Real Estate 2026 Comparisons

Property rights in Québec are governed by civil law principles, which differ significantly from the common law system applicable in all other Canadian provinces. The primary legislative foundation of real estate law in Québec is the Civil Code of Québec (Civil Code), which sets out the fundamental rules governing ownership, its attributes, and its transfer. Beyond the Civil Code, statutes governing specific aspects of real estate law, including construction matters, agricultural land and fiscal matters, among others, must also be considered. Case law is also considered to have force of law and plays a crucial role in interpreting these rules and clarifying their scope.

Over the past 12 months, the Québec real estate market has been shaped by continued pressure on the rental sector, prompting increased government interventions to address the housing shortage. Expanded federal financing tools, including a larger CMHC loan envelope and the rollout of the Canada Homes programme, have been rounded out by municipal efforts to streamline permitting and accelerate approvals. Higher inflation and tightened lending criteria have weighed on first‑time buyer confidence, while mortgage renewals have played a major role in the refinancing landscape. That said, Bank of Canada rate cuts have started to bring some breathing room and have helped restore investor confidence.

A key theme has also been asset repositioning, particularly in the office sector, where owners are revisiting the highest and best use of under‑performing buildings. On the residential side, although the market was calmer than during the record‑setting COVID years, Québec still saw several noteworthy transactions in 2025, particularly in multi‑family segments. Several large‑scale multi‑unit acquisitions stood out, supported by a province‑wide 12% increase in plex sales and strong investor demand for stable, income‑producing assets.

Among the most notable deals of the past 12 months were the sale of the Deloitte Tower by Cadillac Fairview and the acquisition of Promenades Saint‑Bruno by Primaris REIT, reflecting continued activity across the office and retail sectors.

At federal level, the latest budget and National Housing Strategy provided for the creation of Build Canada Homes, a public housing agency set up to increase the supply of residential property using public land and new financing tools, and gradual implementation started in 2025. The federal Prohibition on the Purchase of Residential Property by Non-Canadians Act was also extended until 1 January 2027, thus continuing to limit foreign investments by non-Canadians into “residential properties” (generally buildings with three or fewer dwelling units and parts of buildings such as condo units) in Census Metropolitan Areas and Census Agglomerations, subject to limited exemptions. In Québec, a major reform of the Act respecting the preservation of agricultural land and agricultural activities, in force as of 25 March 2025, tightens restrictions on the acquisition and use of agricultural land, notably by limiting purchases by non-farmers and restricting development opportunities.

Québec law draws a fundamental distinction between real rights and personal rights. Real rights confer a direct and enforceable power over a thing, such as immovable property, and are opposable to third parties. The principal real right is ownership, which includes the right of use, enjoyment, and disposition, while personal rights create a claim against a specific person rather than a direct right in the property itself; for example, a lease generally grants the tenant a personal right of use only. Ownership may also be structured through modalities and dismemberments, including usufruct, bare ownership, emphyteusis, and divided co-ownership, commonly used for condominiums.

The Civil Code of Québec defines the right of ownership and governs the principal modes of transfer of property, including sale, exchange, gift and succession. Furthermore, the Act respecting duties on transfers of immovables imposes transfer duties upon their acquisition. In addition, the acquisition of certain residential properties by non-Canadians may be restricted under the Prohibition on the Purchase of Residential Property by Non-Canadians Act.

Certain categories of property are also subject to specific legislative regimes. Real property located in agricultural zones is subject to the Act respecting the preservation of agricultural land and agricultural activities, which may require authorisation from the Commission de protection du territoire agricole du Québec in the event of a transfer. Heritage buildings in Québec are primarily governed by the Cultural Heritage Act, which establishes the framework for protecting, classifying, and regulating interventions on culturally significant immovables.

Transfer of title to real estate is affected as soon as a valid contract, whether under private signature or in notarial form, is entered into between the parties, but can also occur through other legal constructs, such as donations or exchanges. Although not necessary for the transfer to lawfully occur, in order to be opposable to third parties, any transfer of title is published in the Québec Land Register.

The obtention of lender title insurance is common in real estate financing transactions, while owner title insurance is obtained primarily when extensive title review of the property in question has not been affected by the purchaser.

Real estate due diligence varies depending on the asset class being purchased. However, items commonly reviewed as part of any due diligence include:

• review of documents available at the Land Registry and other public registers to confirm title to the property and the existence of encumbrances;
• requests for information from relevant governmental (and other) authorities to ensure the property’s conformity with applicable laws;
• zoning conformity for the purchaser’s intended use of the property; and
• contract review, including review of leases and contracts with various service providers. 

