing prices won’t be known for some time.

Do people who have financial concerns have any recourse if they’re already entered into a contract?

Frustration of Contract and Force Majeure

We have previously discussed the potential for someone to argue frustration of contract or use a force majeure (or “Act of God”) clause to relieve themselves of liability in relation to COVID-19. Without specific language that considered a pandemic to be an event significant enough to walk away from the contract, this is a tough argument to make with most contracts. In a real estate context, it becomes even more difficult. Nearly all purchases and sales use the standard Ontario Real Estate Association Agreement of Purchase and Sale, which does not include such a provision. Parties are entitled to include additional clauses at will, however this must have occurred at the time the contract was executed in order to be valid.

There are previous examples of buyers seeking to back out of a purchase in light of an economic change. British Columbia introduced a foreign homebuyer’s tax in 2016 that had a significant impact on buyers from out of the province, which helped contribute to an overall decline in home prices. As a result, many buyers tried to get out of their contracts, however, they were not permitted. It is unlikely a court would find differently in light of the current circumstances.

Penalties for Backing Out

We have addressed the significant financial fallout that can occur when a person fails to close a real estate transaction in a previous blog, but it is worth noting again that it is not just a matter of losing one’s deposit. Buyers that fail to close could also face liability for a difference in purchase price if a seller is forced to re-sell at a lower price. One couple in Ontario had originally agreed to buy a home for $2.25 million and later backed out for financial reasons. When the seller resold, the price dropped to $1.77 million and the original buyers were found liable for the difference, which amounted to $470,000.

As demonstrated above, failing to close on an Agreement of Purchase and Sale can have hefty financial consequences for the party in breach, far beyond simply giving up the deposit. The housing market can fluctuate quite significantly and result in drastically different purchase prices just a few months later and the buyer who originally backed out may be forced to pay the difference in addition to legal costs. If you have concerns about a real estate deal you entered into prior to the pandemic, and questions about your rights and obligations, you should seek advice from an experienced real estate lawyer as soon as possible.

At Baker & Company in Toronto, our real estate lawyers take the time to meet with you and understand your unique needs in order to guide you through your real estate matter, whether commercial or residential.  We rely on our broad base of experience and expertise to provide exceptional legal advice and risk management in a variety of transactions, or through litigation. Call us at 416-777-0100 or contact us online for a consultation.

Categories
Commercial Leases Real Estate Law

Commercial & Residential Tenancies During COVID-19

The financial instability being faced by both individuals and companies throughout the country due to the ramifications of COVID-19 is creating insecurity in a number of areas, including in residential and commercial leasing matters. Many tenants under financial strain are wondering about their obligation to continue to pay rent during this unprecedented time, while both residential and commercial landlords are unsure of their options if a tenant stops making payments under an existing lease.

Residential Tenancies

In March, the province shut down most businesses in Ontario in order to limit person-to-person contact. In anticipation of the financial challenges this would cause for Ontarians who rent their homes, the government made the following announcement on March 19th:

As the COVID-19 situation continues to evolve, Tribunals Ontario is taking action to safeguard the health and well-being of all Ontarians, while continuing to ensure access to justice. The Landlord and Tenant Board (LTB) has reviewed the appropriate approach to conducting hearings and until further notice the LTB is suspending:

1) All hearings related to eviction applications, unless the matter relates to an urgent issue such as an illegal act or serious impairment of safety; and

2) The issuance of eviction orders, unless the matter relates to an urgent issue such as an illegal act or serious impairment of safety.

While evictions have been halted, there are no mandated regulations in place with respect to a temporary suspension of rent collection or payment obligations for tenants. For those who own homes and pay mortgage payments, most of the major Canadian banks have begun to offer mortgage payment deferrals for this period of time, but there are no similar widespread policies in place for those who pay rent.

The Ontario government has encouraged landlords and tenants to work together in situations where a tenant may have trouble paying rent, to find an arrangement that the parties can both agree to. Given these guidelines, the hope is that parties will come to terms themselves without intervention but the fact remains that many tenants may find themselves facing eviction proceedings once the LTB resumes regular function if they are unable to make up rent arrears at that time.

Commercial Tenancy Considerations

Businesses throughout Ontario have largely been forced to close or dramatically alter their operations in order to facilitate social distancing regulations. For many, this means income has either completely stopped or been severely curbed for an undefinable period of time. Even within the first couple of weeks after the closures, many businesses were forced to lay off staff and make other arrangements to reduce immediate expenses. For those businesses that lease their property, the current situation has placed a particular strain on those obligations, which generally make up one of a business’s most significant monthly expenses. While the government has encouraged commercial landlords to make arrangements with their tenants during this time, they are not required to do so.

