Legal considerations
Province of Québec
The conversion of a rental immovable is permitted in all Québec municipalities outside of the territory of the Island of Montréal.
However, conversion to divided co-ownership is prohibited if the immovable is owned by a housing cooperative, a non-profit organization or a municipal housing corporation and was built, acquired, restored or renovated within the scope of a government housing assistance program.
Under the Act respecting the Administrating Housing Tribunal, a municipality can regulate the conversion of rental immovables to divided co-ownership. This power to intervene allows the municipality to prohibit or authorize the conversion of rental units or to impose conditions on the conversion.
Island of Montréal
In Montréal, the conversion of a rental immovable into a divided co-ownership property is prohibited by regulation, but is possible under certain conditions. The Act gives the city or borough in which the immovable is located the possibility of allowing the conversion by council resolution, even if such conversion is prohibited by regulation on the territory of the municipalities of the Island of Montréal.
Indivision
Conversion to divided co-ownership is permitted for an immovable where all the units are owned by undivided co-owners. In this case, the residential immovable can be converted to divided co-ownership if three quarters of the co-owners, representing 90% of the shares, agree to the change.
As with any other type of conversion, if one or more dwellings held in undivided ownership are occupied by a tenant, the right to maintain occupancy must be respected.
Right to maintain occupancy
When an owner wishes to convert a rental immovable to divided co-ownership, he cannot evict the tenants from their dwellings. Any person who is a tenant at the time the notice of intent to convert is sent, or any new tenant whose lease begins before the date of the decision by the Administrative Housing Tribunal authorizing the conversion, may remain in the premises for as long as he wishes provided he complies with the terms of the lease.
In the event of illegal repossession, harassment or failure to comply with conversion procedures, the Act provides remedies. In this area, it is the broker’s duty not to encourage or participate in a scheme to illegally evict a tenant. Section 69 of the Regulation respecting brokerage requirements, professional conduct of brokers and advertising states: “A broker or agency executive officer must not participate in any act or practice in real estate matters that may be illegal or that may harm the public or the profession.”
Conversion to divided co-ownership must be authorized by the Administrative Housing Tribunal, provided that the building has or has had within the last 10 years, at least one rented dwelling. For the purposes of the Act, a “dwelling” is a place that is leased or offered for lease for residential purposes, or has become vacant after a lease. Question D2.3 of the DS “Was your private portion ever leased? If so, indicate the leasing period,” is used to determine if the building falls into this category.
