Lease assignments can get complicated

Dear Ted,

Sorry to come back to you again...

Maybe you remember, I'm in the process of assigning my lease of a four-and-a-half... After posting the apartment for a while, we interviewed two undergraduate students interested in getting the lease.

We met them and found they were from the US, studying at McGill with both bursaries from the University and student loans from the US government. They also had excellent references from the student residence where they have been dwelling last year. As a warranty, they were offering to have their own parents as co-signers of the lease.

After interviewing them, we signed a Lease Assignment Agreement; of which I've sent a copy to the landlord by certified mail. The landlord interviewed one of them (the other was already en route to the States) and came back to us saying that he wouldn't accept the candidates because they didn't have a co-signer in Canada. Awkwardly enough, when I arrived here I was a student with no money or co-signer in Canada... apparently risk matters differently according who is taking it.

In the meantime, our candidates (for assignment) called back to us saying they wanted to back-up from the agreement as they were treated disrespectfully by the landlord. They sent me a letter in this sense, a copy of the electronic version of it I have attached to this mail.

How should I proceed?

Thanks.

BL

Dear Mr. Ted Wright,

As I had mentioned to you earlier that we would be vacating our apartment end of July as we are moving out of Montreal.

Meanwhile, I have managed to find a couple who are interested in subleasing the apartment from us.

I have to request you to kindly give me details and procedure of subleasing. … With your expertise I wish to resolve this matter in an appropriate way…

Kind Regards

WT

Paraphrase of another reader’s letter:

Mr. Wright:

The landlord has refused seven potential assignees. Why? Does he have the right? What is our next option? What are our legal rights? We have bought a new condo.

LR

There was more to this case, but this is the essential part, for the purposes of this column.

I have written about this before, though not in exactly the same way.

There are really several issues here:

a) The right to assign/sublet a lease.

b) The right of a landlord to verify a new assignee.

c) The obligation of a landlord to act in good faith.

d) An assignee backing out of an agreement to accept the lease.

e) The right to end a lease because you have purchased a condo/home.

The right to assign/sublet a lease

Each tenant has the right to sublet or assign his lease. A landlord does not have the automatic right to refuse this option to a tenant. Any clause in the lease which denies this right is illegal (Article 1870 CCQ, Lease Article 3, Para 2).

Should a landlord attempt to deny this legal right to a tenant, the Court (the Régie du logement) is an available means of recourse. If the landlord’s illegal actions, related to refusal of rights, should cause problems or damages to the tenant or potentially others, he (landlord) may be sued, resulting in the loss of thousands of dollars, through several court cases.

The right of a landlord to verify a new assignee.

The residential lease is just that, a contract. It is a 'quid pro quo' (exchange of goods, services or money), therefore since the service (a lease connected to a dwelling) is still being offered, the rest of the 'quid pro quo', the money, is a continuing obligation. Thus, it a part of the lease that rent must be paid. The landlord has the right to ascertain that the rent be paid. He needs to know that the new person is a bona-fide potential tenant. Most of the time this verification is no problem.

The obligation of a landlord to act in good faith.

A landlord must act in good faith in the acceptance of a tenant’s right to assign/sublet. The means he cannot just arbitrarily refuse a potential tenant because he does not like their look, colour, social status, sexual orientation, career (i.e. strip club dancer), etc. There must be a legal reason to refuse. This could be, but not limited to, inability to pay the rent, history of eviction due to non-payment of rent, history of causing serious problems for other tenants in the building, continuing violent criminal activity, continuing un-rehabilitated danger as a pedophile.

The above may be challenged in court. It is not a clearly defined science. Each individual case will be decided on its merits. However, one thing is very clear. If the rent cannot be paid, do not expect your assignee to be accepted and do not expect that the Court will not support the landlord wholeheartedly.

To this end (i.e. accepting an assignee), the proprietor must welcome a bona-fide tenant who can pay the rent. To repeat the caveat, should the landlord deny a person the right to be an assignee, legal damages are a distinct danger and probability. There can be legal repercussions if the landlord treats unfairly or disrespectfully a proposed assignee.

An assignee backing out of an agreement to accept the lease.

What does a tenant do if their chosen assignee backs out of the lease? Several different conditions may apply. If the landlord has refused a bona-fide assignee, which causes the chosen assignee to back out, both the tenant and the assignee can institute various legal proceedings. These can be Immediate Access, Specific Performance Order, Declaratory Judgment, Damages and Interest, etc. If the proposed assignee backs out and refuses to take legal action to guarantee him his legal rights, the tenant can sue both the proposed assignee and the landlord in various individual legal fashions.

The legal action of the tenant would be based upon the following:

1. A contract to assign exists between the tenant and proposed assignee. If the refusal by the proposed assignee causes financial problems to the tenant, the proposed assignee can be sued. A chosen assignee does not have the automatic right to end his assignment contract with the tenant just because the landlord refuses him acceptance to take over the lease. Legal damages may exist.

2. A lease contract exists between the landlord and the tenant within which the right to assign a lease is a clear legal right. If the landlord refuses illegally and/or in bad faith, legal damages against him may be the result.

The right to end a lease because you have purchased a condo/home.

Once a contract exists between two persons, it must be honoured. The second option is that another legal way is available to fulfill the contract. The third method can be that both parties reach a mutual settlement which satisfactorily terminates the contract (residential lease) to the acceptance of all parties (there may be more than two).

In summation, legal rights and obligations crisscross each other.

1. A lease must be fulfilled.

2. A landlord cannot refuse/impede a bona fide lease assignment.

3. A landlord cannot put a clause in the lease which denies assignment rights.

3. Damages may result flowing from a bad faith assignment refusal.

4. If an assignee backs out of the assignment, damages may be payable to the tenant.

5. The bottom line is that the rent must be paid until the legal end of the lease.

6. A tenant able to pay the rent must be available to assume the lease obligations.

Individual cases will vary and require specific knowledge to resolve these individual circumstances. Consult your lawyer. Visit us at the legal clinic. Speak to the rental board (Régie du logement). Do not consider that you know everything. The law is complicated and a couple of words can change everything. There are almost always questions which must be answered and if the requisite knowledge to ask specific questions does not exist then necessary knowledge may not be available to you. The danger starts when we assume we have all the answers. Please consult someone who knows.

• This is a general overview only. Please seek legal counsel or come and see us. Ted Wright is coordinator of Westmount Legal Clinic, every Wednesday at 3:30 p.m. at the Westmount YMCA, 4585 Sherbrooke St. W. Send questions to tedquestions@yahoo.ca or via fax to 514-277-8403, or mail to P.O. Box 48101, Montréal, Qc., H2V 4S8. Please provide a phone number to verify identity. Your name will not be published without your permission. Mr. Wright contributes to various media in Canada, both print and electronic. Should you wish personal, more extensive assistance, professional fees may apply. He may also be heard on the Know Your Rights legal show every Saturday at 2:30 p.m. on CINQ 102.3 FM. Podcasts of shows are available for one week after original airing at www.radiocentreville.com. Ted Wright can also be heard every so often on 940NEWS Montreal's legal affairs programme Sidebar with Dino Mazzone every Friday evening from 8 to 10 p.m. on 940 AM.