New obligations arising from sections F and G of the lease

The time for signing new leases is fast approaching for tenants planning to move in on July 1. Although the residential lease form, consisting of four double-sided pages, looks simple to complete, it is essential for landlords to pay particular attention to certain details when preparing it in order to avoid costly legal disputes.

In 2024, a number of bills were passed amending the rules governing residential tenancies, including Bill 31, which introduced major changes affecting, among other things, sections F and G of the lease.

In the next few lines, we will be analysing these specific changes in detail so that you can fill them in properly.

 

Section F: restrictions on the right to set the rent and amend the lease

By correctly completing Section F of the lease, the landlord and tenant waive their right, for a period of five years from the date on which the building is ready for its intended use, to apply to the Tribunal administratif du logement (hereinafter ‘TAL’) to have the rent set or the terms of the lease changed when it is renewed.

However, this benefit does not apply to all leases signed. To benefit from this restriction, three conditions must be met (Article 1955 of the Civil Code of Québec):

1. Make sure you tick the box corresponding to your situation in the lease:
   
   
   1. The rented dwelling is located in a building that has been newly constructed in the last five years or less;
      
      OR
      
      
   2. The rented dwelling is located in a building that was converted to residential use five years ago or less.
      
      
2. Be sure to indicate the date on which the property was ready for occupation.
   
   
3. Since the adoption of Bill 31, if:
   
   
   1. The landlord's building is ready for its intended use (new construction or change of use) on or after February 21, 2024;
      
      AND
      
      
   2. The lease is signed on or after February 21, 2024, the lessor must complete Section F.

Fill in the “Notice to a new lessee – maximum rent”, available on the TAL website. For whatever reason, if the landlord fails to complete this notice, he will not be able to benefit from the restriction on the right to set the rent and amend the terms of the lease.

 

Important points to know

• Whether your building is a new construction is a question of fact. Certain elements, such as building permits issued by the municipality or new municipal tax bills, can serve as clues. It should also be noted that the Civil Code of Québec does not define any specific work threshold at which an immovable is considered a new construction. If in doubt, we invite you to consult our partner law firms.
• The maximum rent notice must be completed again each time you sign a new lease and still meet the two criteria set out above in point 3 (i) and (ii).
• Please note that there is no ceiling on the maximum rent that may be charged in the five years following the date on which the building is ready for its intended use. However, we recommend that you be reasonable and set an amount that will cover any unforeseen expenses.

 

If Section F applies, it is not necessary to complete Section G of the lease, which we will discuss later.

 

Did you know?

• The paper lease form does not yet include the “Notice to a new lessee – maximum rent”. It is therefore crucial not to forget to print it out and attach it to your lease if you meet the two conditions mentioned above in point 3 (i) and (ii), which require you to complete it.   

• If possible, make it a priority to use the electronic lease on ProprioLocation. This service will provide you with additional notes to guide you in filling out each section of the lease. It will also allow you to fill out the “Notice to a new lessee – maximum rent” form directly when preparing your lease, which will automatically be appended at the end of the lease, if you have filled it out correctly.

• CORPIQ offers its members a model renewal notice specifically for cases where Section F is applicable. You can download it by clicking here.

 

Section G: notice to new tenant or sub-tenant 

Section G of the lease requires the landlord to declare to the new tenant the lowest rent paid in the 12 months preceding the start of the lease or, where applicable, the rent fixed by the court for the same period.  Note that the same rule applies in the case of subletting.

In fact, there are 3 possible scenarios in which the new tenant or sub-tenant may challenge the rent:

1. The landlord correctly declares, when the lease is signed, the lowest rent paid or set during the 12 months preceding the start of the lease: the new tenant or sub-tenant will then have 10 calendar days from the signing of the lease or sub-lease to lodge an appeal to set the rent with the Tribunal administratif du logement (hereinafter ‘TAL’).
   
   It is important to note that if the tenant does not receive a copy of the lease when it is signed, the time limit will start to run from the time it is delivered. In accordance with Article 1895 of the Civil Code of Québec, the lease must be delivered within 10 days of signing. If this time limit is exceeded and the tenant has still not received his copy, he is deemed never to have received the notice. In this case, the time limit mentioned in point 2 below will apply.
   
   
2. The landlord fails to declare the rent in section G: the new tenant or subtenant has 2 months from the start of the lease or sublease to apply to the TAL to have the rent fixed.
   
   
3. The landlord makes a false declaration in this section: the tenant or sub-tenant may apply to the TAL within 2 months of becoming aware of this fact.

Although this clause seems very explicit, it generally raises a number of questions among our members, particularly concerning its mandatory nature. In theory, the landlord must comply with article 1896 of the Civil Code of Québec. In practice, no one can force them to do so when the lease is signed. However, they must be aware of the risks associated with their decision.

With the coming into force of Bill 31, in addition to benefiting from longer deadlines for initiating rent-setting proceedings, tenants may ask the TAL to order the landlord to pay them punitive damages in 2 cases: (i) when they make a false declaration or (ii) when they knowingly fail to make a declaration.

 

Dwelling not rented for more than 12 months

The second change introduced by Bill 31 in this section imposes the obligation to declare the lowest rent previously paid and its date when no rent has been paid in the 12 months preceding the start of the lease. This notice can be found on the Tribunal's website under the heading “Notice to the new tenant - last rent paid”. So, if the landlord finds themselves in this situation, don't forget to indicate in section G that it is not applicable, the justification and fill in the additional notice in question and attach it to your lease. 

 

Important points to know

• The “Notice to the new tenant - last rent paid” form must be completed when no rent has been paid in the 12 months prior to the start of the lease. However, the tenant has no recourse to the TAL to have the rent fixed. On the other hand, if this notice is knowingly omitted or contains a false statement, the landlord is liable to the tenant for punitive damages, in accordance with Article 1896 of the Civil Code of Québec, as is the case for Section G.

• If the rented accommodation or the terms of the lease differ from those of the previous lease for which you declared the lowest rent paid, you should remember to tick the ‘NO’ box in section G of the lease and specify the items that have changed. If possible, you can also indicate the value of any additions in brackets.

 

Did you know?

• The Civil Code of Québec does not set a specific amount for punitive damages that may be awarded by the TAL. However, under section 28 of the Act respecting the Administrative Rental Tribunal, the TAL has jurisdiction over disputes where the amount at stake does not exceed $100,000, with certain exceptions.
• The paper lease form does not yet include “Notice to the new tenant - last rent paid”. So don't forget to print it out and attach it to your lease, if applicable.
• Whenever possible, opt for the electronic lease on ProprioLocation, where the “Notice to the new tenant - last rent paid” is directly integrated into the platform. You can fill it in easily and attach it automatically at the end of the lease.

In summary, the changes introduced by Bill 31 strengthen landlords' obligations, particularly in terms of rent setting and transparency regarding previous rents. Filling in sections F and G of the lease correctly is essential to avoid any disputes. Using the electronic lease on ProprioLocation is highly recommended to simplify these procedures and ensure compliance. Careful management of the lease guarantees a smooth rental relationship that complies with the new rules.