Courts Rule Against Landlord Owners Who Rent Condominium Units to Multiple Tenants (and defines “Single Family”)

Two Ontario cases support condominium communities in their effort to enforce single family use provisions.   Ballingall v CCC 111 demonstrates the extraordinary length to which a rogue director, acting in bad faith, will go to protect his interest in four rented units. NCC 4 v. Kilfoyl (2011), helped define “single family” for purposes of the single family use provision contained in many declarations and rules.  Prior to December 2011, there was no court ruling specifically determining how the term “single family” should be interpreted in the context of condominium law.

In NCC 4 v. Kilfoyl, the court held that where the condominium’s documents do not provide a definition, “single family” should be taken to mean “a social unit consisting of parent(s) and their children, whether natural or adopted, and includes other relatives if living with the primary group.”  That definition was subsequently upheld by the Court of Appeal and the Human Rights Tribunal, and, together with the ruling in Ballingall v. CCC 111, it effectively prevents landlord owners from renting their units to multiple tenants like students.

In Ballingall v CCC 111, a director and president of the board went to extraordinary length to re-write the rules and to manipulate the concept of grandfathering agreements to protect his personal investment in four student-rented units.  The court found that he had acted in bad faith and held him joint & severally liable for $15,000 in costs.  The corporation was also held liable for $35,000 in costs.  The joint & several finding allows recovery entirely against the corporation, but as the court found the director/president had acted in bad faith, the corporation was under no obligation to cover the president/director’s costs.

You can read more about these important decisions at Condo-ology Ontario Network, Gowlings’ Condo Advisor - A Condominium Declaration Can Prohibit Short-term Rentals to Unrelated Students, Hodis Law’s - Single Family Occupancy Provisions NCC #4 v. Kilfoyl – Where are we now?, and Gowlings’ A Director Should Not Act Against the Rest of the Board.  You can also read the excellent June 2015 issue of Horlick, Levitt, Di Lella LLP’s ExclusiveUses newsletter.  Until the newsletter is available for download when their new website launches in late October, you can email E. Rudy Petershofer our Director of Training & Communications for a PDF copy – the newsletter covers the case very well, so don’t hesitate to request a copy.

For corporations with owner-landlords and student-rented units or owner-residents who rent out a room contrary to single-family use provisions, these are two very important cases.