Bad Faith Renovictions:

Hamilton to be the first city in Ontario to implement a bylaw to hinder renovictions

By Mirjana (Mira) Markovic

The City of Hamilton (“City”) is making further efforts to combat the elevated housing crisis that Canadians are continuing to experience by becoming the first municipality to implement a bylaw to deter landlords from bad faith evictions and further promote better protection for tenants, especially those who are vulnerable and rely on the affordable housing sector. The bylaw has been in the works for over a year and on Wednesday, January 17, 2024, the City’s councillors voted unanimously in support of the bylaw. The final approval will take place before the end of January and then be enforced at the beginning of 2025. Let us take a closer look.

A “bad faith renoviction” is when a landlord uses renovations as an excuse to evict an existing tenant and then proceed to rent the property to a new tenant at an increased rent rate. Landlords can issue eviction notices to tenants if a vacancy is required to renovate or repair a unit, but the tenants have the right to move back once the renovation and/or repair is completed. However, because landlords infrequently face penalties for illegally “renovicting tenants” or for not upholding the right of the tenant to return to their unit once the renovation and/or repair is completed, many landlords have taken advantage to evict, renovate, and rent to new tenants at an elevated rate. The City of Hamilton is focusing on preventing such a scenario from occurring in the future by implementing a bylaw to address this obstacle.

Statistics reveal that 34% of households within the City are rentals with 23 affordable units declining for every new affordable unit built, which equals to a 10-year loss of approximately 16,000 rental units which are priced below $750.00. In 2022, more than 6,000 households were on a waitlist for affordable housing.

The Bylaw

The purpose of introducing the said bylaw is to implement a resource that will eliminate renovation “shams”, allow honest landlords to carry out necessary renovations and/or repairs to their properties, and deter landlords from arbitrarily evicting tenants, especially the vulnerable Canadians.

How will the bylaw operate?

• A landlord will be required to apply for a renovation licence within seven (7) days of issuing an eviction notice called the N13 Notice (“Notice”).
• Fees associated with the licence will be approximately $700.00 per unit and $125.00 to review annually.
• The landlord will have to secure and submit building permits along with an engineer’s report confirming vacancy is necessary before the City will issue the renovation licence.
• The landlord will further be compelled to make appropriate arrangements with the tenant(s) who wish to return to their units upon the renovation and/or repair being completed (i.e. provide alternate temporary accommodations that are comparable to the tenant’s current unit and rental rate and/or provide appropriate compensation).
• Landlords will be obligated to comply with the Residential Tenancies Act^[1] and allow tenants to return to their units once renovation and/or repair has been completed at the same rent rate that the tenants were paying prior to such a renovation and/or repair.
• If a landlord fails to comply with the bylaw, the landlord will be fined $500.00 per unit per day plus administrative fees, which will be set once the bylaw is finalized before the end of January. 
• Once the bylaw is enforced, tenants will receive information about their rights in the form of an information package including how to inform the City if the landlord delivers the N13 Notice so that the City may check if the landlord applied for the renovation licence. The City will also make it mandatory for landlords to post the tenants’ rights in their buildings regarding the N13 Notice. 

The City Council has indicated the annual costs associated with running the bylaw program to be approximately $950,000.00, broken down into eight full-time staff members, vehicles, outreach, and communication efforts. The City Council anticipates that the licence fees will cover approximately 10% of the costs to run the program while taxpayers will cover 90%.

N13 Notice

As mentioned above, a landlord will be required to deliver the N13 Notice to their tenants before any renovation and/or repair to a unit(s). Even though the Notice provides certain guidelines and procedures, landlords rarely face penalties if same is not complied with. The new bylaw will change this by invoking more responsibility on the landlords. Below is a summary of the current guidelines and procedures concerning the Notice.

A landlord may terminate a tenancy under the Notice for the following reasons:

1. To demolish the rental unit or the residential complex.
2. To repair and/or renovate unit(s) that require extensive improvement where a building permit is required and the rental unit must be vacant to do the work.
3. To convert a rental unit(s) or the residential complex to a non-residential use.

