Renovation eviction

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Renovation eviction

Matt Geerts
Investor · St. Thomas, Ontario · Member since 2015 · 692 posts · 312 votes

Warning: If you're not from Ontario Canada, your advise is probably useless here. You have no idea what "tenant friendly" means.

I am working on a deal with a triplex... there's a slim chance that I can make it happen, but I want to be prepared with a plan if it goes through.

The interior is crap and the rents are... mediocre. At the price that I'm going for it is still a good cash flowing property.

However, I'd prefer to work with higher rents, higher value property and higher quality tenants. So, what I'd like to do (after I wait a bit for funds to stabilize) is to kick out one tenant at a time to do a total overhaul of each apartment. The end goal is higher rents and to refi my reno money plus extra.

Now the fun stuff... The Ontario Landlord Tenant Board and Residential Tenancies Act.

It is my understanding that:

  1. I may evict a tenant if the work to be done:
    1. Requires a permit
    2. Will make the unit "unsafe" to live in. Is it correct that turning off the power and water to do wiring and plumbing makes it "unsafe"? I'd also be tearing out the kitchen and floors.
  2. Tenants have first right of refusal after the renovation is done. 
    1. I must inform them of that right when I give notice, and 
    2. They must express their intent before they move out. 
    3. If they move out before the date on my notice, they forfeit the right.
    4. THEY CAN PAY THE SAME RENT

My greatest concern is that after spending 15k+ renovating an apartment, that the first right of refusal allows them to move back in and keep paying the same rent. Is that true? That is absolutely absurd, but welcome to Ontario, where we wear pants on our heads and give tenants money when they trash our houses.

Can I apply to the board for higher rent? Would I do this after the tenant has moved back in, or before? 

Can I get some Ontario landlord input here?

@Greg S.

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Thomas S.
Member since 2016 · 13k+ posts · 12k+ votes
10y

I think all you questions have been answered.

You can evict to move in, reno. and then move on the next unit and do the same. The LTB is a major PITA and could for any reason deny your request as they are not obligated to inforce the rules of the RTA. Evicting to reno only requires that you have a building permit.

As stated many tenants will choose not to move back as it will be extremely difficult finding another unit, moving, terminating that lease and then moving back.  But if they do the have the right to pay the same rent as when they left.

Ask if they want first right, if the say yes tell them you have no idea how long the reno will take, could be anything from a week to a month to 6 months. This makes their life more difficult and they are more likely to say no.   

Since I have never evicted to do reno I have no first hand experience as to what a arbitrator mah decide. 

Ontario landlords needing info on previous rulings should do a search on CanLII - Ontario landlord tenant board. Do a search under - Evict to renovate.

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  • Daljeet S.
    Investor · Brampton, Ontario · Member since 2016 · 21 posts · 4 votes
    10y

    Hi Matt,

    I'm from Brampton, ON, I was involved in evicting of a tenant and got myself pretty familiar with the RTA and operations of the LTB, eventually got the tenant evicted with the help of this Tenant/Landlord lawyer's blog, http://ontariolandlordandtenantlaw.blogspot.ca/

    Its got a lot of useful articles and comments, it will take some time to search/sift through the posts but I think you can find your answer there as I did. If you find an article that meets your situation, just post a comment and the lawyer usually replies with some free advice.

    I eventually got my tenant evicted for non-payment of rent and going to small claims court to recover over 6k of lost money in a couple months.

    Let me know if you ever need any help with the RTA / LTB stuff as I recently went thru it all.

    0Reply
  • Rob Dowsett
    Investor · Dorchester, Ontario · Member since 2016 · 27 posts · 5 votes
    10y

    Matt,

    I have not experienced this, but I have heard some conversations about it (London ,ON btw).  I am attaching a link, you probably have already seen this.  It seems you are spot on with the info you have, although the document from the LTB isn't clear about rents (see pg. 17).

    http://www.sjto.gov.on.ca/documents/ltb/Brochures/....)%20Revised_Bill140_June15_2015.pdf

    I will say that I was speaking with a colleague recently who had a similar situation.  He actually loved the tenant, but wanted to upgrade the place and charge higher rents.  His tenant had been there for quite some time and had no intention of moving.  His solution, he actually - up front, and above board - paid the tenant to leave.  They came to agreement that he would pay one months rent to the tenant, and the LL would pay any clean up expenses, etc. once the tenant left.  In the end, really, he looked for a win win situation and was able to have the tenant agree amicably to leaving.

