As a transactional real estate lawyer, you typically focus on closing deals, not courtroom battles. However, a recent Ontario Superior Court decision serves as an important reminder that seemingly straightforward mortgage enforcement can become complicated when residential tenancies are involved. In Croskery v. Pomeroy, 2025 ONSC 4528, Associate Justice Kamal refused to grant a mortgagee’s routine request for a writ of possession, highlighting critical issues that transactional lawyers should consider when advising clients on rental properties.
The Basic Facts
Michael Croskery held a second mortgage on a property in Ottawa. After the mortgagor, Graham Stanley Pomeroy, defaulted, Croskery obtained a judgment for possession in July 2024. Typically, the next step would be straightforward: obtain leave to issue a writ of possession and evict the occupants.
However, the property had multiple tenants living in it, each with their own room but sharing common kitchen and bathroom facilities. Croskery sought not only leave for the writ of possession but also a declaration that the Residential Tenancies Act, 2006 (RTA) did not apply to the property under section 5(i), which exempts living arrangements where occupants share bathroom or kitchen facilities with the owner (or the owner’s immediate family) who lives in the building.
The court refused both requests, adjourning the motion and requiring proper notice to the owner and tenants.
The Section 5(i) Exemption: Not as Simple as It Seems
Section 5(i) of the RTA exempts properties where occupants share facilities with the owner or his immediate family. On its face, this seems straightforward. If your client owns a house, lives there, and rents out rooms while sharing facilities, the RTA shouldn’t apply, right?
Not necessarily. Associate Justice Kamal made clear that whether this exemption applies is highly fact-specific and cannot be determined based on superficial evidence. The court identified several critical factors:
Timing matters. What were the living arrangements when the tenancy began, or did they move in later? Courts have held that landlords cannot unilaterally oust the Landlord and Tenant Board’s (LTB) jurisdiction through unilateral action, such as changing the living arrangements after the start of tenancy. As the court noted in Cowie v. Bindlish, 2010 ONSC 2628, allowing landlords to deprive tenants of RTA protections through unilateral action would be “grossly unfair.” For example, in TET-79055-17-RV, 2017 CanLII 60359 (ON LTB), the LTB found that the RTA did not apply because, at the outset of the tenancy, it was agreed that the landlord’s daughter would be moving into the premises and sharing facilities, which deprived the LTB of jurisdiction pursuant to section 5(i). The unilateral actions of the landlord, such as delaying when his daughter moved in, could not change the LTB’s lack of jurisdiction.
Substance over form. Courts look beyond appearances to examine the actual living arrangements. Has the landlord “staged” their living situation to evade the RTA? Do they genuinely reside in a shared space, or do they occupy a separate unit? For example, in TET-87517-18-IN, 2018 CanLII 42846 (ON LTB), the LTB found the RTA applied because the landlord actually lived in a separate unit despite appearances.
Conflicting evidence requires scrutiny. In Croskery, the evidence was contradictory. An occupant stated in November 2023 that the mortgagor lived there 50% of the time, but a year later said he didn’t live there at all. Then in January 2025, the mortgagor confirmed he did reside at the property but also had a cottage. Without clear, comprehensive evidence, the court refused to make a determination.
Why Transactional Lawyers Should Care
This decision has several important implications for transactional practice:
Due diligence on rental properties. When acting for purchasers or mortgagees of rental properties, investigate the actual living arrangements. Don’t rely solely on lease agreements or the owner’s representations. If the owner claims the RTA doesn’t apply, obtain detailed evidence about when they moved in, where they sleep, which facilities they use, and how the arrangement was disclosed to tenants from the outset.
Mortgage documentation. Consider whether your mortgage documents adequately address scenarios involving residential tenancies. Section 48 of the Mortgages Act prevents mortgagees from obtaining possession of rental units except in accordance with the RTA. This significantly complicates enforcement.
Notice requirements. The court emphasized that determinations about RTA applicability affect not just the parties to the mortgage action but also the tenants’ rights. Before a court will make such determinations, proper notice must be given to all affected parties, even though Rule 60.10 typically allows writs of possession to be obtained without notice.
Impact on enforcement timelines. What should be a routine administrative step—obtaining leave for a writ of possession—can turn into contested motion requiring oral submissions, additional evidence, and potentially significant delay. This affects enforcement strategies and timelines.
Practical Takeaways
For transactional lawyers advising clients on properties with tenants:
- Investigate thoroughly. Verify the actual living arrangements, not just what appears in documents.
- Document carefully. If an owner genuinely occupies shared accommodation, ensure this is clearly documented from the beginning of any tenancy, including in written agreements with occupants.
- Advise about complexity. Warn mortgagee clients that enforcement may be more complicated and time-consuming if tenants are involved, even if the owner claims to live there.
- Consider LTB jurisdiction. When considering if the Board has jurisdiction over a matter, courts have identified the “essential character of the dispute” as being the proper criteria to be applied. However, section 9(1) of the RTA allows, but does not require, anyone to make an application under the RTA. Hence, as this case confirms, the LTB does not have exclusive jurisdiction to decide whether the RTA applies. The Superior Court also has concurrent jurisdiction over such questions.
- Don’t assume. Never assume the RTA doesn’t apply simply because facilities are shared. The exemption is narrower than it appears and heavily dependent on factual context.
Conclusion
Croskery v. Pomeroy demonstrates that residential tenancy issues can significantly complicate what appears to be straightforward mortgage enforcement. For transactional lawyers, the lesson is clear: when dealing with rental properties, dig deeper into the actual living arrangements and be prepared for potential complications down the road. A few extra questions during your initial retainer could save your client—and their litigation counsel—significant headaches later.
