By Harry Fine
It started with venom from tenants and tenants organizations. Then landlords started calling me a traitor.
I like to believe that after my years as an adjudicator at the Landlord Tenant Board (LTB), I tend to look at things from a reasonably balanced perspective, which seems attractive to nobody in these polarizing times.
But Toronto’s rental crisis has reached the point of complete madness. So let the darts fly, but I need to speak up on the current state of Toronto’s real estate market that pits profit-taking from investment properties against tenants.
Rents for vacant units have gone up about 12 times faster than inflation in recent years. Nowadays, there’s no such thing as a lateral move for an evicted tenant.
Add to the mix buyers who have absolutely no interest in inheriting a tenant protected by rent control and you have a recipe for a perfect storm.
In 2021, no rent increases were allowed in Ontario. In 2022 the provincial guideline was set at just 1.2 per cent. But market rents on an empty unit can be $1,000 a month more than for an existing tenant in a one-bedroom apartment.
Enter N12 notices.
For all the talk of renovictions, which is a cute word that’s been coined to refer to the N13 notice and allows a landlord to evict a tenant for renovations, the real foe fuelling the rental crisis is the N12 notice.
The N12 starts the eviction process for a landlord, their family or the purchaser of a property and their family to move into a unit that’s already occupied.
After 20 years in the business of advising both landlords and tenants, I’m convinced that at least 50 per cent of the N12 notices served on tenants are phony and will not succeed if challenged.
Quite often the purchaser of a property does not actually want to move in. What they want is a vacant property and the seller taking the risks and bearing the cost of evicting the existing tenant.
The risks are substantial. A tenant evicted in bad faith can turn around and sue their former landlord at the LTB, and receive compensation of up to $35,000. In addition, the landlord can be fined up to $35,000 and can also be prosecuted by the province incurring a further fine upon conviction of up to $50,000 for a landlord and $250,000 for a corporation.
It angers me when realtors tell their landlord clients looking to evict tenants to “Just serve the N12”, or “Just say your son is moving in,” or worse, “Just tell them they have to leave.”
My advice when representing tenants served with an N12 is simple. Don’t move out. Leave it to the landlord to prove their claim. In most cases, if a tenant holds firm and insists that the landlord use the eviction process outlined under the Residential Tenancies Act, they may soon discover that there is no purchaser moving in, and chances are they can at the very least get a reprieve.
There are many prerequisites for an N12 to succeed. The notice must be accurate and properly served. There must be a month-to-month tenancy. For a landlord to move in, the property must be at least partially owned by an individual, so if ownership is in the name of a corporation, there can be no eviction. Compensation of a month’s rent must be paid to the tenant prior to the termination date in the notice.
If the tenant just says no, then a hearing must be held at which the landlord or purchaser will have to prove the good-faith nature of their intentions.
In fact, the LTB cannot schedule a hearing let alone order eviction, unless the person who claims they require the unit submits an affidavit or declaration to the LTB which is filed along with the application.
In the case of purchasers’ N12, the real tension nowadays is the fact that getting a hearing at the LTB can take up to 6 months, while most real estate closings complete in 60 or 90 days. Not many buyers will agree to accept multiple extensions while the seller waits for the hearing. And damages against the seller can be substantial if the buyer pulls out of the deal because the tenant did not move out as promised.
My advice to tenants when served with an N12 is to hold your landlord to strict proof of their intentions, or the intentions of the purchaser unless you can strike a very good deal with them for both compensation and time.
Some landlords call this extortion, but it’s a tenant’s right under the law.
Harry Fine is a Toronto-based paralegal and a former adjudicator at the Landlord and Tenant Board.