Typically, a commercial landlord has a few options with respect to enforcement a lease if the tenant stops paying rent. The landlord can sue for payment of the rent owed, seize property from the tenant, or re-enter the property to force the tenant out if the lease allows for such a right or the landlord receives a court order to this effect. If a landlord wishes to terminate the lease in order to find a new tenant, they may do so pursuant to s. 18 of the Commercial Tenancies Act, however, landlords are generally advised to obtain a court order before taking this step. With a court order, a landlord can then have the Sheriff’s Department execute a writ of possession and remove the existing tenant from the premises.

However, along with other services, the Ontario government has chosen to close courts in the province to all but emergency matters for the time being, significantly restricting the matters a court will hear to urgent family and criminal matters. As a result, it will be difficult for a commercial landlord to obtain a court order granting the termination of a lease during this time.

For now, commercial landlords should try to work with clients to make mutually agreeable arrangments for the duration of the emergency order while planning for future enforcement of a lease’s terms, if necessary, once business in the province begins to return to normal.

At Baker & Company in Toronto, our real estate lawyers take the time to meet with you and understand your unique needs in order to guide you through your real estate matter, whether commercial or residential. We rely on our broad base of experience and expertise to provide exceptional legal advice and risk management in a variety of leasing issues. Call us at 416-777-0100 or contact us online for a consultation.

Categories
Property Disputes Real Estate Law Residential Real Estate

Purchaser Denied Certificate of Pending Litigation on Closing Date

A certificate of pending litigation (CPL) is a tool used to put others on notice that a property is the subject of ongoing litigation. With a CPL registered on title, others will be prohibited from dealing with the property by selling it, registering a mortgage, or refinancing. However, a recent decision showed that an Ontario court was reluctant to grant a purchaser with the right to register a CPL on the title of the property he was set to purchase later that same day.

Purchaser Seeks to Block Sale Until Provided With Warranty

The purchaser and sellers entered into an Agreement of Purchase and Sale (APS) for a residential home in Newmarket. The sellers were a father and two sons, who had renovated the existing home as well as constructed additions to the home themselves with the intention that the father would eventually reside in the home. The nature of the type or extent of the renovation and construction work was not made clear to the court. In July of 2018, the Tarion Warranty Corporation (“Tarion”) issued a letter to the owners that the house met the requirements for an “owner-built home”.

On January 5, 2020, the parties entered into an APS for the sale of the home. According to the terms, the closing was to take place “no later than 6:00 pm on February 5, 2020”. The plaintiff had the home inspected in mid-January and visited the home again on January 26th. He had identified some issues with the construction that he had requested to be addressed prior to closing. This led him and his wife to contemplate the idea of a warranty with respect to the construction to give them protection once they became the owners of the property.

On January 31st, the plaintiff’s lawyer inquired with the seller’s lawyer as to whether the property was warranted by Tarion. Later that day, they received a reply stating that the property had not been registered under the warranty program as the home had originally been intended for one of the sellers. The response also stated that the nature of the work had been a renovation rather than new construction and that the structure of the home had not been changed.

The day before closing, the sellers confirmed that no Tarion warranty would be provided and that no HST would be collected on the purchase (as would have been the case with a newly constructed home). The next day, the closing day, the plaintiff reached out to Tarion directly and inquired as to whether the house qualified for warranty protection. Tarion provided the following response:

If the home was never occupied then it should have been enrolled and the builder should have been registered with Tarion. A home is not required to be enrolled to be covered under the warranty but the determination has to be made by Tarion that the home is eligible for coverage. That usually involves investigation and that is always more than one day. From the information you have provided it would seem likely that the home is entitled to warranty coverage but I cannot confirm that to you right now. I will get back to you with more information as soon as possible.

The plaintiff then brought an emergency ex parte motion for leave to register a CPL against the property, halting the sale until the warranty issue was resolved.

What are the Requirements for a Certificate of Pending Litigation?

As set out in the decision Perruzza v. Spatone, 2010 ONSC 841, the requirements are as follows:

  • There must be a triable issue as to the interest in the land (note that it is not required that the plaintiff demonstrate a likelihood of success)
  • The party opposing the CPL is required to establish that there is no triable issue with respect to the interest in the land
  • A court must look at all relevant factors and use its discretion in determining whether a CPL should be granted. These factors can include:
    • whether the property is unique
    • the ease or difficulty in calculating damages
    • the intent of the parties in acquiring the land
    • the harm to each party if the CPL is granted

In considering the factors, the court denied the plaintiff’s request for a CPL in the case at hand. The court considered the following in reaching this decision:

  • The APS did not provide for a Tarion warranty and no representation was made with respect to the construction being Tarion-warranted. The plaintiff appeared to make this demand in the final hours.
  • While the plaintiff claimed to be “ready, willing and able” to close, the court found that he was unwilling unless his last-minute condition was met.
  • The plaintiff presented no evidence that the sellers would be unwilling to correct any defects after the date of closing, nor that they had insufficient financial assets should they be required to satisfy a future judgment.
  • The plaintiff brought the motion ex parte on the date of closing and had made no attempt to try to extend the closing first.
  • The potential harm to the defendants (sellers) should a CPL be granted outweighed any potential harm to the plaintiff.

