Mortgagee in Possession (LTB)

From Riverview Legal Services


Residential Tenancies Act, 2006, S.O. 2006, c. 17

2 (1) In this Act,

“landlord” includes,
(a) the owner of a rental unit or any other person who permits occupancy of a rental unit, other than a tenant who occupies a rental unit in a residential complex and who permits another person to also occupy the unit or any part of the unit,
(b) the heirs, assigns, personal representatives and successors in title of a person referred to in clause (a), and
(c) a person, other than a tenant occupying a rental unit in a residential complex, who is entitled to possession of the residential complex and who attempts to enforce any of the rights of a landlord under a tenancy agreement or this Act, including the right to collect rent; (“locateur”)

Mortgages Act, R.S.O. 1990, c. M.40

47 (1) A person who becomes the mortgagee in possession of a mortgaged residential complex which is the subject of a tenancy agreement between the mortgagor and a tenant or who obtains title to the residential complex by foreclosure or power of sale shall be deemed to be the landlord under the tenancy agreement. 1997, c. 24, s. 215 (5).

(2) A person who is the landlord under the tenancy agreement ceases to be the landlord while another person is deemed to be a landlord under subsection (1). 1991, c. 6, s. 3; 1997, c. 24, s. 215 (6).
(3) A person who is deemed to be a landlord is subject to the tenancy agreement and to the provisions of the Residential Tenancies Act, 2006 which apply to residential complex. 1997, c. 24, s. 215 (7); 2006, c. 17, s. 252 (7).
(4) A person shall no longer be deemed to be the landlord under the tenancy agreement when the person ceases to be a mortgagee in possession. 1991, c. 6, s. 3; 1997, c. 24, s. 215 (8).
(5) Despite subsection (4), a person who is deemed to be a landlord under subsection (1) continues to be liable for the obligations of a landlord that were incurred while the person was deemed to be a landlord. 1991, c. 6, s. 3.
(6) A person who is deemed to be a landlord shall serve notice to all tenants of the change in landlord. 1991, c. 6, s. 3.
(7) The notice shall be in writing and shall provide the person’s name and address. 1991, c. 6, s. 3.
(8) The notice may be in the form prescribed by the regulations made under this Act. 1991, c. 6, s. 3.

48 (1) No person exercising rights under a mortgage may obtain possession of a rental unit from the mortgagor’s tenant except in accordance with the Residential Tenancies Act, 2006.

(2) A person exercising rights under a mortgage who gives notice of termination of a tenancy shall be deemed to be a landlord under subsection 47 (1). 1991, c. 6, s. 3.

49 On or after default under the mortgage, a tenant who in good faith pays rent to a mortgagee who first serves notice on the tenant is released from the obligation to pay the rent to any other person unless the mortgagee instructs otherwise or a court orders otherwise. 1991, c. 6, s. 3.

TET-58197-15 (Re), 2015 CanLII 94894 (ON LTB)

8. Mortgagee as mortgagee-in-possession: The first issue to be determined is when does a mortgagee become a mortgagee-in-possession. In Bank of Montreal v. Smith, 2008 CanLII 28435, the Court described the test as, being when the mortgagee “[d} eprives the mortgagor of the control and management of the mortgaged property.” Further in Patakay v. Legace, 2003 CarswellOnt 1589, the former Ontario Rental Housing Tribunal indicates that a mortgagee takes possession when, “it can properly be said that [the mortgagee} has taken upon himself to intercept the power of the mortgagor to manage his estate, and has himself so managed and received the rents as part of the management of the estate.”

10. Mortgagee-in-possession as landlord: Section 2 of the Act defines the term “landlord” as “the owner of a rental unit or any other person who permits occupancy of a rental unit other than a tenant…” Therefore, as the entity allowing occupancy of the rental unit as of February 6, 2015, C.W.T.C., through its personnel, meets the definition of landlord under the Act.

TET-63730-15 (Re), 2016 CanLII 38789 (ON LTB)

A mortgagee in possession meets the definition of “landlord” as set out under section 2 of the Act. As such, the Landlord’s responsibility in this case was not only to collect rent, but to maintain the property and ensure that the Tenants were provided with uninterrupted vital services, which in this case included electricity to the common areas of the building and hot water to the rental unit/complex.

TET-63727-15 (Re), 2016 CanLII 38791 (ON LTB)

8. A mortgagee in possession meets the definition of “landlord” as set out under section 2 of the Act. As such, the Landlord’s responsibility in this case was not only to collect rent, but to maintain the property and ensure that the Tenants were provided with uninterrupted vital services, which in this case included electricity to the common areas of the building and hot water to the rental unit/complex.

