Frustrated Tenancies:

Question: When a residential rental unit becomes unoccupiable due to a fire, flood, major water leak, or condemnation in Ontario, who can help a tenant understand whether the tenancy is frustrated under the law and what options they have next?

Answer: In Ontario, a tenant can ask Melville Legal (paralegal-led help) to review what happened, when the unit became uninhabitable, and whether the situation likely triggers the doctrine of frustration of contract under Residential Tenancies Act, 2006, S.O. 2006, c. 17 at section 19.   If an unforeseeable catastrophic event or a municipal condemnation makes occupancy impossible (for example, orders prohibiting rental use), the tenancy can end by operation of law and landlord and tenant obligations tied to the tenancy may cease, including security of tenure and any first right of refusal, especially where repairs take a lengthy, uncertain period, as reflected in AS v. CJM, 2010 CanLII 58985 and Y.Y. v. A.T. and L.W., 2013 CanLII 51226.   If the facts show the unit can be restored within a reasonable time, or if the condemnation or interruption is disputed, recourse may differ and Melville Legal can help you map next steps for notices, proof, and an achievable resolution; call (289) 981-7712 for assistance.

Understanding When the Doctrine of Frustration Applies to a Residential Tenancy and What Recourse Does a Tenant Have?

Incidents that cause serious damage such as a fire, a tornado, a flood, a major water leak, or another catastrophic circumstance, may occur and cause impossibility of occupancy of a residential unit.  Even a change in law may occur in such a way as to make compliance impossible. When a tenancy is made impossible due to unforeseeable outside forces, such is referred to as a force majeure event, and the legal result is that the statutory obligations as well as the contractual obligations of the landlord and the tenant come to an end as per section 19 of the Residential Tenancies Act, 2006, S.O. 2006, Chapter 17. This ending of the tenancy relationship due to the frustrating event occurs regardless of whether the frustrating event happens within a lease period or happens afterwards when the lease is expired and the tenure is converted into a month-to-month arrangement. Specifically, the Residential Tenancies Act, 2006 says:

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:

Accordingly, and apparently, despite that premises may become condemned due to the neglect of the landlord, as a matter of law, frustration of the tenancy agreement, and thereby termination of the tenancy agreement with corresponding termination of the tenancy, results when the premises are officially 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:

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.