As of today, CORPIQ is offering landlords a new form that includes the option of asking for a security deposit when signing a lease, in all legality , after having recently obtained a favorable judgment from the Régie du logement.
Although it is still forbidden to require, as a condition of the lease, any amount that can be kept by the landlord, the security deposit becomes a legal tool if it is part of the alternatives offered to the tenant. Indeed, Article 1904 of the Civil Code of Quebec does not prohibit the landlord from offering options from which a candidate tenant may freely choose. They reduce the landlord's risk.
The form designed by CORPIQ therefore providesthe possibility for a refused candidate to offer one of the three securities offered: a joint tenant, a natural person who will co-sign the lease as a suretyship or a security deposit.
This form has been successfully used by a member of CORPIQ. A year ago, his candidate tenant, whose application had initially been refused, chose to pay a security deposit equivalent to two months' rent. A few months after signing the lease, she stopped paying her rent. The tenant tried to recover her deposit and apply it to the two rents she owed but was refused.
In its decision, the Régie du logement noted that the landlord did offer choices to the candidate, without requiring her to pay a deposit. The landlord then became entitled to keep the amount until the end of the lease. The tenant was therefore in a situation of non-payment of rent for more than three weeks, which resulted in the cancellation of the lease.
"This recognition by the court that a security deposit may be legal is essential to the proper functioning of residential leasing," explains CORPIQ's Director of Public Affairs, Hans Brouillette.
"Many applicants have a weak credit history, barely enough income or a judgment in their name for non-payment of rent. Even when tenants are willing to provide a security deposit to convince landlords to rent to them, landlords are reluctant to avoid the legal hassles arising from what was, until then, a vague interpretation of the law. If the CORPIQ form is used properly, this obstacle has just been removed," continues Mr. Brouillette.
Many landlords have been using the security deposit for years. The CORPIQ form will harmonize the ways of doing things, in all legality. It can only be used for new leases, but not for existing ones.
CORPIQ believes that the recognition that a security deposit can be legal will encourage tenants who are moving out to show more respect for the next tenant. In the absence of a deposit, one out of three leaves their unit in an unacceptable state, according to a Léger survey, to the dismay of tenants who move in.
"We were also able to measure the extent that a crisis as sudden as COVID-19 can have on rent payments. By early April, as many as one out of five tenants had not paid their rent. In addition, the government ordered the paralysis of the Régie du logement for 3 months and evictions were prohibited for 5 months, during which time it forced landlords to continue to offer housing for free" explains CORPIQ’s spokesperson. "With a security deposit as a financial cushion, a lot of unnecessary stress for both landlords and tenants could have been avoided. It is time for healthier rental practices. The security deposit is one of them.
Easier for tenants to rent
By diverting disputes through filing, fewer tenants will have a file in the courthouse. This will help them better qualify for housing. By offering a security deposit to the landlord, tenants will have better access to the private market with a wider choice of housing.
Government of Quebec's security deposit program
CORPIQ is aware that lower income tenants may have difficulty in putting down this security deposit. Often, they have neither a roommate to reduce the risk nor a person who would agree to guarantee their lease.
"We reiterate our proposal to the Quebec government to set up a public security deposit program for tenants whose financial situation makes them eligible for low-rent housing," explains Hans Brouillette. "The tenant would pay nothing. For its part, the government would only pay the money to the landlord if the tenant is in default, which is a minority of cases."
Savings for the Government of Quebec
The more the security deposit will be practiced, the less demands will be made to the Régie du logement for unpaid rents or damages, notes CORPIQ. Many disputes, especially for small amounts, will now be settled out of court. The congestion of the court, which deals with 70,000 claims per year, is expensive.
In addition, a government bonding program would reduce the number of households that cannot be accepted in private housing due to the financial risk they represent. The state must therefore take care of them by finding them a place in a HLM. Here too, the government would save money.