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The deposit does not compensate for all the errors of the past.

The deposit does not compensate for all the errors of the past.

In the field of rental law, the financial guarantees that can be required by a Quebec owner are not many. The one that remains, the deposit, is not a palliative solution for all the situations that are presented to him during the renting of a housing.

Even if this announcement is not a novelty, it deserves that one takes the time in order to explain to you that the deposit is a financial guarantee which does not always compensate for the bad files of the candidates.

Indeed, in a decision rendered on June 4, 2010, the administrative judge, Me Anne Morin, explained to the parties: “Does a landlady have the obligation to rent to an insolvent person if the deposit offers guarantees of solvency? In this respect, the Court considers that the landlady could refuse the transfer, because the credit file of the tenant shows strong chances that the landlady would have been obliged to sue for non-payment of the rent. ”

You must understand in this statement that to refuse a candidate in spite of the financial guarantee his credit file must be very precarious. Generally, this candidate went bankrupt recently or his payment practices are amongst the worst according to criteria established by credit-checking companies. Many decisions of the Rental Board where the tenant was condemned for non-payment of rent or for frequent delays can also reflect this kind of situation.
Me Morin explains that a lessor has this right because he “must take care of the good administration of his company and one cannot force him to give the use of a housing to a person who already does not respect his financial obligations.”
It is obvious that in an extreme situation such as this one the choice is less difficult to make for an owner but it is not always the case. But when then is the deposit useful?
It is in cases when the credit file shows some difficulties of payment without being catastrophic though that the deposit will have its utility. Indeed, the guarantee of a deposit cannot be required at any time. A perfect file does not justify it and the deposit could not be required from him.
If it is required, the guarantee could be signed and confirmed directly in the lease or in a document separate from the lease.
The interpretation of a credit file is left to the appreciation of the owner and we agree that certain situations can cause confusion as to the choice to make, more especially as few intervenors can help him to make his choice.
Unfortunately, there is no other way of assessing a candidate well and of managing one’s company in a responsible way.

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About the author

Me Jean-Olivier Reed, avocat

Me Jean-Olivier Reed graduated from Collège l'Assomption in legal technology in 1997 and then from the University of Montreal in law in 2001. Member of the bar since 2004, he was a lawyer and building manager from 2004 to 2006.

Lawyer with Messier Soucy lawyers since 2006. He works in real estate law and more particularly in rental law and co-ownership law.

He has written several articles in the newspaper "Le Propriétaire" on various topics dealing with rental law.
He lectures to members of the Quebec Landlords Association on current topics in rental law.

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