Housing cooperative: the departure clause of the tenant.

The distinctive nature of a housing cooperative

In Quebec, tenants has the right to maintain occupancy of their dwelling, pending the fact that they meet their obligations set out in their lease (for example : pay their rent in full and without delay, not to disturb the enjoyment of other tenants, comply with the regulations of building, respect the residential destination of their dwelling, etc.). However, this fundamental principle of housing law knows certain exceptions, such as the right of the landlord to take back the dwelling to house therein a member of his family or himself.

One of these exceptions is the associative, corporate and contractual nature of a housing cooperative.

Indeed, what prevails in a housing cooperative is the fact that the tenant is a member of a cooperative: he adheres to the cooperative rules laid down by the Cooperatives Act, to the internal by-laws of the cooperative and to his membership contract. Because the member has rights reserved only for members, he can therefore be a tenant. This possibility of being a tenant stems from his membership status.

Historical perspective

A housing cooperative therefore benefits from a special regime as a landlord. This particular regime has been highlighted in some important judiciary decisions.

In 2002, the Quebec Court of Appeal, in the case of Coopérative d’habitation Jeanne-Mance c. Landry, decided that the contractual relationship between the member and his cooperative did not allow the Housing Tribunal ( ex. Rental board) to nullify the decision of the board of directors to exclude him as a member: this administrative tribunal, by virtue of its constitutive law, does not have the power to decide of such matter, which falls under the competency to review a decision of a legal person that only the Superior Court, a judicial tribunal, can exercise.

In line with this judgment of the Court of Appeal, the Court of Quebec followed-up and applied this particular regime of cooperatives, deciding on the application of a departure clause. In the case of Coopérative d’habitation Le Rouet c. Sergio Herrera, Mr. Herrera, a tenant, had been excluded as a member. However, his lease and his membership contract included a clause which specified that the tenant who lost his membership rights undertook to vacate his dwelling at the end of the current lease.

On appeal from the Rental board's decision rendered in this case, the Court of Québec provided three answers to the questions raised by this case:  

1. The landlord, as a housing cooperative, can effectively adopt a regulation which obliges a tenant who ceases permanently to be a member of the cooperative to vacate the dwelling at the end of his lease.

2. Articles 1945 and 1955 of the Civil Code of Quebec (which distinguish a cooperative and oblige the tenant who refuse modifications to their lease to vacate their dwelling at the end of it) also apply to tenants who have lost in during their lease membership status. Contrary to what was decided by the Rental board, non-member tenants cannot file at the Rental board on the pretext that they are no longer members of the Cooperative, as this would amount to give them more rights than the members of the Cooperative themselves.

3. The decision confirms that Rental board has no jurisdiction to review, directly or indirectly, the decision made by the general meeting of members of the cooperative to increase the member discount from which they benefit on the payment of their rent.

Validity of the departure clause

Whatever the name given to this type of clause (departure clause, clause of automatic or extrajudiciary lease termination...), preliminary conditions apply:

• this clause must first have been duly adopted by the assembly of members, of the cooperative whether during an annual or extraordinary meeting;

• this clause should be included in the member contract, in the lease and in the internal by-laws of the cooperative;

• by respecting the deadlines of article 1942 of the Civil code of Quebec, this clause must be notified to the tenant, whether he is a member or whether he was suspended or even excluded. In the case of a tenant having been excluded before the adoption of such a clause, it is moreover preferable to notify him of this clause by way of bailiff in order to be certain that he is fully aware of it.

• at the end of the current lease, the tenant covered by this departure clause must therefore vacate his dwelling. If this is not the case, it may then be the subject of a request for termination of the lease and eviction by the cooperative, produced at the Rental board within a short time after the end of the lease so as not to tacitly renew the lease.

A defeated clause since 2022

It should be noted that the validity of the departure clause has been constantly recognized by numerous decisions of the Administrative Housing Tribunal since the judgment of the Court of Quebec in the Le Rouet case. However, since 2018, some decisions have nuanced the validity of such a clause (see for example this decision rendered on October 15, 2021) and a recent judgment of the Superior Court declared it illegal and void, on March 2, 2022 (subject to a pending appeal). As is the case with other areas of law, the interpretation of courts in this matter is therefore not frozen in time and may change.

Contact us for more details and to discuss the consequences of this turn-over of the jurisprudence for your cooperative.

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