Agreement of Purchase and Sale Canceled (N12)

Caselaw.Ninja, Riverview Group Publishing 2021 ©
Date Retrieved:	2024-05-03
CLNP Page ID:	2036
Page Categories:	Personal Use Application (LTB)
Citation:	Agreement of Purchase and Sale Canceled (N12), CLNP 2036, <https://rvt.link/af>, retrieved on 2024-05-03
Editor:	Sharvey
Last Updated:	2024/01/20

Gill v Laframboise, 2021 CanLII 141405 (ON LTB)

1. The Application is based on an N12 Notice of Termination served on the Tenant on May 17, 2021, with a termination date of July 31, 2021. The N12 indicates that a purchaser requires the rental unit for residential occupation.

2. In submissions for the hearing, the Landlord provided an agreement of purchase and sale dated June 13, 2021 (the “June Agreement”), nearly a month after the N12 was served, with a completion date of August 31, 2021. The agreement has since been extended to September 30, 2021, and will presumably be extended further.

3. At issue is the fact that the notice of termination relied upon by the Landlord was in served in relation to a previous purchase agreement. The Landlord’s realtor, Harrie Sandhu, provided oral testimony that there was a previous agreement entered into with a different purchaser on May 2021 (the “May Agreement”). The N12 was served based on the intention of the purchaser in the May Agreement to occupy the rental unit. The May Agreement contained a condition for financing, which was never satisfied, and the May Agreement accordingly came to an end.

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9. The Tenant’s representative stated at the hearing that a Landlord cannot give notice under section 49(1) of the Act when the agreement is conditional. It would appear that this Board has in the past found that agreements that come before it while still conditional must be dismissed when there is uncertainty at the hearing that the sale transaction may be completed (see TSL-00881-18 (Re), 2019 CanLII 87153 (ON LTB)). This position is consistent with the contents of the Board’s Guideline 12: “The LTB may refuse an application if it is not reasonably certain that a completed sale will result from the agreement. If a term or condition of the agreement makes it uncertain that the deal will be completed, it may be appropriate to delay the application until the sale becomes more certain.” I accept that, when an application is before the board, if there is reasonable uncertainty on the face of the contract’s contingencies that the conveyance will be completed, the Board cannot grant an order of eviction. It does not flow from that principle that a notice cannot be given while the agreement is still conditional.

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20. The Act expressly acknowledges that an N12 notice is given on behalf of the purchaser. The notice served on May 17, 2021 was accordingly therefore given on behalf of the purchaser under the May Agreement, not on behalf of the purchaser under the June Agreement. As the N12 relates to the May Agreement, the good faith of the resulting application must therefore be looked at through the lens of the intention of the purchaser under the May Agreement.

21. Once the May Agreement failed to firm up, the N12 served in support of that agreement conceptually became a nullity, as there was no longer a genuine, good faith intention of that purchaser to occupy the rental unit. Likewise, it has become an absolute certainty, once the agreement terminates, that the agreement which gave rise to the notice of termination will not be completed. One either ground, the circumstances on which the notice was based have changed, rendering it moot.

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26. In consequence, three points come from the foregoing:

(a) A Landlord may, on behalf of a purchaser, serve a valid notice under section 49 of the Act immediately upon entering into an agreement of purchase and sale that contains conditions or contingencies that may result in the contract terminating before completion.

(b) If that agreement comes to an end before completion, the Landlord may no longer rely on the pre-existing N12 in support of its L2 application.

(c) If another agreement comes into being after the first agreement terminates, the Landlord should serve a fresh N12 on the basis of the new agreement, and make a fresh L2 application.