September 8th - 2008

LEGALBEAT: Failure to give notice voids increase

The tenant paid $179 per month rent for her occupancy of land in an Ontario land lease park.

The tenant paid $179 per month rent for her occupancy of land in an Ontario land lease park. A new owner demanded that she pay $250 but did not provide written notice of this proposed rent increase. She paid the increased rent for a while and then refused to do so, claiming that it was illegal.
 
Proceedings went to the (then) Ontario Rental Housing Tribunal and the landlord won. She appealed to the Divisional Court and lost. She then appealed to the Ontario Court of Appeal. The courts had to deal with the language of the Act which requires a landlord to give a tenant at least 90 days written notice, failing which ".. an increase is void.". A further section says that rent charged or increased one or more years earlier shall be deemed to be lawful unless an application is made that questions it.
 
The Court of Appeal agreed with the tenant that the rent increase was void and, consequently, of no legal force or effect. The one year saving provisions do not operate to render the void rent increase lawful. If the increase is "void," there is nothing to be "saved." The saving provisions refer to other possible issues such as rents that are in excess of prescribed limits and are therefore unlawful. They may be saved by the one year limitation provisions, but not the notice requirement.

Price v Turnbull's Grove Inc. 2007 ONCA 408 (CanLII)

MERV'S COMMENTS
It is amazing that a tenant would pursue such a small amount of money through the Tribunal process and then to two court appeals. Lawyers and REALTORS® should be concerned about the ability to prove that written notices are given for any residential rent increase before lenders or buyers are told that the rent is legally collectible. Earlier cases have dealt with the typical representations by sellers who may then be liable for any rollback in rents when tenants become aware of their rights. If tenants wait too long, landlords can try to argue the legal principles of laches or estoppel. Getting tenancy acknowledgments as required by a proper Agreement of Purchase and Sale continue to be prudent protection for buyers who become landlords.

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