Mayor Valérie Plante announced in February that the city of Montréal will claim its right of first refusal on 300 lots located in central areas of the city to develop social housing. The land and buildings covered by this pre-emptive right are located in several boroughs popular with buyers, including Côte-des-Neiges–Notre-Dame-de-Grâce, Plateau-Mont-Royal, Sud-Ouest, Ville-Marie and Verdun.
The complete list should be available in the next few weeks and notices of assessment will be sent to property owners by the city in the winter and spring of 2020.
What is the city of Montréal’s right of first refusal?
The right of first refusal is granted to the city of Montréal by the Charter of Ville de Montréal, metropolis of Québec1 and is also governed by municipal by-laws2.
Essentially, the city’s right of first refusal allows it to purchase properties with priority over any other buyer by substituting itself for the latter when the seller has accepted an offer to purchase, in order to carry out projects for the benefit of the community, such as social housing.
What to do as an owner of property subject to the city's right of first refusal?
Owners of land or buildings subject to the city’s right of first refusal will be informed by means of a notice of right of first refusal valid for a period of 10 years, which notice will then be entered in the land register.
It is important to understand that the right of first refusal does not oblige any owner to sell his or her property and that his or her ownership rights remain intact. However, as soon as the owner of a subject property accepts an offer to purchase, he or she must inform the city of this fact by sending a "Notice of Intent to Alienate an Immovable", although certain exceptions apply.
The city has 60 days following receipt of this notice to inform the owner/seller of its decision whether or not to exercise its right of first refusal. If it chooses to exercise this right, the city sends a "Notice of Intent to Acquire the Immovable" to the owner/seller, in order to replace the potential buyer who was considering acquiring the property.
What are the issues associated with the city’s right of first refusal?
As far as the owner of the subject property is concerned, if he or she proceeds with the sale without having transmitted a "Notice of Intent to Alienate an Immovable", the owner is exposed to legal proceedings, including an application to have the sale of his or her land or building annulled.
The process for implementing the right of first refusal also involves serious issues for the parties to a real estate transaction. The city's exercise of this right can have an impact on the financing or realization of the transaction due, for example, to the delays associated with the process. Furthermore, the application of the right of first refusal is delicate in certain situations, such as a sale between related persons or a sale of shares. For these reasons, it is important to take appropriate preventive measures when initiating a real estate transaction involving land or buildings subject to the city’s right of first refusal.
1. (C.Q.L.R., chapter C-11.4)
2. By-law determining the park territories in which the city’s right of first refusal may be exercised and in which immovables may be acquired for the purposes of regional parks (RCG 18-034); By-law determining the urban planning sectors where the city’s right of first refusal may be exercised and the purposes for which the immovables may thus be acquired (18-066); By-law determining the territory on which the right of first refusal may be exercised and on which immovables may thus be acquired for social housing purposes (by-law in the process of adoption).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.