What Makes the Difference In Law Between a Renovation and a Demolition?

After a Demolition A Habitable Unit No Longer Exists.  After a Renovation a Habitable Unit Will Exist.  A Tenant Holds a Right to Return Only After a Renovation.

Notice to Evict for renovations document When a landlord intends to do renovation work, where such work requires the tenant to relocate while the work is underway, the law provides a tenant with the right to choose to return to a rental unit following a renovation; however, this right fails to exist when the work is a demolition.  Accordingly, the right to choose to return turns on the question of whether the work being done is a renovation or a demolition.  The brief answer is that following a renovation there will be a rental unit capable of being occupied by the tenant; but, following a demolition, a rental unit capable of being occupied will be gone.

The Law, statutory

To begin, it is necessary to appreciate that the tenant, per s.  50 of the Residential Tenancies Act, 2006, S.O.  2006, Chapter 17 may provide notice to the landlord, upon receiving notice from the landlord of an intent to do repairs or renovate, of an intention to return and occupy the unit following the repairs or renovation.  Specially, s.  50 of the RTA states:

50 (1) A landlord may give notice of termination of a tenancy if the landlord requires possession of the rental unit in order to,

(a) demolish it;

(b) convert it to use for a purpose other than residential premises; or

(c) do repairs or renovations to it that are so extensive that they require a building permit and vacant possession of the rental unit.

Same

(2) The date for termination specified in the notice shall be at least 120 days after the notice is given and shall be the day a period of the tenancy ends or, where the tenancy is for a fixed term, the end of the term.

Same

(3) 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.

Earlier Termination by Tenant

(4) A tenant who receives notice of termination under subsection (1) may, at any time before the date specified in the notice, terminate the tenancy, effective on a specified date earlier than the date set out in the landlord’s notice.

Same

(5) The date for termination specified in the tenant’s notice shall be at least 10 days after the date the tenant’s notice is given.

The Law, jurisprudence

Upon review of the statutory provisions described above, there is an apparent concern that does arise from time to time being the question as to what constitutes a repair or renovation and what constitutes as a demolition whereas it is often argued that, at a certain point, a repair or renovation becomes so significant as to constitute a demolition.  If the work is deemed a "repair or renovation", the tenant holds the right to return when the work is done; however, if the work is deemed a "demolition", the tenancy rights come to an end. Accordingly, the question of when does work becomes so extensive that a 'reno' is actually a 'demo'.  Recently, the Divisional Court case of Two Clarendon Apartments Limited v. Sinclair, 2019 ONSC 3845 provided instructive guidance by stating:

[5]  With respect to the interpretation of s.  50(1) of the Act, the Board concluded that there was a renovation here because the unit would be available in the same floor space, albeit reconfigured and extensively rebuilt.  The Board considered the language of s.  50, especially the right of first refusal of a tenant pursuant to s.  50(3) if a unit is renovated.  The Board also considered the purpose of this section, especially the tenant protection goal underlying s.  50(3).

[6]  The Board concluded at paras.  13 and 14:

13.  In a situation where the rental unit continues to exist, albeit in an extremely altered form, it is possible for the tenant to exercise a right of first refusal, because the rental unit is still there: the tenant may move back and continue the tenancy.  In a situation where the rental unit is gone, it is not possible for the tenant to exercise a right of first refusal:  the rental unit is no longer there and so the tenant cannot move back.  The fact that the Act distinguishes renovations and demolitions by the tenant’s right of first refusal shows that the intention of these sections of the Act is to preserve tenancies where it is possible to do so.

14.  Accordingly, a project will be defined as a renovation under the Act in a case where it is possible for the tenant to move back into the unit and a project will be defined as a demolition where it is not possible for the tenant to move back into the unit.

[7]  The Landlord argues that the Board should have adopted the analysis in One Clarendon Inc.  v. Ross (Ontario Rental Housing Tribunal, June 16, 1999) at paras.  15 and 16, where the member stated:

All the dictionary definitions offered by the parties would lead me to believe that to be consistent, a demolition of an apartment must achieve the same result as a demolition of a building – it must cause it to disappear and change irrevocably.  What subsequently happens to the space occupied by the building or the apartment does not concern the Tribunal.  The land on which the building stood could be used to construct a new one or be left empty, the space where the apartment was can be used to build a new unit or can be converted into a storage space.

That means, to my mind, such a degree of change that what was there disappears.  In an ideal situation, a demolition of an apartment means a removal of all interior walls and doors, flooring, water and other fixtures, kitchen cabinets, electrical cabling – and then rebuilding it with new materials and fixtures, if that’s the intention of the owner.  Anything substantially less than that degree of change can not [sic] be described as a demolition of an apartment.

[8]  I note that this passage was obiter, as the member found that there was a renovation on the facts of that case.  I note, as well, that the Board did not consider the overall purpose of the section, as the current member did.

[9]  The decision in the present case was consistent with the result in Corbett v. Lanterra Developments, 2014 ONSC 3297 (CanLII) (Div. Ct.), at para.  14, where there was a demolition permit, and the construction resulted in different units from those demolished, so that the tenant could not move back into the rental unit.

[10]  In my view, the Board’s approach to the definition of demolition was reasonable and consistent with the Act and modern principles of statutory interpretation.

[11]  On the facts, the evidence supports the finding of a renovation.  I note, although the Board did not mention this, that the affidavit evidence from the City Building Official states that the City had not granted a demolition permit, and the building permit required the same unit outside area as prior to the renovations.

Summary Comment

Per the law, both the statutory law and the Two Clarendon case law interpretation of the statutory law as above, it seems clear that the right to return to a residential unit will exist if there will be a habitable unit to return to, such as will be following a repair or renovation; however, where a habitable unit will not exist, a renovation becomes demolition and the tenant's right to return ceases.

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