Lax Enforcement Of Licenses Puts Campground Owners At Risk
Ontario’s highest Court has ruled, in White v. Upper Thames River Conservation Authority, (“White”) that occupancy restrictions in occupancy agreements are “void” if the Residential Tenancies’ Act (RTA) applies to the agreement. The Court also recognized that there are exemptions from the RTA where the “form of living accommodation is seasonal or temporary”, within the meaning of s. 5 RTA.
In White the Conservation Authority required that the land lease homes, many of which were “stick built” and primary residences, be vacated for a three month period of the residents’ choosing each year. There was no dispute that the RTA applied, which meant the only legal question was whether the occupancy restrictions were valid. The Landlord and Tenant Board (LTB) at first instance predictably found that the restrictions were not valid; however, the Divisional Court, surprisingly in our view, found they were valid. The Court of Appeal agreed with the LTB, finding that any occupancy restrictions were void.
The concern for campground Owners and owners of “Hybrid” land lease communities is that over time, they may find that occupiers of trailers and park model homes are using the structures as their principal residence and are using their structures on more than a “seasonal” or temporary basis. Where this occurs, the reasoning in White means that the living accommodation is likely to be found by the LTB as subject to the RTA and any occupancy or use restrictions will then be void. Such findings can be disastrous for campground Owners who have priced site rentals on the basis of restricted occupancies and who do not supply services (water, sewer, snow and garbage removal, administration) during periods of park closure. If the RTA applies, the campground Owner can be compelled to provide year round services despite zoning and environmental restrictions and despite the language in their occupancy agreements.
The burden of establishing an exemption from the RTA rests on the Owner of the campground. A key piece of evidence used to establish the exemption is the License of Occupation (LOO) which, if properly drafted, will demonstrate a mutual intention that the occupancy is for seasonal or temporary occupancy and show proof and a mutual intention that the structure is not occupied as a primary residence. The “Camping in Ontario” LOO uses language to attract the exemption but if the provisions of the LOO are disregarded by campers and Owners, then an LTB Member is obliged to disregard the LOO and look instead at the “true substance” of the occupancy, in which case the exemption will not apply and the RTA will. As was reinforced by the Court of Appeal, s. 3 of the RTA states that the RTA applies “…despite any other Act or agreement…” which means that it overrides municipal and other Provincial statutes and any written agreement between an Owner and a camper.
In White, the Court stated: “Despite the clear terms of the lease, the respondent has never strictly enforced the occupancy limitation and as a result, many tenants live in their homes year-round.” In addition there was no rationale provided to the Court as to why the occupancy restriction was in place. By contrast, in campgrounds and “hybrid” parks, occupancy restrictions are often in place in compliance with zoning restrictions; water and sewage (environmental) limitations; and, infrastructure limitations. Despite valid and lawful grounds for occupancy restrictions, if the restrictions are not enforced in compliance with “seasonal and temporary” restrictions, the LTB has the legal jurisdiction to disregard zoning and even environmental restrictions in finding the RTA applies and ordering that year round occupancy is permitted.
There have been cases where a camper has knowingly avoided occupancy restrictions in the LOO and the Owner has not been aware of the camper’s breach of restrictions, following which the camper has then sought the protection of the RTA to enforce rent controls and impose new obligations on the Owner. In some cases the RTA has been found to apply but the Owner has then been permitted to terminate the tenancy on the basis of the tenant committing an “illegal act” (contravention of zoning restrictions) or the RTA has been found not to apply because of the principle that a person should not be permitted to rely on their own unlawful conduct to secure a legal benefit. These cases, however, are the exception and the costs to Campground operators have been substantial.
In summary, White affirms that a Campground operator or an operator of a “hybrid” mobile or land lease home community is compelled to properly administer and enforce its License of Occupation or accept the risk of a finding that the RTA applies with attendant and potentially disastrous financial consequences.