9. The Landlords failed to restore hydro service when they were notified in September. By allowing the electricity to remain disconnected for at least a 1-month period after they were apprised of the problem, constitutes a finding of interference with vital electricity to the common areas; and hot water service to the rental units. As well, the new “landlord” also assumed the responsibilities/problems of the previous landlord.

11. The Landlords will therefore be required to provide the Tenant with a rent rebate/abatement of 30:00% of the monthly rent for a one-and-a-half month period covering approximately August 15 to October 7, 2015. This amounts to $315.00 ($1,050.00 X 30:00%).

TST-69521-15 (Re), 2016 CanLII 40108 (ON LTB)

1. The Tenant filed his application on December 22, 2015. He raised three main issues in the application: first the Landlords locked him out of his unit, second the Landlords illegally entered his unit, and third they retained his property and/or have not provided him with access to his possessions.

2. The second Landlord’s representative and the Mortgagee in Possession’s representative raised a preliminary issue regarding the Tenant’s application. They say that the Board has no jurisdiction to hear this matter; namely the Superior Court of Justice has issued two orders pertaining to this residential property and as such the court retains jurisdiction over the matters raised in the application. As such I must determine whether this matter can be litigated before the Board.

10. On the balance of probabilities I prefer the individual Landlord’s, corporate Landlord’s and Mortgagee in Possession’s evidence, it is detailed, logical and makes sense. The court documents clearly demonstrate that by December 22, 2015 it was evident that a court proceeding had been commenced regarding the residential property, and that the Mortgagee in Possession retained control over the property. Further, the court orders make it clear that matters pertaining to the eviction proceeding for the residential property have been addressed by the courts; as such the Board has no jurisdiction to hear this matter. Given these circumstances it would be inappropriate for this Board to hear this case.

11. In closing I note that to the extent that the Tenant wishes to seek a remedy regarding the eviction and related issues he must go to the Superior Court of Justice.

EAT-57026-16-HO (Re), 2017 CanLII 48450 (ON LTB)

1. On the day of the hearing, SH reiterated that he was not the Landlord of the property, but that T. L., by taking control of the property as mortgagee-in-possession on or about April 14, 2015, was responsible for the first and last month’s deposit paid to SH by the Tenants.

2. I note that TL confirmed SH’s assertion that T. became the mortgagee-in-possession in mid-April 2015; he also confirmed that no Notice of Attornment was filed with the Board by the mortgagee, being T. because there were no tenants; the site at the time was still a construction project. He testified that SH had made no mortgage payment since October 2014; in documents subsequently filed with the Board, it was determined that the last mortgage payment made by SH was on December 30, 2014.

3. The Tenants claim that they paid first and last month's rent deposit of $5,200.00 to SH on March 3, 2015, with a projected move-in date of May 1, 2015. The lease was signed then and it was to cover the period of May 1, 2015 to April 30, 2016. I find that SH was the Landlord at the time the lease was signed, as it was before T. took possession of the property as mortgagee-in-possession. I also find that SH received the money from the Tenants as claimed; the Tenants testified that SH reimbursed $300.00 to the Tenants over the summer of 2015, leaving a balance owed of $4,900.00. This seems to confirm that SH felt some responsibility in reimbursing the Tenants the money in question.

6. I find that the C. property was not yet a “residential complex”, as construction was ongoing, so that s. 47 (1) of the Mortgages Act does not apply. The mortgagee in possession took steps to foreclose on a mortgaged construction site, not a residential complex, even though there was a tenancy agreement that had been signed to take effect on May 1, 2015.

Melo v 2297248 Ontario Ltd., 2016 ONSC 4877 (CanLII)

[13] While there is no statutory definition of mortgagee in possession, “[t]he concept has been extensively canvassed in the common law”: First Burton Developments v. Peel Condominium Corp (1997), 8 R.P.R. (3d) 127 at para. 7 (Ont. Gen. Div.), aff’d [1999] O.J. No. 1117 (QL) (ONCA). The test, in essence, is whether the mortgagee has “taken the control and management of the mortgaged property out of the hands of the mortgagor”: Marriott and Dunn: Practice in Mortgage Remedies in Ontario, loose-leaf (2013-Rel. 2), 5th ed. (Toronto: Thomson Reuters Canada Ltd., 1995) at para. 46.6. The leading case on the definition of “mortgagee in possession,” Noyes v. Pollock (1886), 32 Ch. D. 53 (CA), held at p. 61:

In order to hold that a mortgagee not in actual possession is in receipt of the rents and profits, in my opinion it ought to be shown not only that he gets the amount of the rents paid by the tenants, even although he gets their cheques or their cash, but that he receives it in such a way that it can be properly said that he has taken upon himself to intercept the power of the mortgagor to manage his estate, and has himself so managed and received the rents as part of the management of the estate.