The City of Montréal acquires a pre-emptive right for the purchase real estate properties for social housing purposes

The Urban Agglomeration Council of Montréal adopted the Regulation determining the territory in which the pre-emptive right can be exercised and on which real estate properties can thus be acquired for social housing purposes (“Règlement déterminant le territoire sur lequel le droit de préemption peut être exercé et sur lequel des immeubles peuvent être ainsi acquis aux fins de logement social” [1]) on March 26th. This pre-emptive right is the result of new powers that were conferred on the City of Montréal in 2017 under Sections 151.1 to 151.7 of Appendix C of the Charter of Ville de Montréal, metropolis of Québec [2] and allows the City to acquire certain immovable properties in priority over any other purchaser. Since 2017, this right has been used by the City, notably for regional park purposes [3].

Territory concerned

The Regulation relates to real estate properties that could be acquired by the City to develop social housing. The pre-emptive right covers the urban agglomeration of Montréal and the 19 boroughs of the City, but also of Baie-D’Urfé, Beaconsfield, Côte-Saint-Luc, Dollard-Des-Ormeaux, Dorval, Hampstead, Kirkland, L’Ile-Dorval, Montréal East, Montréal West, Mont-Royal, Pointe-Claire, Sainte-Anne-de-Bellevue, Senneville and Westmount. In addition, only privately owned properties may be subject to the pre-emptive right.

The agglomeration council has identified by resolution 196 lots that must be subject to the pre-emptive right, as provided in the Charter and the Regulation. They are divided as follows:

  • Côte-des-Neiges-Notre-Dame-de-Grâce: 21 lots
  • Le Plateau-Mont-Royal: 34 lots
  • Le Sud-Ouest: 22 lots
  • Mercier-Hochelaga-Maisonneuve: 1 lot
  • PDUES (“urban, economic and social development plan”) Marconi-Alexandra, Atlantic, Beaumont, De Castelnau: 26 lots
  • Verdun: 15 lots
  • Ville-Marie: 68 lots
  • Villeray-St-Michel-Parc-Extension: 9 lots

A second resolution will be adopted in April 2020 to add another a series of additional lots. It should be noted that the agglomeration council has delegated to the City’s executive committee the power to avail itself of the pre-emptive right and to acquire property subject to such a right [4].  

How will the city proceed?

Notice of Pre-emptive Rights filed with Land Registry

The City must issue a notice to the Land Registry for each of the lots which must be subject to the pre-emptive right, specifying for what purpose the lot concerned may be acquired. It must also notify the owner of each lot. The pre-emptive right is valid for 10 years following the notice in the Land Registry.

Notice of intent of the owner

If an owner of a subject property owner accepts an offer to purchase from a third party, that owner must provide the City with a notice of intent to alienate the building, by mail or electronically using a form provided.

The owner must, within 15 days of notification of his notice, send the City a copy of the following documents:

  • offer to purchase
  • lease or occupancy agreement of the property
  • real estate brokerage contract
  • environmental study
  • property valuation report
  • other studies or documents used in the offer to purchase
  • a report stating the monetary value of the non-monetary consideration provided for in the offer to purchase, if any

It is important to note that is it is not required to notify the City in the event of a sale for the benefit of a related person under the Taxation Act [5].

Exercising the City’s pre-emptive right

Upon receipt of the owner’s notice, the City will have 60 days to (i) send a notice of exercise to the owner and indicate that it wishes to exercise its pre-emptive right, and (ii) acquire the property at the price and conditions stated therein, subject to any changes subsequently agreed with the owner. During this period, the City may require from the owner any additional information to assess the condition of the property. The City can also have access to the property provided she sends 48 hours’ notice to this effect.

If the City informs the owner that it will not exercise its pre-emptive right or if it does not provide its Notice to Exercise within the 60 days, it will then be deemed to have waived its pre-emptive right and such right will no longer be exercisable. The City will then have to require the discharge of the notice of pre-emptive right from the Land Registry.

When the City exercises its pre-emptive right, it will be required to pay the purchase price of the property within 60 days of notification of its Notice of Exercise. In the event the City cannot pay the sum directly to the owner, the City can deposit it at the Superior Court Registry, on behalf of the owner. The City will also have to compensate the person who planned to acquire the property for the reasonable expenses incurred by the latter in negotiating the price and terms of the proposed sale.

In the event that the City can’t conclude a notarized deed with the owner (for example, if the owner refuses to cooperate), the City would become the owner of the property by registering a notice of transfer of ownership at the Land Registry. This notice would include the description of the property, the price and conditions of its acquisition as well as the date on which the City would like to take possession of the property.

Due to the overheating in the prices of real estate properties observed in the territory of the Montreal agglomeration, the pre-emptive right will certainly raise questions in the coming years, in particular as to with regard to its application and the financial means available to the City to acquire such properties.

To improve the supply of social housing in the urban agglomeration of Montréal, the City has expressed its desire to use the pre-emptive right as an additional tool. This tool will be added to the Regulation to improve the supply of social, affordable, and family housing, which is still under review.

By Émilie Therrien

[1] Regulation RCG 20-012.

[2] CQLR c C-11.4

[3] Regulation determining the parks territories in which the pre-emptive right can be exercised and on which real estate properties can thus be acquired for regional park purposes (“Règlement déterminant les territoires des parcs sur lesquels le droit de préemption peut être exercé et sur lesquels des immeubles peuvent être ainsi acquis aux fins de parc régional”), RCG 18-034

[4] Internal regulation of the agglomeration council regarding its delegation of powers to the executive committee relating to the exercise of the pre-emptive right for social housing purposes (“Règlement intérieur du conseil d’agglomération sur la délégation de pouvoirs du conseil d’agglomération au comité exécutif relatif à l’exercice du droit de préemption aux fins de logement social”), RCG 20-013

[5] CQLR c I-3