Tenant bankruptcy

Tenant bankruptcy

Following the introduction of a demand for non-payment of rent to the Régie du logement, you receive, before the audition and from a Bankruptcy Trustee, a notice for the suspension of all procedures in conformity with the Bankruptcy and Insolvency Act(1) (hereafter : “Act”), because your tenant just went bankrupt.
Therefore, you will not be able to obtain a decision ordering your tenant to pay the rent due before the time of the bankruptcy.
However, will you be able to obtain the resiliation of his lease?
In a decision(2), the administrative judge Anne Morin resiliated a lease despite the tenant’s bankruptcy.
The landlord was asking for the resiliation of the lease because an amount of 3 925 $ was due at the date of the audition on January 6th 2011 and also because the tenant was frequently paying his rent late which caused the landlord a serious prejudice.
Following the bankruptcy of the tenant on November 5th 2010, a notice of suspension of all procedures had been sent. Consequently, the landlord’s demand to recover the rent was suspended.
The Court explained that following article 84.2 of the Act and its interpretation by the Régie du logement, a renting contract cannot be resiliated because the bankrupt had not been paying is rent before the time of the bankruptcy.

84.2 (1) No person may terminate or amend — or claim an accelerated payment or forfeiture of the term under — any agreement, including a security agreement, with a bankrupt individual by reason only of the individual’s bankruptcy or insolvency.


(2) If the agreement referred to in subsection (1) is a lease, the lessor may not terminate or amend, or claim an accelerated payment or forfeiture of the term under, the lease by reason only of the bankruptcy or insolvency or of the fact that the bankrupt has not paid rent in respect of any period before the time of the bankruptcy.”
After hearing the proof, the Court concluded that: “[TRANSLATION] the default by the tenant has been steady and constant since many months. The frequency of his late payments is encountering the criteria of article 1971 C.C.Q. […] This second claim is not based on article 121 of the Bankruptcy and Insolvency Act, but on the violation of an obligation stipulated by the renting contract which is, the obligation to pay the rent on the 1st day of the month. Consequently, the prohibition of article 69.3 (1) does not apply to this case.”
Other decisions have also ordered the resiliation of the lease of tenants who were not paying the rent after the time of the bankruptcy and who were more than three weeks late.
When the tenant does not pay his rent on the first day of each month, especially after the time of the bankruptcy, and when it causes the landlord a serious prejudice, it would also be possible, under certain circumstances, to obtain the resiliation of the lease.

(1) L.R.C. 1985, c. B-3 (à jour au 22 février 2010)
(2) Bédard et al. c. Boucher et Pierre Roy et Associés Inc. Syndic, 2011 QCRDL 76, 6 janvier 2011

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