At Baker & Company in Toronto, our real estate lawyers take the time to meet with you and understand your unique needs in order to guide you through your real estate matter, whether commercial or residential.  We rely on our broad base of experience and expertise to provide exceptional legal advice and risk management in a variety of transactions, or through litigation. Call us at 416-777-0100or contact us online for a consultation.

Categories
Property Disputes Real Estate Law Residential Real Estate

Neighbours Enter Costly Litigation With No Successful Party

Before entering into litigation with a neighbour over a property dispute, it is vitally important to consider the chances for success, and what may be at stake if you lose. While property damage can no doubt be costly, litigation might be even more so, as was demonstrated by a recent decision of the Ontario Superior Court.

Neighbours Both Undergo Construction; One Suffers Water Damage

The parties involved owned homes on adjoining properties in Toronto, with the defendant’s property being uphill from the plaintiff’s land. Both parties undertook large construction projects on their respective homes. The plaintiff completed significant landscape construction which included the removal of hard surfaces in the backyard; the removal of concrete and asphalt surfaces in the laneway, the addition of a downspout to the second story balcony; and the installation of water management features, including installing a soak‑away pit, installing weeping tile tubes to drain water away from the foundation of the home to the soak-away pit; grading the backyard to slope away from the foundation of the house, and installing a new retaining wall.

The defendants, meanwhile, tore the existing house down on their property and had a new one constructed. The main changes to their property as a result of the new construction were:

  • a new garage was erected with a downspout directed toward the plaintiffs’ backyard;
  • a downspout was installed at the southwest corner of the house;
  • the grading, completed in May of 2016, was raised, resulting in an increased slope towards the plaintiffs’ house;
  • an underground pipe was installed, connecting to and draining water from the northeast and southeast corner downspouts of the house. Therefore, approximately half of the roof of the defendants’ house drains to the southwest downspout and toward the southeast corner of the plaintiffs’ house, and the other half of the roof of the defendants’ house drains to the front yard pipe and toward the plaintiffs’ driveway.

The plaintiffs began to notice water infiltrating their basement the same month that the defendants moved into their new home. After completing remedial work to stop the water from entering the basement, the plaintiff brought an action against the defendants for over $83,000 in damages including rent abatement for the basement tenant, remedial work to stop the leaking and additional costs associated with the damage to the basement. The defendants argued that they were at most 25% contributorily negligent for the damages to their neighbours’ property.

Expert Evidence on Both Sides

Each side retained an expert to plead their case, with the plaintiffs’ witness claiming that the damage would not have occurred but for the change in direction of the water flow from the defendants’ property. The defendants’ expert, on the other hand, claimed that even though there was increased water directed at the plaintiffs’ yard, the damage would not have occurred had the plaintiff’s not removed the hard surfaces in their yard when they completed the landscape construction.

Ultimately, the court found that the defendant’s expert evidence was preferable, concluding that:

I have not found liability on the part of anyone for anything…It is very unfortunate that these neighbours could not have found some way to work this out. Sadly, both sides have incurred significant legal costs and an even more significant amount of stress.

The Takeaway for Potential Litigants

Litigation is expensive, particularly when expert evidence is necessary, as was the case here. In addition to that, litigation can be extremely time-consuming. While it is important to seek remedies when one has been wronged in some way, it is equally important to ensure that an attempt is made to resolve issues in the most efficient way possible for everyone involved. The risks of doing otherwise may not be worth it in the end. Particularly when dealing with neighbours, finding an amicable and cost-effective resolution should always be the primary goal, with litigation being a last resort. An experienced lawyer can facilitate negotiations or a settlement that can help the parties to reach a resolution before stepping into a courtroom.

At Baker & Company in Toronto, we take the time to meet with you and understand your unique needs in order to guide you through your real estate matter, whether commercial or residential.  We rely on our broad base of experience and expertise to provide exceptional legal advice and risk management in a variety of real estate disputes, or through litigation if necessary. Call us at 416-777-0100 or contact us online for a consultation.

