Kirkwood PL Ltd. vs. Shiels — Case Study

INTRODUCTION TO THIS LANDLORD AND TENANT BOARD OF ONTARIO CASE STUDY

Welcome to YLAW, your trusted partner for landlord-tenant disputes across Ontario. In this case study, we examine a significant decision where a landlord’s “purchaser’s own use” eviction (N12) was barred by the security-of-tenure rule in section 56 of the Residential Tenancies Act, 2006 (RTA). The case clarifies how land severances interact with N12 evictions and provides important protection for tenants.

Understanding the Landlord and Tenant Board of Ontario

The Landlord and Tenant Board (LTB) resolves disputes under the RTA. Among other things, it hears applications where landlords (or purchasers) seek possession for their own residential use (N12). Section 56 RTA adds a special protection: when a rental unit becomes separately conveyable due to a consent to severance under the Planning Act, a landlord may not give an N12 to a person who was a tenant at the time of that consent.

Background

• Parties: The landlord, Kirkwood PL Ltd., owned a property at 27 Prospect Street in Lakefield, Ontario. The tenants, Adrian and Kathleen Shiels, occupied the unit.
• Agreement of Purchase & Sale: On May 24, 2024, the landlord signed an agreement to sell the property to former tenants, conditional on vacant possession, though the contract also allowed completion subject to the tenancy.
• N12 Notice: On May 27, 2024, the landlord served an N12 in favour of the purchasers with a termination date of July 31, 2024, and paid one month’s rent compensation.
• Severance: The landlord pursued a land severance so the dwelling could be conveyed separately. Final certificates issued July 2–3, 2024, and on July 3 the dwelling lot became separately conveyable through registration.

The Landlord and Tenant Board Hearing

Hearing & Appearances

The hearing was held by videoconference on February 12, 2025. Representatives appeared for the landlord, the tenants, and the prospective purchasers.

Key Issues

1. Does section 56 of the RTA apply to bar an N12 when a unit becomes separately conveyable through a Planning Act severance?
2. If the N12 was served before the severance was final, does it remain valid afterward?
3. Was there any difference between the “severed” and “retained” land that might change how section 56 applied?

Evidence & Submissions

• The tenants argued that section 56 prohibited the N12 once the unit became separately conveyable and they were in possession at that time.
• The landlord argued section 56 should be read narrowly and did not apply, especially since the N12 was served before the severance was finalized.
• The Board reviewed the timeline of the severance, the purchase agreement, and the purpose of section 56.

ANALYSIS AND DECISION

1. Section 56 applies broadly: The Board ruled that section 56 is triggered whenever a rental unit becomes separately conveyable due to a severance, regardless of whether new boundaries or a new complex are created.
2. Tenants were protected: The tenants were still in possession when the unit became separately conveyable on July 3, 2024, so the protection applied to them.
3. N12 became invalid: Even though the N12 was served before the severance, once the property became separately conveyable, the N12 could not be relied on.
4. Arguments rejected: The Board rejected the landlord’s claim that section 56 only applied to “new residential complexes” or only on the specific date of consent.
5. Policy context: The Board emphasized that the purpose of section 56 is to protect tenants and preserve rental housing stock when property ownership structures change.

Result: The N12 was invalid, and the landlord’s application was dismissed.

ORDER

1. The application to terminate the tenancy was dismissed. The tenancy continues.
2. The tenants must repay the $800 compensation paid with the N12. If not repaid by May 31, 2025, simple interest of 5% per year will accrue starting June 1, 2025.

Why This Case Matters

For tenants: If your landlord is severing land so your house becomes its own separately conveyable lot, section 56 can block an N12 for landlord’s or purchaser’s own use — even if the notice was served earlier.

For landlords and purchasers: Before pursuing an N12 tied to a sale, consider whether a Planning Act severance will make the unit separately conveyable while a tenant is in possession. If so, section 56 may bar the notice entirely, requiring a different approach.

Practical Takeaways

• Track dates: The timing of consents, certificates, and registration matters. The moment the property becomes separately conveyable is key.
• Careful drafting: Agreements of Purchase and Sale should consider what happens if vacant possession cannot be obtained.
• Plan alternatives: Consider selling subject to the tenancy or other lawful routes if section 56 applies.

Final Thoughts and Seeking Legal Counsel

Land severances and N12 applications interact in complex ways. A proactive legal strategy—before serving notices or signing contracts—can prevent costly errors. Whether you are a landlord, purchaser, or tenant, YLAW can evaluate your facts, map the key dates, and protect your rights.

Contact YLAW for Landlord and Tenant Board Cases

At YLAW, we specialize in Ontario Landlord and Tenant Board matters, including N12/N13 notices, section 56 disputes, rent issues, and hearing representation.

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This case study is for information only and not legal advice. Results depend on the specific facts of each case.

Decision source: Kirkwood PL Ltd. v. Shiels, 2025 ONLTB 13737 (LTB, Apr 28, 2025).