Fraud and false representations

Fraud and false representations

You have just leased to a seemingly perfect tenant. Good credit, no decisions at the Régie du logement, no banckruptcy. After a few weeks however, you realise that he lied. Is it possible to cancel the lease?

The lease is a contract. This means that, as stated in article 1375 C.C.Q., both parties must negotiate in good faith during the transaction.

“1375. The parties shall conduct themselves in good faith both at the time the obligation is created and at the time it is performed or extinguished.”

Moreover, article 1401 C.C.Q. states as follow :

“1401. Error on the part of one party induced by fraud committed by the other party or with his knowledge vitiates consent whenever, but for that error, the party would not have contracted, or would have contracted on different terms.

Fraud may result from silence or concealment.”

In other words, if one of the parties induced the other one’s mistake by lying or by keeping silent about a decisive factor of the transaction, it will be possible to cancel the contract.

For example, in Réalisations Pierre Lord Inc. c. Hassan Marco Haddad et Nathalie Hally(1), the tenant had represented that he had been forced out of his last apartment because of a repossession and that he did not owe money to anyone. Also, he had presented himself in a way that suggested he was working in construction, had four employees and a busy schedule. He had offered to pay 3 months worth of rent and did so. The landlord, feeling that he could trust him, had agreed to sign the lease without further verifications. Later, he realised that his new tenant owed 11 months of rent to his last landlord and that the debt, and not a repossession, was the reason for the resiliation of his lease. Following this, the landlord made a research and noticed that the tenant had more than 30 decisions for the resiliation of his leases. The administrative judge concluded that the tenant had made false representations which justified the cancellation of the lease because of fraud resulting from the silence of the tenant and his reluctance to state the truth.

Also, in Bon apparte société en commandite c. Sylvain Trottier(2), the tenant had stated that his name was Serge Collette when his actual name was Sylvain Trottier. Consequently, a false credit check had been considered. When he realised the fraud, the landlord asked for the cancellation of the lease. The administrative judge decided that the landlord’s mistake had been caused by false representations and cancelled the lease.

The courts are therefore generally prone to cancel a lease which was concluded under false representations. However, it is better for a landlord to gather information about his candidate by doing a credit check, calling his last landlords and doing a quick research about the decisions of the courts concerning him before signing the lease in order to avoid problems in the future.

(1) (R.L.) 37 110113 012 G, 10 mars 2011, régisseur Marc Lavigne
(2) 31 111110 014 G, 6 janvier 2011, régisseur Serge Adam

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