Conversion to divided co-ownership

Divided co-ownership

Where and in what cases can you convert?

Converting a rental property to divided co-ownership is authorized:

  • When all the dwellings in a building are occupied by undivided co-owners (who will have to prove that no lessee has been illegally evicted from their dwelling)

  • In all Québec municipalities outside the urban agglomeration of Montréal

However, these municipalities may adopt bylaws restricting conversion or making it subject to certain conditions.

Converting a rental property to divided co-ownership is prohibited:

  • If the building belongs to a housing cooperative, a non-profit organization or a municipal housing corporation and was built, acquired, restored or renovated as part of a government housing assistance program

  • In the urban agglomeration of Montréal

However, the law allows for such a building to be converted if granted that right by a resolution of the council of the municipality in which the building is located.

In all cases, the conversion of a rental property to divided co-ownership must be authorized by the Tribunal administratif du logement.

Greater protection for lessees

Converting to co-ownership does not jeopardize the lessees’ right to maintain occupancy.

They are entitled to remain in their dwelling as long as they wish to do so, provided they respect their obligations.

In fact, this right is strengthened, since repossession of the dwelling is no longer possible (with rare exceptions).

The law allows for recourse in cases of illegal repossession, harassment or failure to comply with conversion formalities.

Steps for conversion1

Strict formalities are required for conversion.

To convert a property, the lessor must:

  1. Notify each lessee of the building of their intent, prior to taking any other action, and give a copy of this notice to the Tribunal administratif du logement

  2. Obtain a resolution from the municipality authorizing the conversion, or a certificate of compliance if a bylaw provides for such a document

  3. File an application for authorization to convert at the Tribunal administratif du logement within six months of the date of the notice of intent or the municipal document, whichever occurs last

  4. Register the declaration of co-ownership within one year of the Tribunal authorization

  5. Have the following documents prepared: an expert’s report on the state of the property and an information circular on the project and the condominium administration

  6. Before the first sale of a dwelling, offer the lessee the option of buying their dwelling at the same price and conditions as those agreed upon with another person

Glossary

“Co-ownership” means that a property is jointly owned by two or more people.

“Divided co-ownership” means that some portions of the property are exclusively owned by individual owners, and others are common property.

“Undivided co-ownership” means that the property as a whole belongs jointly to all the owners and that no part of it is exclusively owned by any one of them.

For the purposes of conversion, a rental property is one that comprises or has comprised, in the 10 years preceding the application for authorization to convert at the Tribunal, a dwelling rented, offered for rent or vacant after having been rented.

Lessee recourses

What to do in the event of an illegal eviction

A lessee may claim damages and punitive damages following their final departure from the dwelling, whether or not they agreed to leave, if that departure was the result of:

  • An illegal repossession or a repossession done with a view to converting the property to divided co-ownership

  • Work done with a view to preparing the property for conversion and evicting the lessee

What to do in the event of harassment

Any person wishing to convert a property to divided co-ownership is prohibited from using harassment and thereby restricting a lessee’s right to the peaceable enjoyment of their dwelling.

A lessee who is a victim of harassment may (among other things, depending on the circumstances):

Any person found guilty of harassment is liable to a fine of at least $11,000 and not more than $55,000.

What to do in the event of an illegal sale

At the time of the first sale, the lessee has a priority right to buy their dwelling. This is called the right of preemption.

However, if the lessor has not offered the dwelling to the lessee, the lessee has one year from the time they learn of the sale to ask the Superior Court for it to be annulled.

Enforcing the law

The Tribunal administratif du logement may, ex officio or at the request of an interested party, issue an order if a person:

  • Violates or is about to violate a provision of the law regarding conversion

  • Acts or is about to act against a decision rendered by the Tribunal regarding a conversion

This order requires the person against whom it is rendered to:

  • Comply with the Tribunal’s decision

  • Cease or not undertake their operations and to restore the premises to a state of good repair, if applicable

A refusal to comply with such an order constitutes contempt of court and is punishable by a fine of at least $17,500 and not more than $90,000.

1. If all dwellings are occupied by undivided co-owners, they need only file an application for authorization to convert with the Tribunal administratif du logement and register the declaration of co-ownership within one year of the Tribunal authorization.