Illegally occupied
An upscale family home in North York was turned into an illegal rooming house and crammed with as many as a dozen international students without the owner’s knowledge, a Star investigation has found.
The man who ran the house is Michael Ryan, who represented himself as the homeowner but is not the rightful tenant. He informally sublet the property from an exgirlfriend, who is the only occupant listed on the lease but hasn’t lived at the house in more than a year.
“These people have taken our family home and used it illegally for their own profit to take advantage of us and the students,” said Douglas Melville, who owns the six-bedroom house with his wife, Gailina Liew. The couple bought the property in 2014, but two years ago moved to the Channel Islands, where Melville was hired as the financial ombudsman for the British archipelago.
“We feel very sorry for the students who have found themselves in this situation,” Melville wrote in an email to the Star.
“It was terrible. Everybody thought he was the owner.” JAEHYUN KIM SOUTH KOREAN STUDENT, WHO CLAIMED SHE WAS MISLED BY MICHAEL RYAN
In addition to misrepresenting himself as the owner of the house, Ryan was also not the kind of landlord expected by the tenants, a mix of young people from overseas attending college, university or taking English-language courses.
The Star spoke to two former and one current tenant, who said they lived, at various times, with between nine and 12 other people and each tenant paid their own rent.
They said Ryan routinely and arbitrarily withheld security deposits, enforced what they considered draconian rules and, in general, ignored tenants’ rights. Ryan’s house rules included barring overnight guests and issuing $20 fines if he was unsatisfied with cleaning efforts. Tenants were not given keys to the house or their rooms.
In an interview with the Star, Ryan disputed some of the allegations. He said he had as many as nine students in the house at one time, but never more than that, saying the tenants who spoke to the Star are lying. Unknown guests presented a “safety issue,” he said, while the threat of fines was “just to keep you honest.”
He said he provided a unique, multicultural experience to international students with better living conditions than most “homestay” programs. “I’m proud of what I do.” Rooming houses, which are illegal in North York, consist of any property in which four or more people share a kitchen or washroom and pay separate rents, according to city bylaws. Rooming houses are permitted only in the former cities of York, Toronto and Etobicoke, but they must be licensed and subject to regular inspections. They are illegal in Scarborough, East York and North York.
The house is on Elmwood Ave., a leafy side street just north of Bayview and Sheppard Aves. It is approximately 4,500 square feet and includes “soaring” 18-foot ceilings, a winding staircase and three fireplaces, according to an online rental listing.
Melville and Liew purchased it in 2014 for $1,549,000.
Before they left Toronto, Melville, the former chief executive of Canada’s Ombudsman for Banking Services and Investments, found a single tenant and employed a property management company to collect the rent and maintain the house, where he and his family intended to live again in the future.
So he was shocked to learn from the Star that Ryan, whom he has never met, had taken over the house and was renting out every possible living space.
Melville and Liew signed a lease in January 2016 with Mary Sharleen McDowall, a Toronto psychologist. The lease and rental application list no other tenants or occupants and prohibit any sub-tenancies.
Melville said they only became aware McDowall was living with someone else when their alarm company referred to a “male occupant” at the house.
McDowall told the Star she went to high school with Ryan and they reconnected toward the end of 2015, rekindling a past relationship. They decided to look for a house to rent together and used a real estate broker to find a property. She said she knew Ryan’s main source of income would probably be from hosting one or two international “homestay” students, but she didn’t think that would contravene her lease.
A couple of months into the lease, their relationship fell apart and she decided to move out, while Ryan agreed to keep paying the rent to the property manager. McDowall did not inform the owners or the property managers of her decision and continued to be the only legal occupant on paper.
“It’s so stressful to deal with him that I kind of just wanted to zone out of the situation,” McDowall told the Star. “I have other issues with him. I just don’t want to be involved in it. . . . It’s kind of like putting my head in the sand a little bit — well, a lot.”
McDowall said she had “no idea” what was going on at the house.
“I thought everything was going OK. Rent was being paid.”
The issue came to the Star’s attention when a former tenant, Jaehyun Kim, a 23-year-old South Korean woman visiting Canada on a sixmonth working holiday visa, complained that she had been ill-treated by Ryan, whom she believed was the owner and landlord.
Kim was upset that Ryan abruptly evicted her in February with only a few weeks’ notice and withheld her $150 security deposit. She also says she was misled by Ryan when she signed her rental agreement and did not expect to have to share a kitchen with 12 other people.
“It was terrible,” Kim said, adding that she was shocked to learn Ryan wasn’t the owner of the house. “Everybody thought he was the owner.”
Rents in the house ranged from $450 for a shared bedroom to $800 for a private room, according to the former tenants who spoke to the Star, as well as advertisements posted on a South Korean website. At times 12 tenants shared the same kitchen, while as many as six shared a washroom, according to former tenants. Ryan lived in the basement.
The monthly rent paid to the homeowners was $4,300, so based on advertised rents and what tenants said Ryan charged, he could have collected about $2,500 on top of what he paid the property managers.
Ryan, who said he has been stressed out since being contacted by the Star and recently developed shingles, said that although he may not have followed all the appropriate landlord-and-tenant rules, he never missed a monthly rent payment and did not damage the house.
“The homeowner has not been hurt in any way, shape or form,” he said. “We don’t miss payments. The house is pristine. We’re perfect tenants.”
Ryan said he provided a full suite of services to international students, including language tutoring, nutrition advice, fitness training and counselling. He is not formally trained in any of those areas.
“This whole thing that I do is supposed to be helping students.”
The tenants who spoke to the Star say they simply rented a room and did not receive any other services from Ryan.
Ryan said the majority of the students he hosted had positive experiences at the house. The Star asked more than two weeks ago if he could provide contact information to any of those tenants; he declined. The Star also asked Ryan to encourage former tenants with positive experiences to contact the Star themselves. None did.
Melville, the homeowner, said he has served McDowall with “the re- quired 60 days’ notice to end the tenancy.”
McDowall, meanwhile, told the Star she will be “very pleased” to be rid of the situation.
April Stewart, a paralegal who specializes in helping landlords with problem tenancies, saw the situation as a cautionary tale for homeowners who live abroad.
“It’s a lesson for a far-removed landlord to make sure they employ the services of a property manager who is very present and active in terms of the day-to-day operation of the house. “You need eyes and ears.” Licensed rooming houses are an important part of the city’s affordable housing stock, said Mark Sraga, director of investigations for the city’s licensing department. But illegal rooming houses can pose problems for fire safety, parking and noise, not to mention potential damage to the property itself, he said.
“We can’t ignore the fact that these types of housing forms are necessary and they exist. We just have to make sure they’re in the right places and they’re not having a negative effect on their neighbours.”
Last year, the city inspected 901suspected illegal rooming houses, of which 78 merited violation notices and only two led to charges. Tenants and neighbours can report a suspected rooming house by calling 311.
If a property is found to be operating as an illegal rooming house, the onus is on the owner to make the necessary changes or face fines of up to $50,000, Sraga said. But if owners deal with the issues when they are notified and comply with the city’s orders they typically are not fined.
Stewart said that if a property owner can prove to the Landlord and Tenant Board that the original tenant was running an illegal rooming house he should be able to obtain an eviction order. The young people living at the house would then be considered unauthorized tenants, Stewart said.
“They’re nice people caught in the crossfire, unfortunately.” Brendan Kennedy can be reached at bkennedy@thestar.ca or 416-869-4192.