Under Québec’s Civil Code, statutory warranties of ownership and quality apply unless excluded. In commercial transactions, sellers typically provide representations and warranties regarding authority, title, absence of litigation, taxes, environmental compliance, residency for tax purposes, non‑permitted encumbrances, property condition, and brokerage commissions, with additional assurances for leases or operational matters. Survival periods usually range from six to 36 months, while “fundamental” representations may survive longer. Liability caps vary with deal size and seller strength. If breached, buyers may seek damages, a price reduction, or rescission. Representation and warranty insurance is used mainly in share deals and is uncommon in mid‑market real estate.

When purchasing real estate in Québec, investors must consider several key areas of law. Tax structuring is essential to ensure the acquisition is completed in a fiscally efficient manner. Zoning and land‑use compliance must be verified to confirm that the intended use is permitted, or that required changes are achievable. Financing terms also play a central role, as they directly affect the viability and profitability of the investment. Careful attention must be given to the seller’s representations and warranties, which influence due diligence and available remedies. Finally, investors must ensure the property’s title is clear and free from irregularities.

A buyer can be responsible for soil pollution or environmental contamination of a property even if they were not the source of the contamination. In Québec, the Environment Quality Act can require the current owner of contaminated land to investigate, monitor, or carry out remediation work, regardless of when the pollution occurred or who caused it. These statutory obligations apply independently of any contractual risk‑allocation between the parties or civil liability principles under the Civil Code. That said, buyers can protect themselves contractually by negotiating provisions that give them recourse against the seller if the property fails to meet environmental requirements.

A buyer can ascertain the permitted uses of a parcel of real estate by reviewing the applicable municipal zoning by‑laws and planning instruments adopted under the Act respecting land use planning and development. It is also possible to enter into project‑specific development agreements with municipal authorities.

Public authorities may expropriate private property for public purposes under the Act respecting expropriation, provided that the owner is paid fair and full compensation. The process typically begins with formal notice to the owner, followed by negotiations to determine compensation. If no agreement is reached, the compensation amount is determined by the Administrative Tribunal of Québec.

In Québec, the transfer of real property generally triggers transfer duties under the Act Respecting Duties on Transfers of Immovables (ARDT). Unless an exemption applies, the purchaser must pay these duties to the municipality where the property is located. In an asset deal, each party typically covers its own professional fees, although the purchaser usually pays the notary’s publication fees. The seller is responsible for any costs associated with discharging existing hypothecs.

Share transactions involving a property‑owning company are not subject to transfer duties unless a previous exemption under the ARDT becomes void – eg, where beneficial ownership changes within the required 24‑month period. In such cases, duties may be retroactively triggered.

Although the calculation of the cost of transfer duties varies slightly from municipality to municipality, the commonality is that the transfer duties are calculated based on the higher of: (i) the municipal evaluation of the property adjusted by a multiplying factor for the given year; and (ii) the consideration paid for the property.

Numerous statutory exemptions exist under Chapter III of the ARDT.

The Prohibition on the Purchase of Residential Property by Non‑Canadians Act is a federal law that prohibits non‑Canadians from buying certain residential properties in Canada, namely buildings with three dwelling units or fewer located within Census Metropolitan Areas and Census Agglomerations. This Act is subject to exemptions, such as purchases by certain work‑permit holders, spouses of Canadian citizens, and buyers acquiring subjected residential property outside the restricted areas. 

Commercial real estate acquisitions in Québec are typically financed through a mix of secured debt and equity, consistent with Civil Code requirements and market practice. Senior mortgage financing remains the primary tool, whether through a bilateral loan or, for larger transactions, a syndicated facility. In the multi-residential sector, CMHC-insured loans continue to provide higher leverage and competitive pricing.

When senior debt does not fully meet funding needs, buyers often supplement with bridge loans, mezzanine financing, or preferred equity, particularly in institutional or partnership structures. Equity contributions generally range from 20–40%, although certain lenders may finance up to 90–100% of a property’s value in specific cases.

Large-scale or portfolio acquisitions typically involve more complex structures, combining several layers of financing and addressing timing, due diligence considerations, and the overall sophistication of the transaction.

In Québec real estate financing, lenders typically require security tailored to the asset and borrower. The main security is an immovable hypothec registered in the Land Register, often supplemented by an assignment of rents for income‑producing properties. Lenders also take movable hypothecs over equipment, receivables, contracts, or all present and future movable property, which must be registered in the Register of Personal and Movable Real Rights (RPMRR) to be enforceable against third parties. Depending on the project and risk profile, lenders may also require personal or corporate guarantees or insurance‑based protections to mitigate specific project risks.

There are no restrictions on granting security over real estate to foreign lenders. What does matter is that the security must comply with Québec’s civil law formalities.

