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Frustrated Tenancies: Impossibility of Continued Occupancy
Question: When does the doctrine of frustration end an Ontario residential tenancy after a fire, flood, or condemnation, and what can a tenant do next?
Answer: In Ontario, a tenancy can end by operation of law when an unforeseeable event or municipal order makes the rental unit impossible to occupy for an unknown or lengthy period, under Residential Tenancies Act, 2006, S.O. 2006, c. 17, s. 19, and the tenant’s recourse is typically to document the event, confirm whether frustration applies, and seek any eligible rent or deposit adjustments through the Landlord and Tenant Board with help from Traffic Ticket Rescue, a paralegal service assisting tenants in Toronto and surrounding areas. Where repairs will restore habitability within a reasonable time, the tenancy may continue and a tenant may retain security of tenure, but where the downtime is extensive or indefinite the tenancy may be treated as terminated, as reflected in AS v. CJM, 2010 CanLII 58985 and Y.Y. v. A.T. and L.W., 2013 CanLII 51226.
Understanding When the Doctrine of Frustration Applies to a Residential Tenancy and What Recourse Does a Tenant Have?
Certain events, such as a major fire, flood or serious water damage, tornado or windstorm, or some other unforeseen circumstances, including changes in law, may arise with the result being that occupancy of the residential premises becomes impossible. When the tenancy becomes impossible due to an unforeseeable outside force, sometimes called a force majeure event, the contractual obligations of both the landlord and the tenant, whether during a lease period or after the tenure converts to a month-to-month, are deemed frustrated and the tenancy arrangements come to an end as per section 19 of the Residential Tenancies Act, 2006, S.O. 2006, Chapter 17 where it is said:
19 The doctrine of frustration of contract and the Frustrated Contracts Act apply with respect to tenancy agreements.
Condemnation
In some circumstances, premises may become unoccupiable when ordered condemned by the local municipality such as occurred in the case of AS v. CJM, TSL-05808-10 (Re), 2010 CanLII 58985 wherein it was stated:
1. At the hearing before me the parties filed an order dated September 27, 2010 issued by the City of Toronto that says the residential complex is unsafe and that occupancy of the rental unit is prohibited.
2. As I explained at the hearing section 19 of the Residential Tenancies Act, 2006 (the ‘Act’) says: “The doctrine of frustration of contract and the Frustrated Contracts Act apply with respect to tenancy agreements.” Essentially the doctrine of frustration says that when a contract becomes impossible of performance, then the contract has come to an end. As the doctrine applies to residential tenancy agreements what this means is that when a residential complex cannot be physically lived in anymore because it has been condemned, the tenancy has come to an end by operation of law.
3. As a result, an order will issue declaring the tenancy termination by operation of the doctrine of frustration.
Accordingly, and perhaps surprisingly, even when premises become condemned due to neglect, meaning a failure of maintenance, by the landlord, a frustration of the tenancy occurs resulting in a termination of the tenancy agreement, whether as a lease agreement or a statutory month-to-month agreement, when the rental unit is condemned.
Ceasing of Security of Tenure
Where a tenancy agreement is deemed frustrated, such as in circumstances where a fire requires restorative work that will be extensive and take considerable time, the security of tenure, including first right of refusal to return following restorative work, is absent. Only where the restorative work can be done in a reasonable amount of time will the tenancy agreement be without frustration and therefore with security of tenure protected as per the case of Y.Y. v. A.T. and L.W., TEL-32649-12 (Re), 2013 CanLII 51226 where it was said:
1. The Residential Tenancies Act, 2006 did apply to this unit from June 1, 2012 until December 1, 2012. At that time the unit was deemed uninhabitable and the tenancy agreement became frustrated pursuant to the Frustrated Contracts Act and as permitted under section 19 of the Residential Tenancies Act, 2006 (RTA).
2. As a result of the lengthy period of time required to make repairs to the unit there is no foreseeable date that the Tenants would be permitted back into the rental unit. There is no requirement under the RTA for the Landlord to offer the Tenants first right of refusal when the unit does become habitable.
3. Based on the evidence provided and the fact this vacancy of the rental unit is not for a short period of time I have deemed the rental contract to be frustrated as of December 1, 2012.
Summary Comment
An unforeseeable destructive event, often referred to as a force majeure, that renders a rental unit unoccupiable for an unknown length of time, generally, results in a frustration of the tenancy agreement, regardless of whether the event occurs during a lease period or during a month-to-month period. When such an event rises to the level of a frustration, the obligations of both landlord and tenant end and the tenancy arrangement, including the security of tenure, end.
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