On July 30, 2020, Administrative Judge Francine Jodoin of the Tribunal administratif du Logement (formerly the Régie du Logement) (hereinafter the “TAL”) rendered a judgment declining jurisdiction and dismissing the plaintiff’s action. This decision is important because it circumscribes the jurisdiction of the TAL in the context of apartment rental services such as Airbnb.
In this case, the plaintiff was seeking the termination of three leases signed with the tenant 9372-5968 QUEBEC. These leases were for the rental of three apartments, but contained references to their commercial nature. They provided for the re-rental of the apartments for commercial purposes by 9372-5968 QUÉBEC INC, which intended to make them available through the Airbnb platform and other similar services.
Lawyers for Lévesque Jurisconsult Inc. raised doubts as to the jurisdiction of the TAL, which is limited to so-called “residential leases”. The lawyers for Lévesque Jurisconsult Inc. were successful in demonstrating that the LAO should decline jurisdiction for two main reasons.
First, the tenant was a company. It was therefore impossible for the destination of the rented premises to be “dwelling” since a company is not a natural person and cannot “inhabit” a dwelling as a natural person would. Secondly, the tenant had disclosed its intention to use the premises for commercial purposes. The parties had included a statement to that effect on the leases in dispute.
Although the plaintiff invoked the end use of the dwelling as residential (natural persons living there) and the use of a “lease of dwelling” type of document, the ALJ agreed with Lévesque Jurisconsult’s lawyers and declined to rule.
The administrative judge expressed herself as follows:
Not every form of accommodation constitutes in itself a lease of a dwelling which would be subject to the specific rules of the Civil Code of Québec and to the jurisdiction of the Régie du logement. In this sense, the destination and use of the premises remain for residential purposes, but not in the context of a lease of dwelling within the meaning of the Act.
The words must be given their usual meaning and the rules governing the lease of a dwelling conferring jurisdiction on the Régie du logement do not concern the nature of the legal relationship between the parties. In fact, in such circumstances, the rules applicable to residential leases must be modulated according to the intentions of the parties at the time they entered into the contract. In this case, the Tribunal considers that the intention of the parties was to allow the tenant to carry on the business of renting out the units on a short and medium term basis. Therefore, these three apartments are not residential leases within the meaning of the Act and the Court must decline jurisdiction over the claims relating to them.
It appears from this case that the intention of the parties is the determining factor in characterizing the contract, not the type of document used or the use that is ultimately made of the premises. The ALJ found that the fact that individuals end up living in the leased premises is not determinative since these individuals are third parties to the Landlord and have no legal relationship with it. Thus, the intention of the parties was clear: 9372-5968 QUEBEC INC. was leasing the premises for commercial purposes. The leases were not so-called “residential” leases. Therefore, the LAO did not have jurisdiction to hear the dispute.
The bottom line is that if the tenant is a company, or if the tenant states that he or she will not be living in the unit and intends to sublet it, the LAO will likely not have jurisdiction to hear an application regarding that lease. Landlords should be sure to clarify this issue before signing the lease and indicate on the lease that they do not allow subletting for commercial purposes if that is their intention. Both landlords and tenants should be aware that a commercial arrangement continues to be a commercial arrangement even if it is agreed to using the TAL’s standard “Residential Lease” document. If you have any questions regarding these issues, please do not hesitate to contact the lawyers at Lévesque Jurisconslt Inc.