Tuesday, August 16, 2011

Before Investing, Be Aware That The LTB May Deny You The Right To "EVER" Move In

While lamenting about Ontario's over-bearing and over-reaching rental housing legislation, the first plank of Marx's communist manifesto comes to mind.  It reads as follows:

Abolition of private property in land and application of all rents of land to public purpose.

Without question most would agree that the real estate market drives the rental industry in Ontario.  Low interest rates and values that climb annually without apparent logic make investing in a house or condo a no-brainer for those inclined to take on some risk.  But going in, most investors think the risk is small or non-existent, and for many the fall-back is that they or a family member can move in when it suits them.  After all....it's their property, right?

But how many potential investors would put their 10% down if they thought there was even a chance that they could not move back in, or sell the property without being hamstrung?  I suspect it would knock at least 20% out of the game.

But they don't know the score getting into the game, and investors blindly buy condos or upgrade to a bigger house and hold onto their old property for a short time, tenanted, until the market improves.  Some move in a basement tenant to help cover their costs while they continue to live in the house.

We have no absolute property rights in Canada.  That should change.  Rights of expropriation or eminent domain under limited circumstances for the public good, and with compensation still have a place, but denying an individual the use of their home when no expressway is coming through is plain wrong.  Far too often I've seen the Landlord and Tenant Board  strip away an owners right to re-occupy a premises, or rid themselves of a tenant who shares it with them.

Just this week I've spoken with the daughter of a sick, elderly woman who needs to bring in a full-time caregiver into her four bedroom house, where a male tenant actually shares the house in an upstairs bedroom with the mother down the hall.  The elderly woman, with the support of her children, wants to stop renting, too much time and effort in her condition and at her age.  Also the agencies that provide live-in caregivers won't provide a candidate for the job with the male tenant living on the same floor in one of the bedrooms.  The LTB call centre advised her that because there are enough bedrooms for the landlord, the caregiver and tenant, that she can't evict the male tenant based on the caregiver moving in.  It's not settled law that a landlord can evict because they just want to stop renting.  Sounds like Hotel California!

A couple of years ago there was a young man and his fiancée wanting to move into one of the units of a Toronto 4-plex that they owned.  At the LTB, the Member found that the landlord had given good-faith termination notice, but denied termination of the tenancy (not delayed, denied) based on the tenant's vision impairment.  The case went to the Ontario Divisional Court on appeal.  It's Caputo v. Newberg at Canlii.org.  The court upheld the LTB's decision.

Just this week I spoke to a man who moved to New York for work purposes for a few years while renting out a condo near Toronto's waterfront.  He is coming home and wants to move back in. The tenants were served an N12 but refused to move out.  He has nowhere to live when he comes home.

Another woman I spoke to this week had the unmitigated nerve (note the tongue in cheek) to put her house on the market.  But when difficulties selling the house and their family situation changing caused them to re-think the sale, they decided that their son would move in rather than buy his own place. The tenant has retained counsel (free, courtesy of your tax dollars) who will argue that the notice must have been in bad faith since the house was on the market for a time.

I had a client named Slapsys in 2008, 2009 and 2010.  It took over two years for him to get his house back for the use of his growing family at a cost of about $25,000 in legal fees.  I was successful at first instance at the LTB getting an eviction order, but before the sheriff came, a local legal clinic filed an appeal to Divisional Court.  My client won there with costs against the tenant, but then the advocacy Centre for Tenants, Ontario took the file and brought the case to the Ontario court of Appeal.  All on your dime.  My client won there again.  But at what cost?  Check out Slapsys v. Abrahms at Canlii.org.

How many investor owners are aware that the Landlord and Tenant Board  has no jurisdiction to evict a tenant if the landlord is in serious breach of an obligation under the statute or of any material covenant of the tenancy agreement?  I can't count the number of tenants I've seen fabricate maintenance issues, tamper with electrical systems, disable furnaces etc. in order to avoid eviction.

And what about the naïve investor who buys a property through a single-shareholder corporation where the human and the corporation act in harmony as one?  Years later the human landlord serves an N12 notice and attempts to move in, but he risks losing the right to live in the house, forever, because of the corporate ownership.  It turns out that corporations don't need a place to live.

While it's the topic of other blog entries, I haven't even touched on how the Residential Tenancies Act  makes private property owners surrogates of the government by forcing them to act as social workers and use the fruits of their own labour to deal with issues of mental illness in their tenant population.  Isn't that the government's job, to be paid for by all taxpayers as part of general tax revenues?

That government money and legislation is used to deprive people of their own property is perverse.  Why do we allow this here?  And where is Tim Hudak and the Real estate industry?


Anonymous said...

Mr Hudak is no Mike Harris. To date, he has simply said very little to indicate he is actually prepared to lose a single vote by correcting injustices of the LTB. Best example to date are complaints by Cambridge landlords over councils change on utility billing putting the onus on landlords to pay delinguent tenants utility bills but refusing to provide up to date info on delinquent accounts. Where is Mr Hudak on this issue of fairness or lack thereof.?

Chris Newald said...

Being a landlord means running a business. Tenants are customers that need to be treated fairly and most landlords, being good businessmen, do so accordingly. Despite this, the laws in Ontario continue to be strictly biased in favour of tenants. There are gaping holes through which tenants can take advantage of landlords and situations where landlords are powerless to act despite being legal owners of the properties. Your examples prove this point numerously. A great post!

Anonymous said...

Oh God- I think I'm getting out of this now. Being a landlord is a nightmare. The LTB makes it that way. Something is very wrong and needs correction.

Valerie Keefe said...

Actually, the action would be against the caregiver agency either on the basis of sex or source of legal income. Blaming LTB for the refusal of a caregiver agency to provide services to a disabled person due to their adequate living arrangement is ridiculous and relies on benevolent sexism and agism to assume the skids should be greased.