Major fire at SFH, what are some of our rights as landlords?

[Jami Kloet]

I'm trying to comb my way through the updated Residential Tenancies Act but I can't really seem to find an answer. I'm hoping somebody here can point me in the right direction, or maybe offer some guidance.

Long story short: we had a major fire at one of our properties earlier this summer. We are waiting on an official cause of fire, but in all likelihood, the cause was unattended cooking (tenant's fault). The place is a total rehab, the frame still stands but everything from the studs in, the windows and even the siding is being replaced. Thankfully, both us and our tenants were insured. 

The process has been slow, but we are hoping to have the unit ready for occupancy by Jan. 1 (more likely Feb. 1). Our old tenants have expressed that they would like to come come back. 

They were good tenants (despite the fire), have been living in the home for five years, and I would be happy to have them back. However, the home will be brand new, and is in very high demand at this time. I like the tenants, but for business purposes, I'd like to raise the rent if I have an opportunity. I am confident we could get $150-$200 more per month once the renovations are complete.

I can't find anything in the tenant act that would relate to this type of scenario? 

There are lines about damage to property, but nothing is mentioned about fire. And there is nothing mentioned about damages that deem the property uninhabitable. 

There are lines about eviction for major renovations and upgrades, but I am not sure this would fall under that, and even then, it's not clear whether we could raise the rent.

Has anybody in Ontario been in this position? 

[Thomas S.]

It would fall under a couple of possibilities.

First did you give them notice of termination following the fire, did they at that time exercise their right of first refusal.

It would be eviction for purposes of renovation or you could fall back on frustrated contract law.

I would argue that they did not inform you at time of move out that they were exercising right of first refusal combined with frustrated contract concluding that at the time of the fire the contract was terminated.

You first avenue of action is to simply tell them NO unless they are prepared to pay the higher rent and see how it plays out. It is always worth taking the chance in Ontario as opposed to invoking the law at this point in time. You have nothing to lose and everything to gain if they voluntarily go for the new rate.

If it ends up in court you argue they did not exercise there right of first refusal at the time and that in fact the contract was Frustrated due to the fire and the lease terminated for that reason.