In Québec, the registration of a hypothec entails only nominal statutory filing fees and notarial fees, and the subsequent enforcement of such security does not give rise to any additional registration charges beyond the ordinary legal and procedural costs associated with exercising remedies.

Before an entity can validly grant security over its immovable property in Québec, it must first ensure that it has the requisite corporate powers and internal authorisations, and that the granting of the hypothec is in the best interests of the corporation. Directors must also consider any solvency implications, as well as potential issues relating to preferences or transfers made in the vicinity of insolvency. In addition, all mandatory formalities must be complied with, including executing the hypothec in the proper form – typically by notarial act en minute – and registering it at the Québec Land Register to render it opposable to third parties. While Canada does not impose statutory financial assistance restrictions, directors remain responsible for assessing corporate benefit, solvency and the impact of the transaction on stakeholders.

In Québec, enforcement of a hypothecary right following a borrower default requires that the creditor complete the prescribed formalities, including issuing and publishing a préavis d’exercice (notice of exercise of a right of hypotec) in the Land Register and proceeding with one of the Civil Code’s enforcement remedies. Beyond these statutory requirements, no exceptional hurdles generally arise, and ranking issues are governed primarily by the order of publication, so additional steps to secure priority are uncommon at the enforcement stage. Depending on the remedy pursued and the level of court oversight, realisation on an immovable property can take several months to more than a year. All temporary COVID‑related limitations on foreclosures have long been lifted, and while many lenders are actively enforcing, others still opt for negotiated forbearance depending on the commercial context. The market for non‑performing real estate debt remains active, notably among private, alternative, and opportunistic capital providers.

In Québec, priority among secured debts is generally determined by the order of registration in the Land Register for immovable hypothecs, in accordance with the principle of “first in time, first in right.” That said, an existing secured debt may become subordinated to newly created debt, either by agreement among creditors or by operation of law.

The most common mechanism is contractual subordination. A creditor holding an existing hypothec may voluntarily agree to subordinate its claim in favour of a new debt granted to another lender. This is typically documented in a subordination agreement or an intercreditor agreement, pursuant to which the existing creditor agrees that its hypothec will rank after that of the new lender. Such an agreement does not extinguish the existing hypothec, but rather modifies its priority ranking in the event of enforcement or insolvency. Once executed and, where required, published, the subordination is opposable to third parties.

Subordination may also arise by operation of law, as certain claims benefit from priority solely as a result of statutory provisions. This includes, for example, certain legal construction hypothecs or those arising from judgments, as well as other statutory priorities provided under the Civil Code of Québec, which may take precedence over previously registered security interests.

Finally, subrogation may also affect creditor priority. Where a new creditor pays off the debt of a prior ranking secured creditor, it may be subrogated to that creditor’s rights and rank, thereby effectively stepping into its position in the order of priority vis-à-vis other creditors.

As a general principle, a lender holding a hypothec over immovable property does not incur environmental liability solely by virtue of making a loan or holding security. A lender that refrains from taking operational control of the property is generally not considered an “owner or person having custody or control” within the meaning of the Environment Quality Act (EQA). However, the EQA imposes environmental obligations on owners, occupiers, and any person having custody or control of contaminated land, regardless of fault. A lender may therefore become exposed if it moves beyond passive secured creditor status — specifically by exercising hypothecary remedies involving possession, administering or operating the property following default, or otherwise exercising actual control over the site. Accordingly, lenders active in Québec real estate financings routinely require environmental representations, warranties, indemnities, and compliance covenants in their loan documentation.

In Québec, a hypothec remains valid and enforceable in insolvency if properly created and published, provided immovable hypothecs are granted by notarial deed in accordance with the Civil Code. Priority among hypothecs is generally determined by registration order and cession of rank agreements, subject to important exceptions: prior claims, legal hypothecs of construction, and federal deemed trusts rank ahead regardless of registration. Court-ordered super-priority charges in CCAA or BIA proceedings can also take precedence over existing hypothecs. An unpublished hypothec is unenforceable against the trustee. In bankruptcy, secured creditors generally enforce without court authorisation, unlike under the CCAA, where the stay is broader. A properly structured and published hypothec nonetheless offers strong protection in Québec real estate financings.

There are no existing, pending, or proposed rules, regulations, or requirements that lenders or borrowers pay any recording or similar taxes in connection with mortgage loans or mezzanine loans related to real estate in Québec.