Categories
Litigation Property Disputes Real Estate Law Residential Real Estate

Suing a Condo Corporation for a Delay in Repairs

What a condominium corporation’s obligations to individual owners with respect to repairs? If an owner is unsatisfied with the response to repeated complaints, are they entitled to damages? When might a condo corporation’s failure to address an issue to an owner’s satisfaction be considered oppressive?

A recent decision of the Ontario Superior Court of Justice dealt with these questions, following a five-year battle between a condominium owner and the corporation.

A Five-Year Complaint History

The complainant had purchased a unit on the top floor of a 15-storey condominium building. Four years after moving in, she began to notice an excessively loud noise emanating from what sounded like an industrial fan or a motor on the roof of the building that disturbed her significantly. She made a verbal complaint to the condominium corporation in 2014 about the noise and when nothing was done, she made a further complaint in writing.

In 2019, five years after the owner’s initial complaint, the condominium corporation replaced two exhaust fans that were located above the owner’s unit. While the noise was still present, the owner said that this helped to reduce it significantly. The complainant brought an action against the condo corporation for failure to meet its statutory obligations with respect to repairs and maintenance, as well as oppression.

What Exactly Are a Condominium Corporation’s Obligations?

Under ss. 89 and 90 of the Ontario Condominium Act, a corporation does have a statutory obligation to repair and maintain the common elements of a condominium:

89 (1) Subject to sections 91 and 123, the corporation shall repair the units and common elements after damage.

90 (1) Subject to section 91, the corporation shall maintain the common elements and each owner shall maintain the owner’s unit.

However, the court, in this case, was careful to point out that the standard of a corporation’s obligation is one of reasonableness. In this case, there was no evidence that the complained-about noise had occurred as a result of a failure to properly repair or maintain the fans that were eventually replaced. Further, there was evidence that the corporation had ensured that the fans were inspected and maintained on a regular basis, going back to before the complaints began.

To address the noise complaints, the corporation brought in a third party company to inspect the fans, and no underlying cause of the noise was found. The same company inspected the fans again six months later, and then six months after that. On the last visit, the company installed new blower assemblies on the fans above the complainant’s unit in an attempt to make them quieter.

In 2018, the complainant hired an acoustic engineer to inspect the fans. His report showed that the fans were old, contained some rust and did not appear to have any acoustic or vibration insulation. However, he did not test the fans beyond inspecting them visually.

Three months later, the corporation retained mechanical engineers to inspect the fans. The engineers recommended some servicing to address a slight bearing noise on one fan and said the other was actually quieter than industry standards. The corporation carried out the recommended service but the complainant said that the sound persisted.

Given the fact that the fans were regularly inspected and maintained, and that the corporation had the fans inspected by engineers specifically to address the complaints, it could not be said that the corporation had violated a reasonable standard of repair and maintenance. Further, the complainant alleged that the noise had been due to a failure to maintain the fans, but also said the noise persisted even after the service recommended by mechanical engineers had taken place.

Was the Corporation’s Conduct Oppressive?

The complainant alleged that the corporation had ignored her complaints and failed to address a serious issue that was highly disruptive for five years. However, the court found that this ignored several steps the corporation took during that time frame to identify and address the noise she complained of. When the corporation eventually did order new fans, the complainant, through her lawyer, objected to the manufacturer’s installation instructions, based on the opinion of a consultant she had retained to review them. The installation was delayed for nearly nine months due to this objection, and eventually, the complainant allowed the corporation to proceed with the original instructions.

While the corporation’s response had some faults, including failing to respond in writing initially, and then providing a memo from the superintendent that was dismissive and sarcastic in tone, overall the response was reasonable in the given circumstances. On the issue of oppression, the court ultimately concluded that:

A unit owner seeking an oppression remedy under the Condominium Act must show both that there was a breach of their reasonable expectations and that those reasonable expectations were breached by conduct legitimately characterized as oppressive. I find that [the complainant] had a reasonable expectation that [the corporation] would comply with its statutory obligations to repair and maintain its common elements. I also find that [the corporation] acted reasonably and in compliance with these obligations.

While condominium owners certainly have a right to expect action from their condominium corporation when it comes to the repair and maintenance of the common elements, the standard of reasonableness must be kept in mind. Prior to initiating a potentially costly and time-consuming action in court, a complainant should carefully consider whether they will be able to establish that the corporation failed to meet the reasonableness standard under the given circumstances.

At Baker & Company in Toronto, our lawyers take the time to meet with you and understand your unique needs in order to guide you through your real estate matter, whether commercial or residential.  We rely on our broad base of experience and expertise to provide exceptional legal advice and risk management in a variety of transactions, disputes, or through the litigation process. Call us at 416-777-0100 or contact us online for a consultation.