    Hope something in there helps.

    Rob

    BTW: I am not positive, but I have heard that there are going to be some big changes to the LTB/RTA, so keep an eye/ear open.  Likely, they will be in favour of the tenant, but you never know.

    0Reply
  • Luc Boiron
    Specialist · Toronto, Ontario · Member since 2016 · 564 posts · 425 votes
    10y

    @Matt Geerts

    The RTA does not say that the renovation needs to make the unit unsafe, but rather that you "do repairs or renovations to it that are so extensive that they require a building permit and vacant possession of the rental unit."

    I believe you can easily argue that a combination of a permit for plumbing or electrical, plus the tenant having too much stuff, makes it that you would need vacant possession for things like repainting and changing the floors.

    I have also found that in many cases, the tenant will not try to move back in after the renovations. Remember that they must give you notice of their intent to move back in before they vacate the units: 

    "A notice under clause (1) (c) shall inform the tenant that if he or she wishes to exercise the right of first refusal under section 53 to occupy the premises after the repairs or renovations, he or she must give the landlord notice of that fact in accordance with subsection 53 (2) before vacating the rental unit"

    If a tenant needs to find a new place, get all of their stuff out (you can definitely require that every last item is removed, even if they want to move back in after), move out, they will not want to go through the hassle and cost of moving in again.

    As @Rob Dowsett said above, if the tenant does inform you before moving out of their intent to move back in after renovations, you can always try cash for keys.

    If you would consider house hacking, the RTA also allows you to evict a tenant based on you moving into the unit, so you could evict a tenant, renovate, and move in for a reasonable amount of time.

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  • Thomas S.
    Member since 2016 · 13k+ posts · 12k+ votes
    10y

    I think all you questions have been answered.

    You can evict to move in, reno. and then move on the next unit and do the same. The LTB is a major PITA and could for any reason deny your request as they are not obligated to inforce the rules of the RTA. Evicting to reno only requires that you have a building permit.

    As stated many tenants will choose not to move back as it will be extremely difficult finding another unit, moving, terminating that lease and then moving back.  But if they do the have the right to pay the same rent as when they left.

    Ask if they want first right, if the say yes tell them you have no idea how long the reno will take, could be anything from a week to a month to 6 months. This makes their life more difficult and they are more likely to say no.   

    Since I have never evicted to do reno I have no first hand experience as to what a arbitrator mah decide. 

    Ontario landlords needing info on previous rulings should do a search on CanLII - Ontario landlord tenant board. Do a search under - Evict to renovate.

    2Reply
  • Matt Geerts
    OP
    Investor · St. Thomas, Ontario · Member since 2015 · 692 posts · 312 votes
    10y

    Greg, I can't believe that I have never seen that CanLII site! Thank you so much!

    I guess the practical reality is that once someone has moved, they arw not terribly inclined to kove back. I would just fear a 0% return on a massive renovation because of a right of first refusal. 

    0Reply
  • Sergey S.
    Oakville, Ontario · Member since 2014 · 23 posts · 3 votes
    10y

    @Thomas S. Great topic. I was looking at a duplex where one tenant pays way less than the market rate and was wondering what can be done to bring the rent back to market rate.

    0Reply
  • Matt Geerts
    OP
    Investor · St. Thomas, Ontario · Member since 2015 · 692 posts · 312 votes
    10y

    Sergey, if we are talking hundreds belowarket, you could try cash for keys and rerent. 

    Move into it.

    banking on a tenant not coming back is too risky in my opinion.

    0Reply
  • Minna Hu
    Rental Property Investor · Toronto ON, Canada · Member since 2015 · 58 posts · 11 votes
    9y

    Originally posted by @Daljeet S.:

    Hi Matt,

    I'm from Brampton, ON, I was involved in evicting of a tenant and got myself pretty familiar with the RTA and operations of the LTB, eventually got the tenant evicted with the help of this Tenant/Landlord lawyer's blog, http://ontariolandlordandtenantlaw.blogspot.ca/

    Its got a lot of useful articles and comments, it will take some time to search/sift through the posts but I think you can find your answer there as I did. If you find an article that meets your situation, just post a comment and the lawyer usually replies with some free advice.

    I eventually got my tenant evicted for non-payment of rent and going to small claims court to recover over 6k of lost money in a couple months.

    Let me know if you ever need any help with the RTA / LTB stuff as I recently went thru it all.

    0Reply
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