In Québec, land use planning is governed by a hierarchical framework established under the Act respecting land use planning and development (the LAU). At the highest level, the provincial government issues government policy directions, which are administered by the Minister of Municipal Affairs, Regions and Land Occupancy, and set out the government’s objectives and expectations for regional and local planning bodies. Where the territory falls within a metropolitan community, a metropolitan land use and a development plan (the “Metropolitan Plan”) provide binding policy directions to the Regional County Municipality (RCM) and agglomerations within its territory. These policy instruments are not directly opposable to citizens; they frame the directives that cascade down to the RCMs, which must incorporate them into their own planning documents.

At the regional level, each RCM adopts a land use and development plan (“the RCM Plan”) along with a complementary document that imposes specific obligations on local municipalities, such as standards regarding heights, density, and new construction, which the municipalities must transpose into their own by-laws. The RCM Plan itself is not directly enforceable against individual citizens, but it determines what each city or municipality (whether governed by the Cities and Towns Act or the Municipal Code) may or must regulate. The RCM issues a certificate of conformity to confirm that local by-laws comply with the RCM Plan. Municipalities then adopt a series of normative regulatory instruments directly applicable to citizens: (i) the zoning by-law, which divides the territory into zones and prescribes through a detailed grid the permitted uses, norms and density applicable to each zone; (ii) the subdivision by-law; and (iii) the by-law respecting permits and certificates, which governs the issuance of building permits, certificates of authorisation and certificates of occupancy.

Development rights are obtained by filing an application for a building permit or a certificate of authorisation with the municipality, which verifies compliance with the zoning, subdivision and permit by-laws under the LAU. Where the project conforms, the municipal official must issue the permit. Additional authorisations may be required from the CPTAQ for land in an agricultural zone and from the Minister of Sustainable Development, Environment and Parks for projects subject to the Environment Quality Act. Third parties, including residents of contiguous zones, may object through the referendum approval process provided for in the LAU when a zoning by-law amendment is proposed. Enforcement is carried out by the municipal official who applies the LAU and the local regulatory framework, with powers to refuse non-conforming permits, institute penal proceedings, and seek injunctive relief.

The more commonly used entities to hold real estate in Québec are corporations, partnerships and trusts. In such cases, the holding of real estate assets is carried out indirectly, since the investor holds shares, interests, or units in the relevant entity, which itself owns the property. Investors may also opt for the direct holding of the real estate asset with other investors via undivided co-ownership. The choice of investment vehicle or holding structure is guided by various factors, including fiscal considerations, risk management, the type of asset, and each investor’s governance rules.

A corporation is a separate legal entity whose shareholders benefit from limited liability. It is managed by a board of directors. Taxable income, profits, and losses are calculated at corporate level, and dividends are taxed at shareholder level.

A partnership, whether general or limited, is created by agreement among investors. In a general partnership, the partners may manage the business directly and are jointly and severally liable to third parties. In a limited partnership, the general partner manages the enterprise and bears liability, while limited partners benefit from limited liability so long as they do not participate in management. Partnerships are flow‑through vehicles, meaning income, profits, and losses are taxed directly at the investor level.

A trust is a distinct patrimony administered by trustees for its beneficiaries. Trustees act as administrators of the property of others, and income may be taxed at either the trust or beneficiary level.

Divided co‑ownership is not a legal entity but a form of shared ownership in which each investor holds an undivided share of the property. Income and losses are taxed directly in the hands of co‑owners, who collectively manage the asset.

REITs in Québec may be privately held or publicly traded, but, in all cases, must have at least 150 unitholders. They operate as income trusts that hold income‑producing real estate or related assets, forming a distinct patrimony separate from the settlor, trustees, and beneficiaries. Trustees manage the portfolio for the benefit of unitholders, who are taxed on distributions because REITs may deduct amounts paid to beneficiaries from their own taxable income. Distributions can consist of ordinary income, capital gains, or return of capital, depending on the REIT’s activities and results. When beneficiaries are non‑residents, withholding tax generally applies, with rates varying based on the nature of the income and tax treaty provisions. To maintain REIT status, the trust must primarily hold income‑producing real estate and comply with fiduciary governance requirements. For investors, REITs provide exposure to real estate without direct ownership obligations, offering steady income, diversification, and greater liquidity than direct property holdings.

There is no minimum capital requirement applicable to any of the investment vehicles discussed above.

Entities used to invest in real estate in Québec are subject to governance requirements that vary by structure. Corporations, incorporated federally or provincially, must comply with corporate law and transparency obligations. They are managed by a board of directors elected by shareholders, and directors owe duties of loyalty, prudence, and good faith while overseeing major decisions such as acquisitions, financings and dispositions. Québec’s transparency rules require disclosure of individuals exercising significant control, and federally incorporated companies must also maintain a register of such individuals.

Partnerships, whether general or limited, operate under a partnership agreement that outlines decision‑making, management authority and partner responsibilities. General partners manage the partnership and may bear personal liability, while limited partners benefit from limited liability provided they do not participate in management. Partnerships must maintain internal records and disclose individuals with significant control.

