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The insurance clauses introduced during the lease vs. accepted from the beginning

The insurance clauses introduced during the lease vs. accepted from the beginning

Property insurance and liability are increasingly demanded by the owner to sign the lease. Indeed, it is common that a landlord inserts a clause in the contract requiring from the tenants proof of purchase of such insurance. But, if ever the owner has not done this at the signing of the lease, may he incorporate such a clause at the renewal of the latter? In the same vein, a tenant who refuses to accept the new insurance clause, is he in his right to do so?

First, you should know that to change your lease at its renewal, as the owner, you must meet certain conditions. In fact, you have an obligation to give notice to your tenant of the next change. Also, if he refuses the changes, you can go to Court, which may decide the fate of the amendments and this if you submit your request “in the month of receipt of the notice of refusal.” Once past that deadline and without your filing an application with the Régie du logement, the lease will be automatically renewed, but under the old conditions.

In the case of an addition of an insurance clause in a lease which did not include one initially, the main obstacle to such a change is the concept of unfair terms. According to article 1901 of the C.c.Q, “A clause stipulating a penalty in an amount exceeding the value of the damage actually suffered by the lessor, or imposing an obligation on the lessee which is unreasonable in the circumstances, is an abusive clause. The same provision states that such a clause is null “or any obligation arising from it may be reduced.”

Regarding the insurance clause introduced during the lease, without it existing at the original signature of the latter, jurisprudence abounds to explain that this is an abusive clause. For example, in Gagnon vs. Gauthier (2012 QCRDL 43869), while the owner added a clause requiring the tenant to take out insurance in a new Regulation of the building written during the lease, the Régie du logement is categorical to the effect that this clause is abusive because additional costs are required from the tenant, costs whose value can not be determined in advance.

Similarly, in Innovest Inc. vs Grier (2011 QCRDL 16473), while the clause does not require the tenant to purchase insurance but it rather “strongly suggests” (paragraph 7) to do so, the Régie du logement comes to the same conclusion. Indeed, the Régie explains that, in writing this, it will not be responsible for all the property of the tenant, the landlord limits his liability but imposes one on the tenant, even in situations of damage not caused by his fault.

Therefore, to distinguish between a case where the lease already contains an insurance clause, in contrast to that where the clause is only added during the lease renewal, is essential. Indeed, in Tassé vs. Savard (2011 QCRDL 42562), the owner decides to add a condition in the lease that the tenants must submit, twice a year, proof of property insurance and liability underwriting. The Régie du logement stipulates immediately that adding an insurance clause in leases represents an unfair clause as it is then a financial burden to the tenant. In contrast, it said that, if the parties had never signed the lease at the outset with a provision of insurance, their common intentions prevail and it is perfectly legal for them to do so. Once such a clause already exists, if during the lease the owner just wants to add something, it is not an unfair clause because no undue financial hardship or the imposition of an obligation arises from it. Indeed, as the commitment to insurance already exists, the fact of requiring proof of it every year does not constitute an additional economic burden.

Let us also reflect on clause 1313 in Chomedey vs. Lévesque (2011 QCRDL 48820). The Régie du logement explains there, that in the new Regulations of the building that the owner proposes to the tenant, the insurance clause modifies the already existing one in the previous regulation. The difference in the new document is to the effect that the tenant's liability is reduced but that a precision is issued at the level of the responsibility with regard to the actions of his visitors. As the tenant had already accepted the clause to take insurance in the old regulations the additions do not constitute an unfair clause especially as the responsibility with regard to his visitors exists already without clause because of Section 1862 of the C.c.Q.

 To include an insurance clause represents a win-win situation for both the owner and the tenant according to the APQ. However, be careful, especially if you try to add this clause during the lease. In case of refusal the Régie could conclude that we cannot add the insurance requirement. Do not hesitate to contact the legal services of the Association of Quebec Landlords for any questions and advice.

About the author

Élène Moussa

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