Asking the seller of a Multi-family property to give vacant possession, is it legal?

The information below is copyrighted material provided by Merv Burgard.

In this article he summarizes a case which was presented to the Ontario Rental Housing Tribunal (ORHT)  This emphasises the illegality of the buyer of a multi unit building removing a tenant, if that buyer does not intend to move into the apartment himself.

In this case, it was the Sellers Realtor who gave the tenant notice to vacate the property as per the agreement with the new Buyer.  When the Buyer did not move into the property, it was not the Buyer who was fined, but the Seller.

A tenant can only seek remedy from the landlord and in this case the Seller was the landlord who gave the tenant notice, so even though it was the Buyer who was the bad actor in this play, the Seller is the one responsible.

As a Realtor, I would never advise my Seller client to give a tenant notice to vacate a property. I tell them to have the Buyer do so WHEN the Buyer TAKES POSESSION of the property. Besides being legally responsible, the Seller could also be injured if the Buyer did not close on the property.

The Seller would be left with a vacant property and no income. 

Read the details of this interesting article from Merv Burgard below:

This case is a review of a previous Order by the ORHT, determining that the Buyer of a rental property was to pay $4,100.00 to a Tenant as moving expenses, plus a fine of $1,000 for violating the Tenant Protection Act.

The Order initially found that the Buyer acted in bad faith by requiring the selling Landlord to give the Tenant notice to vacate for the Buyer's personal use, with no intention of moving into the property. The Notice for Vacant Possession was given to the Tenant by the existing Landlord's real estate agent.

It was noted that the Tenant had been living in the unit for 19 years and the Tenant's rent was substantially below the market rent. When the initial decision was made, the Buyer was given the status of Landlord and this resulted in the Order.

The Buyer requested a review of the order based on the fact that the Buyer was not the Tenant's Landlord.

The ORHT agreed with this interpretation and determined there was no authority to make an order against or to levy a fine against the Buyer.

The Review determined that the Order for the payment to the Tenant and the fine was to be made against the existing (selling) Landlord, and not the Buyer of the property.

While there was no evidence that the Seller was aware of the Buyer's bad faith, and the Seller claimed she was not aware, the Tribunal found that the Seller was the Tenant's Landlord and was liable.

The Tribunal report determined that “to relieve the landlord/vendor of liability in these circumstances would be to acknowledge a gaping hole in the protection the legislation is meant to provide.

If the bad faith had to be that of the landlord/vendor, the tenant would fail because the landlord did not know the true intentions of the purchaser. The purchaser would also escape as the legislation only authorizes orders for payment of money against the landlord. The tenant would be remediless.

Sections 51 and 52… confer on the owner, or the soon-to-be owner, the right to live in his or her property. This right trumps security of tenure even though the tenant is innocent of any misconduct as a tenant. Other than some notice and filing requirements, all that is required is that the owner, or prospective owner, possesses a genuine intention of moving into the rental unit and making it his or her home.

Thus, it is the good faith of the purchaser that is at issue. If the purchaser is acting in bad faith, then the document has been served in bad faith.

Section 32(9) of the Act clearly allows an application to be brought against the landlord/vendor when the purchaser has not moved into the unit.

None of the above is designed to make the landlord/vendor ultimately liable for the malfeasance of the purchaser. In a prospective proceeding before the courts, it is expected the vendor would recover against the purchaser. But in the first instance, the tenant should be able to proceed before the Tribunal and recover against his former landlord.

The Tenant Protection Act protects the tenant in this scenario. It is up to the landlord/vendor to protect himself when the purchaser enlists the landlord/vendor for service of the notice of termination.

Perhaps some sort of warranty that survives closing should be obtained from the purchaser to the effect that the purchaser shall save harmless the vendor from consequences of applications such as this.

The Tribunal will hold the landlord/vendor liable for the bad faith of the purchaser in these circumstances.

While the Tenant Protection Act has been replaced with the Residential Tenancies Act, the particular sections applicable to this case have not changed. Registrants should be familiar with the provisions of the Residential Tenancies Act and the role of the Landlord and Tenant Board (http://www.ltb.gov.on.ca/en/index.html), formerly the Ontario Rental Housing Tribunal.

The following comment by the judge in this case should be of particular importance to registrants when representing landlord/sellers.

The Tenant Protection Act protects the tenant in this scenario. It is up to the landlord/vendor to protect himself when the purchaser enlists the landlord/vendor for service of the notice of termination. Perhaps some sort of warranty that survives closing should be obtained from the purchaser to the effect that the purchaser shall save harmless the vendor from consequences of applications such as this.

Well-known real estate educator Merv Burgard, Q.C., is a graduate of Osgoode Hall Law School and has been a member of the Ontario Bar for over 30 years. 

Based in London, Ontario, Merv is a regular contributor to many real estate publications, lectures to both legal and real estate audiences and has been active in the self-management process for Ontario's real estate professionals. Merv has served as counsel to OREA, several real estate boards and many REALTORS® and firms.