A trust is a separate patrimony administered by trustees who owe strict fiduciary duties to beneficiaries and must maintain detailed records. Trusts carrying on commercial activities must disclose individuals who ultimately control or benefit from the trust when registering with the Business Registry (Registraire des entreprises du Québec).

Undivided co‑ownership, often used when multiple individuals jointly acquire real estate, is governed by the Civil Code and by the indivision agreement entered into by the co‑owners. Each co‑owner holds an undivided share of the property and participates in decisions relating to its management, unless the agreement delegates certain powers to a manager or establishes a specific decision‑making process. Co‑owners owe each other duties of cooperation and must contribute to expenses and obligations proportionally to their shares. Because undivided co‑ownership does not create a separate legal entity, clear documentation of ownership shares, management rules, and financial contributions is essential. The co-ownership agreement itself is subject to a statutory limit: it may not exceed 30 years, although it can be renewed upon expiry.

Legal entity maintenance annual costs are usually less than CAD1,000.

A lease is the most common arrangement allowing the occupation and use of real estate for a limited period without ownership, granting the right of occupancy in exchange for rent. There is also the granting of emphyteutic rights (typically for long periods), a usufruct, specific usage rights, or even servitudes.

There are many different types of commercial leases, which depend largely on the leased property and the sharing of costs and expenses between the parties. Common examples include office, industrial and retail leases, which can be structured as gross, semi-gross or net leases.

Unlike residential leases, for which the terms and rent payable are regulated in Québec, commercial rents and lease terms are freely negotiated.

The terms of a lease are freely negotiated between the parties. Typically, the initial term of a lease is anywhere between two and ten, often with renewal options. Maintenance and repair obligations depend on the type of lease (gross, semi-net or net). However, the landlord generally remains responsible for structural elements. Rent is most commonly payable monthly in advance on the first day of every month.

Although extremely uncommon, rent could in theory remain the same as long as the lease lasts, if such was provided for in the lease. However, rents are typically subject to yearly increases based on an agreed percentage, or even according to the increase in consumer price index.

Commercial leases will generally include a determinable procedure to determine the new rent. Such a procedure is typically either: (i) a fixed percentage increase to the current rent; (ii) an increase according to the consumer price index; or (iii) to be negotiated between the parties prior to the date of such increase.

Goods and Services tax (GST) and Québec sales tax (QST) are payable on rent.

Other than rent (including security deposits or pre-paid rent), there are no costs payable by a tenant at the start of a lease. 

In most commercial leases, tenants are responsible for the maintenance and repair costs of common areas (such as parking lots, gardens, and landscaping) as part of additional rent. Under net – and especiallytriple‑net – leases, tenants cover these costs as part of their proportionate share of operating expenses. However, this obligation is nuanced by the type of commercial lease in question. For example, it is possible that maintenance and repair costs of common areas be included in the rent payable by tenant and the responsibility lies with the landlord.

In multi‑tenant commercial properties, utilities and telecommunications costs are typically paid either directly by each tenant or indirectly through the landlord, depending on how the building is set up. When individual units can be separately metered, tenants usually arrange and pay for their own utility and telecom services directly to the service provider. If separate connections are not available, the landlord supplies the services and then bills tenants, often adding an administrative fee.

In net, double‑net, and triple‑net commercial leases, taxes are generally part of the tenant’s additional rent obligations. In a gross lease, the landlord generally pays the property taxes, although the cost is usually built into the higher all‑inclusive rent.

In commercial leases, the landlord typically insures the building, as he holds the insurable interest. However, commercial leases routinely shift this cost to the tenant through additional rent or operating costs, especially in net, double‑net, or triple‑net leases. In such leases, tenants reimburse the landlord for building insurance premiums as part of operating expenses.

Building insurance usually covers physical damage caused by fire, water, vandalism, and other property‑loss events. However, specific coverage is obtainable for a wide variety of events including business interruption coverage that applies only when business activities cease due to physical damage from an insured peril.

During the COVID pandemic, tenants generally did not recover rent or clean‑up costs under business interruption insurance, because insurers denied claims on the basis that pandemic closures did not involve the required “direct physical loss or damage”, leading to significant litigation across Canada.

landlords can restrict how a tenant uses the premises through the lease, typically by specifying a permitted use and/or prohibiting certain uses. Tenants must also comply with usage restrictions or permissions in accordance with zoning laws.

Furthermore, recent modifications to the Competition Act which now restrict anti‑competitive clauses such as exclusivity or restrictive covenants when they unjustifiably limit competition are an important aspect of consideration in the drafting of commercial leases.

