When a mortgage trumps a residential tenancy

Karen Perron and Marion Unrau  of BLG have provided a useful article: “Ontario Court of Appeal confirms mortgagee can apply to set aside a tenancy agreement under certain circumstances“.  They draw our attention to a recent Ontario Court of Appeal case, Toronto-Dominion Bank v. Hosein, 2016 ONCA 628 (CanLII),  where a defaulting mortgagor had created a “sweetheart deal” tenancy agreement with a third party after the mortgage default.   The tenant said that termination could only be done in accordance with the Residential Tenancies Act, and the mortgagee bank sought to set aside the tenancy under s.52 of the Mortgages Act.   The bank lost on application, but the Court of Appeal overturned that, setting aside the tenancy.

Perron and Unrau: “The Court [of Appeal] held that although the Residential Tenancies Act governs the circumstances to terminate a tenancy, this is to be contrasted with the relief permitted by the Mortgages Act which seeks to set aside a tenancy agreement under certain circumstances with the result that a valid tenancy never existed in the first place.”

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