LTB: Corporations Can No Longer Issue N12 Evictions for Personal Use
In a landmark case, Ontario’s Landlord and Tenant Board (LTB) has ruled that a property owned by a corporation cannot issue an N12 eviction for personal use of the property.
This is a troubling decision considering that even small landlords typically have set up a corporation for property ownership. However, even with this new decision, the benefits of property administration through a corporation can be higher than managing a property without a corporation.
Why small landlords use corporations to manage properties
There are significant tax benefits to administering a property with a corporation, depending on the situation. This Hamilton accounting firm makes the following recommendations:
- One property doesn’t require incorporation
If your plan is to only own and rent out one property, the firm does not recommend incorporating unless you are extremely concerned about liability. If that is the case, you may be able to purchase insurance that will do for you what a corporation would.
- Multiple properties may require incorporation
If your intention is to own more than one rental property, there are various advantages to doing so under the umbrella of a corporation, including offsetting losses of one property against the other.
Consult a financial and/or legal professional to find out what works best for your particular situation. This advice is general and doesn’t take business interests, finances, or other considerations into account.
How the LTB decision changes the game
If your intention is to have the property available for use for family members now or in the future, you may want to dissolve an existing corporation and transfer the ownership of the property to yourself personally. However, doing this won’t help you with any existing tenants; only new ones going forward, so you’ll want to only do this when they move out and the time comes to find a new tenant.
If you want to continue making money when the family member moves in, you may have to ask your family member(s) to share common spaces with a boarder. This way, your property is no longer under the jurisdiction of the Residential Tenancies Act. This obviously isn’t ideal, and would best be done with friends of the people moving in as opposed to tenants that they don’t know.
Evictions for unpaid rent and criminal activity are still greenlit
The crux of the recent LTB decision came down to the fact that a corporation technically cannot have a family member as a corporate entity. This means that the most common pathway to eviction, unpaid rent, is still open to you, as are evictions for illegal activity in the unit. Keep in mind that new bylaws are in place in the cities of Toronto and Hamilton which are extremely preventative for “renovictions” to the point where they are impractical for most landlords.