A tenant may alter or improve the leased premises only as permitted under the lease. Structural work is generally prohibited or subject to strict conditions, often requiring the landlord’s approval, supervision, or performance. Non‑structural alterations may follow a lighter approval process, depending on their nature and value. Improvements typically become the landlord’s property on installation, though leases may require the tenant to remove them and restore the premises at lease end. In all cases, tenants must obtain required permits, secure landlord consent, use approved contractors, comply with building codes, and provide plans before commencing any work.

Leases are governed by the Civil Code, but residential leases are subject to statutory regulations that limit what landlords and tenants can agree to, unlike commercial leases which are largely based on contractual freedom. Hotels are generally treated as commercial properties for leasing purposes, even though their operation is also subject to separate regulatory frameworks. During the pandemic, Québec mainly adopted temporary measures affecting residential tenancies, while commercial leases were not subject to asset-class‑specific legislation and, instead, relied on financial relief programmes.

Tenant insolvency limits a landlord’s contractual remedies because federal insolvency laws override the lease. Under the Bankruptcy and Insolvency Act (BIA), a trustee may disclaim a lease, giving the landlord 15 days to challenge it in court; under the Companies’ Creditors Arrangement Act (CCAA), at least 30 days’ notice is required. The landlord then ranks as a general unsecured creditor for full provable damages – Canadian law imposes no statutory cap. The BIA’s automatic stay bars landlords from terminating the lease for insolvency, and insolvency-triggered default clauses are separately unenforceable. Post-filing rent is treated as a current operating expense and must be paid according to the ordinary course. Of note is that Section 136(1)(f) of the BIA grants landlords a preferred claim for up to three months’ arrears of rent that accrued before bankruptcy, ranking ahead of ordinary unsecured creditors but behind secured creditors. In practice, landlords and their counsel have internalised the three-month figure as the baseline ask in any insolvency negotiation, knowing it reflects both the statutory preferred claim under the BIA and the customary threshold that courts have accepted in CCAA initial orders.

In a commercial lease, a tenant has no right to remain within the premises after expiry of the term. However, although a fixed‑term commercial lease ends automatically at the term under Article 1877 of the Civil Code, the only exception is tacit reconduction whereby, if the tenant occupies the premises more than tend days after expiry of the term without the landlord’s opposition, the lease renews automatically under Article 1879 of the Civil Code.

To ensure that the tenant leaves at the expiry of the term, the lease can provide for a waiver by the tenant to article 1879, removing the right of tacit reconduction. Furthermore, the lease can also provide that occupation of the premises after the lease’s expiry will increase the rent payable for the period of occupation concerned by 150%, and even 200% in some leases.

This clause would also provide that, should the tenant occupy the premises after expiry of the lease, the lease term would be month to month and terminated upon notice by the landlord.

A commercial tenant may assign its leasehold interest in the lease or sublease all or a portion of the premises unless such right is expressly denied in the lease. If such is permitted, then conditions typically imposed include:

• the landlord’s satisfaction with the proposed assignee or subtenant’s financial capacity and creditworthiness;
• confirmation that there is no existing default under the lease;
• maintaining the initial tenants’ liability under the lease with respect to the assignee’s or sub-lease’s obligations; and
• the availability of similar premises in the building (if such is a multi-tenant property).

The right to terminate a commercial lease generally arises from the contractual provisions of the lease and, in the absence of such, the Civil Code. From the landlord’s perspective, termination rights typically stem from:

• a tenant’s default in the payment of rent;
• failure to comply with an obligation under the lease (such an unauthorised assignment or sublease, maintenance obligations, prohibited uses etc);
• the insolvency or bankruptcy of the tenant; or
• abandonment of the premises.

From the tenant’s perspective, the termination rights are much more limited and generally arise when the landlord fails to grant the tenant with peaceful enjoyment of the premises (if such warranty is provided by the landlord).

Additionally, both parties may negotiate express termination rights in the lease itself, such as in the event the premises suffer serious damages which cannot be repaired with a specific time frame.

In Québec, a commercial lease does not need to be registered in the Land Register to be valid between the parties. However, publishing a notice of lease makes the lease opposable to third parties and protects the tenant against termination by a subsequent purchaser. For leases exceeding one year, tenants are advised to publish such a notice in accordance with Article 2999.1 of the Civil Code, a public order provision that cannot be waived. Although a lease may restrict publication of the full agreement for confidentiality reasons, the tenant always retains the right to publish a notice identifying the parties, the description of the premises, and the term.

