Here’s the bottom line: Section 49 of the Residential Tenancies Act allows a seller/landlord to terminate a tenancy within a residential complex that contains no more than three (3) residential units, or a condominium unit; if:
(i) The seller/landlord has entered into an agreement of purchase and sale to sell the residential complex; and
(ii) The buyer, in good faith, requires possession for the purpose of residential occupation by the buyer, his spouse, or a child or parent of one of them, or a caregiver who will be living in the same building and providing such service to the buyer, spouse, child or parent.
Corporate Buyers and Shareholders
Can a corporate buyer terminate a tenancy so that it’s shareholder, or his spouse, parent or child, can occupy the unit? The cases go both ways. Some courts have held that only human buyers can personally occupy a unit and as corporations and their shareholders are separate and distinct legal entities, corporate buyers cannot terminate a tenancy on behalf of their shareholders. Other courts have taken a more liberal view of the legislation and have found that the sole shareholder, or controlling shareholder of a family held corporation, may be a “landlord” for the purposes of the legislation and as such entitled to use section 49 to evict a tenant for his own personal occupation or that of a family member. In those cases, the shareholder argued that he was “the person giving or permitting occupation” of the premises or that “he acted separately from the landlord corporation and was another landlord with a right of occupation”. The Board is authorized to examine the real substance of the facts to determine if section 49 can be relied upon.
Requirement of Good Faith
This requirement relates to the genuine intention of the buyer to occupy the unit. The test is not proof beyond a reasonable doubt, but that good faith exists on the balance of probabilities.
If the tenant fails to vacate, section 72(1) calls for the seller to file an affidavit sworn under oath by the buyer certifying that he in good faith requires possession for personal use. If the genuine intention is not so genuine, and the buyer has a different motive, for example to evict the tenant and increase the rent, then such an affidavit would be problematic, possibly tantamount to perjury.
If the tenant vacates but the buyer doesn’t occupy, the Landlord and Tenant Board can make orders against the buyer, including a fine not exceeding $25,000.00.
The courts have held that the reasonableness of the buyer’s intention to occupy was not important because the real test is the genuine want and desire to occupy the unit.
Notice Form N12
The date of termination specified in the Notice of Termination must be at least 60 days after the notice is given and, generally speaking, on the last day of the rental period in which the 60th day falls. By way of example, if you were to enter into an Agreement of Purchase and Sale on the second day of August, the effective date of termination specified in your notice to the tenant must be at least 60 days after the notice is given (which takes you into the beginning of October), but the effective date must be the last day of the month (the rental period) in which the 60th day falls. In other words, if you were giving a notice on August 2, the earliest possible date of termination would be October 31. If your notice does not comply with the foregoing, then it is void and you would be required to serve a fresh notice complying with the Residential Tenancies Act. I have attached a copy of Form N12.
I wrote an article last year on Can you Evict your Tenant When Selling your Property?, check it out here.