Termination Date:

The termination date must be at least 120 days after the N13 Notice is given.

The termination date must be the last day of the rental period. For example, if rent is paid on the first of each month, the termination date must be the last day of the month.

If the tenancy is for a fixed term, the termination date cannot be earlier than the last day of the fixed term. For example, if the tenancy is under a one-year lease, the termination date cannot be earlier than the last day of the one-year set out in the lease.

If the Tenant(s) disagree with the Notice:

A tenant(s) does not have to move out if they disagree with what the landlord has outlined in the Notice as a reason to terminate tenancy. However, the landlord can immediately upon delivering the Notice apply to the LTB to evict the tenant(s). The LTB will schedule a hearing where the tenant(s) can explain why they disagree.

If the Landlord and Tenant Board (“LTB”) issues an order terminating a tenancy and evicting the tenant(s), the order will not require the tenant(s) to move out any earlier than the termination date included in the Notice.

Compensation by Landlords:

If the landlord delivers the Notice to terminate a tenancy subject to reasons 1 or 3 above and if the subject property is a residential complex that has at least 5 residential units, the landlord must either compensate the tenant(s) an amount equal to 3 months' rent or offer another rental unit that is similar to the tenant(s) current unit. If the subject property is a residential complex that has fewer than 5 residential units, the landlord must compensate the tenant(s) an amount equal to 1 month’s rent, or offer the tenant(s) another rental unit that is similar to the tenant(s) current unit.

If the landlord delivers the Notice to terminate a tenancy subject to reason 2 above and if the subject property is a residential complex that has at least 5 residential units and the tenant(s) does not plan to move back once the repair and/or renovation is completed, the landlord must compensate the tenant(s) an amount equal to 3 months' rent, or offer the tenant(s) another rental unit that is similar to the tenant(s) current unit. If the subject property is a residential complex that has fewer than 5 residential units, and the tenant(s) does not plan to move back once the repair and/or renovation is completed, the landlord must compensate the tenant(s) an amount equal to 1 month’s rent, or offer the tenant(s) another rental unit that is similar to the tenant(s) current unit.

Furthermore, If the landlord delivers the Notice to terminate a tenancy subject to reason 2 above and the subject property is a residential complex that has at least 5 residential units and the tenant(s) plans to move back once the repair and/or renovation is completed, the landlord must compensate the tenant(s) an amount equal to 3 months' rent, or the rent for the period of time the rental unit is being repaired and/or renovated, whichever is less. If the subject unit is a residential complex that has fewer than 5 residential units and the tenant(s) plan to move back once the repair and/or renovation is completed, the landlord must compensate the tenant(s) an amount equal to 1 month’s rent, or the rent for the period of time the rental unit is being repaired and/or renovated, whichever is less.

It is important to note that landlords are not required to compensate a tenant if the Notice was delivered because the landlord was ordered to demolish and/or repair a rental unit(s) under any Act or law. Further information about the N13 Notice can be accessed here.

I suspect that the N13 Notice will be amended once the bylaw is enforced in order to add the mandatory fees that the landlords will be subject to along with an update to the tenants’ rights.

Concluding Remarks:

The City of Hamilton hopes that implementing the renoviction bylaw will discourage landlords from arbitrarily evicting tenants, especially those who are vulnerable and rely on the affordable housing sector. This appears to be yet another effort to combat the housing crisis in Ontario. We will have to wait until 2025 to see if such a program will be effective.

In the meantime, the City has shared its bylaw progress with other councillors in the Region of Waterloo, Ottawa, Windsor, and Peel Region who are all seeking to implement similar solutions in the future. The momentum is starting to build as the City continues to evaluate the proper steps to take in the future.

I hope that this article has provided you with some helpful information. If you have any questions, please do not hesitate to contact me at mira@sorbaralaw.com.

____

^[1] Residential Tenancies Act, 2006, S.O. 2006, c. 17