how to manage the free granting of a housing to a close relation

Published on by Me Jean-Olivier Reed

Topic(s): Regulation

Source: Messier Soucy Avocats

how to manage the free granting of a housing to a close relation
When one lends a housing for free to a close relation or a friend, one must understand and know that there is no question of a lease here. Indeed, the payment of a rent is an essential condition for the formation of the contract of lease. Most jurisprudence is constant on this, and if no rent is paid, the Régie du logement will not be able to intervene in the event of litigation.

If it is not a question of a lease, what is it all about then ?

The courts have determined that this legal relation is “a loan for use” framed by the Civil code of Quebec in articles 2313 and following.

The Civil code enacts particular rules to circumscribe the obligations of the parties as well as the methods making it possible to put an end to the loan. Let us mention those which are most striking, such as the fact that the user cannot allow the use to someone else except with the agreement of the owner/lender. Also, the Code provides that the owner can put an end to the loan if he has an urgent need of the housing for himself, at the time of the death of the user or if the user fails to fulfill his obligations.

In the event of litigation, the owners can turn to the Court of Quebec, small-claims division, in order to request the cancellation of the loan-for-use contract for one of the reasons envisaged in the Code and, if necessary, to claim a maximum of seven thousand dollars in damages. (Article 953 of the Code of civil procedure)

Anyway, to make a written contract would facilitate the relations greatly when they become conflicting and this even with your close relations.

The loan-for-use contract can envisage several different methods since the Civil code is very general and is not as complete as in the case of the lease of housing especially for the conditions which it imposes for this kind of contract. Most important to envisage is, in our opinion, the period that it covers, since in the absence of a period, it is of unspecified duration which restricts the reasons to terminate the contract. Note that the borrower is not entitled to the maintenance on the premises as in a lease of housing and he will have no other choice than to leave at the end of his contract or renegotiate another trust deed with the owner. Do not forget that as soon as a rent is paid, the contract will be regarded as a lease. Thus, do not see this contract as a loophole for the strict rules of the lease of housing but rather as a frequent and particular situation of the family and friendship relations which now have for you a precise name and framework and a forum in the event of litigation.

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Relevant decisions:
Régie du logement 31 100527113G
Court of Quebec: 505-32-015867 030 on May 27, 2004 by 30 and 125-32-001160-025, November 19, 2002, paragraph 49 and following

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