Alicia Mossington, Estate and Trust Consultant

Executors have many responsibilities: paying debts; taxes; testamentary expenses; and managing estate assets. Different assets come with different responsibilities and rules and some assets – like rental properties – have unique complexities to manage. It is common for estates to include rental properties especially given the real estate market in Ontario over the past decade. When managing occupied property, the executor must balance their responsibility to the tenants as well as the beneficiaries of the estate.

Residential tenancy legislation varies province to province (and country to country). Executor landlords may have several options such as: maintaining the property; extending the lease; terminating the tenancy; or transferring the property in kind to beneficiaries. There are benefits and drawbacks with each option. In some cases, the obligation an executor-landlord owes to tenants can conflict with the duty to maximize the value of the estate for the beneficiaries.

What about the heir of a deceased tenant? An interesting case before the Ontario Divisional Court considered whether the daughter of a deceased tenant would have rights as a tenant since she occupied the property.

Since at least 1964 the Smith family had lived in the subject property in Mississauga.[1] The Smith parents rented the property where they lived with their daughter Susan Smith (“Susan”). Various fixed term leases from 1964 until 1978 referred to the parents as “tenants” and Susan as an “occupant.” After her parents died Susan continued to live in the property and no new lease was ever signed. In or around 2011 the property was converted into a condominium and the new owners (landlords) purchased the property in 2021. In October 2021, the new landlords served Susan with an eviction notice, and applied to terminate Susan’s tenancy.

Susan’s parents were the original tenants and she argued that the definition of tenant under s. 2(1) of the Residential Tenancies Act included “tenants’ heirs”. If so, she would have certain rights as a tenant under the Act. However, the Ontario Landlord and Tenant Board found that Susan was not a tenant at the time of the condominium conversion and therefore not entitled to any protection under s. 51(1) of the Act. Smith appealed, and Justice Wilkinson of the Divisional Court considered two questions:

1. Was Susan a tenant at the time the condo declaration was prepared by living with her parents, helping to pay rent and assisting with repairs? and
2. Was Susan a tenant at the time of the condo declaration by virtue of being an “heir” of her parents?

Regarding question number two – the Landlord and Tenant Board had referred to a previous decision in Lakeshore Management (1500 Tansley) v Smith, [2002]

With respect to an heir being included in the definition of tenant, there is no evidence that an heir simply steps into the shoes of the tenant with respect to the occupancy of a rental unit. I find that “heir” was included in the definition of tenant, in order for an estate to recover the deposit or interest on such deposit, etc. Furthermore, no argument was presented as to whether a month to month tenancy can be considered real or personal property, ie. something to inherit.[2]

It is important to note that the RTA specifically includes a spouse of a deceased tenant if the rental unit was the principal residence of the deceased tenant at the time of their death. Justice Wilkinson noted that the legislature had not included children in the definition although it would have been “natural” to do so if that was their intention. Ultimately, Justice Wilkinson upheld the decision of the LTB to conclude that Susan was not a tenant.

Thank you for reading.

[1] Smith v Gega et al. 2023 ONSC 4723. Full text of the decision can be found in the 26 January 2024 issue of the Ontario Reports. Retrieved from: https://digital.ontarioreports.ca/ontarioreports/library/.

[2] Citing Lakeshore Management (1500 Tansley) v Smith, [2002] O.R.H.T.D. No. 91, 2002 CarswellOnt 3788 (Ont R.H.T) para 6 at para 27.