Purchase of a leased apartment

The purchase of a condo leased to a third party is a frequent occurrence in the resale market. Save for an agreement to the contrary, nothing prohibits a co-owner lessor from selling and a purchaser of purchasing an apartment even though the tenant wishes to continue to reside in it. The lease is attached to the immovable, not to the co-owner/ lessor. The lease will continue to be in force even if the unit is sold and the terms and conditions of the lease shall remain the same.

Be careful, however, there are some pitfalls and if you are not careful your investment could quickly prove unsuccessful. This is the reason why you need to follow a few steps before, especially if you are a real estate owner for the first time.

Purchase for investment purposes

For an investor, the purchase of an apartment occupied by a tenant may be advantageous, because he will not have to find a tenant. If you wish to purchase an apartment leased to a third party, review the declaration of co-ownership and make sure that there is no restriction on rentals in the chapter on Leasing.

Some declarations of co-ownership establish limitations on leasing. For example, in many cases, they prohibit leasing for periods of less than one year. This is to avoid the continuous moving in and out of temporary tenants, which has the potential

of increasing the risks related to the insurability of the building. It can also be detrimental to the stability of the co-ownership.

Purchase for residential purposes

If you purchase the apartment to occupy it yourself, a crucial verification shall be carried out: you must ascertain that the tenant does not benefit from a “lease for a lifetime”. This may occur in the case of the conversion of a rental property into divided co-ownership. The developer is compelled, in such cases, to file a request with the Administrative Housing Tribunal, to allow the conversion into divided co-ownership. If the request is granted, the tenants already residing in the building have the right to reside in their dwellings, and this for as long as they wish to do so. The legislator has, by this provision, prevented the repossession of rental apartments by a developer or any new owner (art. 54 of an Act respecting the Administrative Housing Tribunal ).

If the tenant does not benefit of a “lease for a lifetime” and you wish to take possession of the apartment that you have purchased, you then have to send a notice of repossession to the tenant. This notice shall be sent to him at least six months before the expiry of a lease for a fixed term, or one month, if the lease is for a term of six months or less (art. 1960 of the Civil Code of Quebec).

Purchase of a time sharing right

The holding of an apartment by several persons having a periodic and successive right of enjoyment (time sharing) is prohibited, unless the declaration of co-ownership authorizes it expressly (art. 1058 C.C.Q.). Time sharing grants, to each co-owners, a predetermined time period during which they may occupy the apartment.

The duties and obligations of the owner/ lessor

The obligations of the owner of a leased unit are numerous and burdensome. You must:

  1. Notify the syndicate that your apartment is leased (art. 1065 C.C.Q.) and reveal the identity of the tenant;
  2. Remit a copy of the By-Laws of the immovable (By-Laws of the co-ownership) to the tenant (art. 1057 C.C.Q.);
  3. Inform the tenant of the rules and regulations of the immovable;
  4. Be responsible towards your tenant of any problems related to his enjoyment of the premises;
  5. Be responsible for any damages caused by your tenant in the co-ownership and towards the other co-owners in the event of a contravention to the By-Laws of the immovable.

WHAT YOU SHOULD KNOW! ​ It is illegal to prohibit the rental of an apartment in a co-ownership and to impose as a condition of leasing the approval of the Board of Directors or of the general meeting of the co-owners.

http://www.condolegal.com/images/Boutons_encadres/A_retenir.pngWHAT TO KEEP IN MIND:  if you purchase a leased condo, you must verify if the lease is legal and the status of the tenant.

WARNING! After giving a notice to the owner/ lessor and the tenant, a syndicate has the right to instigate an action in cancellation of the lease, if the tenant is in contravention to the provisions of the declaration of co-ownership and that his behavior causes a serious prejudice to a co-owner or the other occupants of the building.


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