To be registered, a lease or notice of lease must comply with the formal requirements of Québec’s Land Register. Registration fees are modest and typically borne by the tenant, who benefits from the resulting protection. Except in the case of leases with a term (including options to renew) exceeding 40 years, no transfer taxes or similar duties apply to the registration of a commercial lease or notice of lease in Québec.

A tenant can be forced to vacate the premises prior to the expiration of the Lease in the event of a default. The length of this process depends on the terms of the commercial lease. For example, most commercial leases will provide the Landlord the right to terminate the Lease ipso facto upon notice to the tenant in the event of a default. Absence of this specific right, the Landlord would have to (in compliance with the Civil Code) obtain a judgment terminating the lease and ordering the tenant to vacate the premises. Any COVID-related eviction moratoriums or restrictions that were previously in place have now lapsed, and no special pandemic era protections currently apply to commercial evictions in Québec.

Through expropriation (ie, when the property is appropriated by the government) a commercial lease can be terminated because of such appropriation. The process is governed by the Expropriation Act and requires the expropriating authority to notify all affected parties, including tenants, and to register the expropriation notice in the land register. Where the expropriation is not challenged, the process from initial notice to the tenant having to vacate the premises typically takes anywhere from several months to two years, depending on the scope and urgency of the intended use by the government.

Importantly, a tenant who is forced out as a result of an expropriation is entitled to financial compensation by the expropriating authority.

A breach of the lease by tenant which leads to the termination of the lease by the landlord, entitles the latter to claim damages. The extent of such damages is typically outlined in the lease and is always subject to the landlord’s obligation to mitigate its damages. 

Under Article 1883 of the Civil Code, the landlord may also seek the authorisation (if not expressly provided for in the lease) to perform any obligation the tenant has failed to perform (such as with respect to maintenance and repair obligations), the whole at the tenant’s expense and typically with an administration fee on top of such costs.

Security deposits are typically provided in commercial leases and most commonly by: (i) cash advances; or (ii) an irrevocable letter of credit issued.

Construction pricing in Québec typically follows one of several models. A fixed‑price contract establishes an all‑inclusive price for the project, placing most financial risk on the contractor and incentivising careful evaluation of costs. A unit‑price contract sets predetermined prices per unit of work or materials, with the final price based on actual quantities installed or supplied. Under a cost‑plus contract, the owner reimburses actual labour and material costs plus an agreed fee or percentage for overhead and profit; the parties may set a Guaranteed Maximum Price, sometimes paired with a shared‑savings mechanism if costs come in below the ceiling.

Québec’s Civil Code also governs cost‑estimate contracts, requiring contractors to justify price increases where additional work, services or expenses were not reasonably foreseeable at signing. These structures allow parties to allocate risk based on project complexity, desired price certainty, and the degree of control each party wishes to maintain.

Responsibility for design and construction can be allocated through several delivery methods. In the traditional model, the owner retains professionals to prepare plans and specifications, then hires a general contractor through a tender process to execute the work, following a linear sequence from design to construction.

In a design‑build model, the owner contracts with a single entity responsible for both design and construction, simplifying coordination and risk allocation.

Under a construction management model, the owner appoints a construction manager early in the process to provide advisory and, in some cases, construction services; the owner may contract directly with trade contractors, or the construction manager may act as both manager and general contractor.

Integrated project delivery (IPD) involves a multiparty agreement among the owner, key professionals, and the contractor, with shared decision‑making, risks, and rewards.

Public‑private partnerships (P3s) are used for major public infrastructures, with a private consortium responsible for design, construction, financing, and often long‑term operation.

Risk management in construction contracts is achieved through indemnification clauses, legal and contractual warranties for defects or poor workmanship, and limitation or exclusion of liability, all subject to statutory and public‑policy constraints that vary across provinces. In common‑law provinces, these clauses are generally enforceable unless unconscionable or contrary to statute. In Québec, their enforceability is further limited by the Civil Code, particularly in cases involving bodily injury or gross fault. Parties also rely on insurance requirements, performance guarantees such as bonds or letters of guarantee, and dispute‑resolution clauses, with the chosen mechanisms reflecting their respective bargaining power.

It is common, particularly in contracts involving public clients, to find clauses imposing liquidated damages or financial penalties on the contractor in the event of a breach of contract, particularly in the event of failure to comply with the work schedule.

In Québec, clauses imposing liquidated damages or financial penalties are typically characterised as penalty clauses under the Civil Code. Although, in principle, the party invoking the clause does not have to prove the damages suffered to be compensated, the courts may reduce the amount if it is considered excessive or disproportionate to the actual prejudice suffered. Depending on the circumstances, the agreed amount of such damages may be subject to judicial scrutiny. However, a contractor who is subject to financial penalties for delays in the performance of the work may demonstrate that these delays were due to force majeure or to the fault of the client.

It is common for the project owner to require additional guarantees regarding the proper performance of the work by the contractor. In general, these guarantees often take the form of bonds, such as a bid bond, a performance bond, and a labour and material payment bond. It is also common to provide a certified check or an irrevocable and unconditionally payable bank guarantee letter.

In Québec, unpaid participants in the construction or improvement of a property – such as architects, engineers, material suppliers, workers, contractors, or subcontractors – may register a legal construction hypothec. This hypothec exists by operation of law but must be preserved through publication in the Land Register within 30 days of completion of the work, and the notice must be served on the owner. It secures payment for work, materials, or services that added measurable value to the property. If the claim remains unpaid, the beneficiary must publish a notice of exercise of a hypothecary right within six months of completion to maintain the hypothec.

An owner may remove a legal construction hypothec by paying the outstanding amount or seeking court‑ordered cancellation, particularly where conditions for the hypothec were not met, the work added no value, or defects required correction. Owners may also request a substitution of security, such as depositing the disputed amount.

Construction projects must comply with applicable building, safety and zoning regulations before they may be occupied or used for their intended purpose.

At the provincial level, building codes (largely based on the National Building Code of Canada) establish minimum standards relating to structural integrity, fire protection, accessibility, energy efficiency and life safety. Compliance with these standards is typically verified by municipal authorities through inspections conducted at various stages of construction. Before occupancy, municipalities generally require the issuance of an occupancy permit or certificate confirming that the project complies with applicable building and zoning requirements. Certain projects may also require approvals from other regulators, such as fire safety, environmental, public health or technical authorities (eg, elevators or electrical systems). Failure to obtain required permits can prevent occupancy and lead to penalties.

Canada imposes value-added taxes through the Goods and Services Tax (GST), Harmonized Sales Tax (HST), Provincial Sales Taxes (PST) and Québec Sales Tax (QST). These taxes vary by province, generally ranging from 5% to 15%, depending on where the transaction occurs. GST/HST/PST/QST typically apply to transfers of: (i) commercial real property; and (ii) new residential real property. The seller generally has the obligation to collect the applicable tax from the buyer, unless the buyer is registered for GST/HST/PST/QST and acquires the property in the course of commercial activities, in which case self-assessment may apply. Transfers of used residential properties are usually exempt. Additionally, sales of real property as part of a broader business sale may benefit from an exemption from GST/HST/PST/QST.

Where imposed, land transfer tax usually applies to direct transfers of real property, not to transfers of shares of a corporation or, except in certain provinces such as Ontario and Québec, interests in partnerships holding real estate. In some provinces, land transfer tax may also apply to the transfer of long-term leasehold interests, depending on the lease duration and its renewal options (ie, exceeding 40 years). For additional context, see also the discussion of the federal Underused Housing Tax in 1.3 Proposals for Reform.

Municipal property taxes are payable by the property owner and are commonly passed to tenants through the lease payments. These taxes are based on: (i) the assessed value of the property; and (ii) the property’s use classification. Some municipalities offer exemptions or reduced rates to: (i) public or non-profit organisations; and (ii) properties located in designated development incentive zones.

The taxation of rental income earned by non‑residents investing directly in Canadian real estate depends on whether the income is characterised as business income or income from property. The more actively the owner manages the property, the more likely the income will be treated as business income. Non‑residents earning business income are taxed on net income at corporate‑level rates (generally 23%–31%, depending on the province) and may also be subject to a 25% branch tax, which can be reduced under applicable treaties, including to 5% under the Canada–US Tax Treaty.

Payments such as rent, dividends, interest, and royalties to non‑residents are generally subject to a 25% withholding tax, often reduced by treaty. Non‑residents earning passive rental income may elect under Section 216 of the Income Tax Act to file a return and be taxed on net rather than gross income.

Non‑residents are also taxed on gains from disposing of “Taxable Canadian Property,” which includes direct real estate interests and certain entity interests deriving over 50% of their value from Canadian real property. Purchasers may need to withhold 25–50% unless a clearance certificate is obtained, and sellers must notify authorities within ten days of disposition.

For VAT on rent, please see 6.7 Payment of VAT.

When computing net rental income (whether by a Canadian resident, a non-resident carrying on business in Canada, or a non-resident filing under Section 216 of the Income Tax Act), deductions are generally allowed for: (i) operating expenses; (ii) reasonable financing costs; and (iii) tax depreciation (capital cost allowance). Depreciation may be claimed on buildings and other depreciable assets used to earn rental income at declining-balance rates typically ranging from 4% to 10%. The claim is discretionary and cannot generally create or increase a rental loss. In the year of acquisition, only half of the standard depreciation rate is permitted.