The client
A buyer is under contract on a $295,000 duplex in Rimouski, $59,000 (20%) down, with a tenant paying $950/mo on the second unit. The buyer's own plan assumed that tenant would vacate at lease end, opening the unit to a $1,150/mo re-rent at market.
Purchase price
$295,000
Rimouski duplex
Down payment
$59,000 (20%)
Conventional, non-owner-occupied financing
Continuing rent
$950/mo
Under the existing lease
Buyer's assumed market rent
$1,150/mo
Contingent on the tenant actually vacating
Buyer's own income
$6,300/month
Salaried
The problem
Quebec's Civil Code gives a residential tenant a strong right to assign their lease (cession de bail) to a new occupant on the same terms, instead of leaving at all -- and a landlord can refuse an assignment only for serious cause. The buyer's plan for a post-vacancy re-rent at market assumed a vacancy that the tenant had every legal right to prevent simply by finding someone to take over the lease.
Why the assumed vacancy was never actually guaranteed
- ▸A Quebec residential tenant may assign their lease to a new occupant on the same terms, without the landlord's consent being freely withheld
- ▸A landlord can refuse an assignment only for serious cause -- a high bar, not a general discretion to prefer a fresh tenancy at a higher rent
- ▸A lender's rental-income offset needs a rent that will actually keep being paid, not a bump contingent on a vacancy the tenant can lawfully avoid
Qualified on the buyer's assumed market rent, the file would have looked slightly better. Qualified on the rent the lease could keep producing indefinitely through assignment, it still worked -- without depending on a vacancy that was never guaranteed.
The numbers
Because this is a conventional, non-owner-occupied purchase, CMHC's standard homeowner schedule doesn't apply at all, and there's no regulatory ratio ceiling -- but the file still had to make sense on a rent that wouldn't disappear if the tenant simply assigned the lease, a distinction the broader rental market data doesn't settle on its own.
| Qualifying on the rent that could keep being paid | Amount |
|---|---|
| Mortgage (purchase price less down payment) | $236,000 |
| Qualifying payment at 6.95% (MQR on 4.95%) | $1,646/mo |
| Rental offset (50% of the $950/mo continuing rent) | $475/mo |
| TDS on the continuing rent | 27.6% |
| Housing cost basis | Continuing rent ($950) | Assumed market rent ($1,150) |
|---|---|---|
| Qualifying payment | $1,646 | $1,646 |
| Property tax and heat | $330 | $330 |
| Rental offset (50%) | -$475 | -$575 |
| Housing + car loan ÷ $6,300 income (TDS) | 27.6% | 26.0% |
The gap between 27.6% and 26.0% is exactly the assumed $200/mo bump, halved by the offset -- and it's small enough that the file never needed the market-rent assumption to work in the first place.
The solution
A courtier hypothécaire (mortgage broker) licensed under Quebec’s Act respecting the distribution of financial products and services treated the assumed vacancy as a number to leave out, not a number to build the file around.
First, confirmed with the seller and the tenant directly what the tenant's own plans actually were at lease end, rather than assume vacancy simply because the listing was marketed that way.
Second, priced the file on the $950/mo continuing rent from the outset, the number the lease could keep producing through an assignment even if the current tenant chose to leave, rather than the buyer's higher market-rent assumption.
Third, explained to the buyer why a landlord's ability to refuse an assignment is narrow, so the eventual re-rent, if it happened at all, would be treated as upside rather than as something the file depended on.
The outcome
The purchase funded on the $950/mo continuing rent at 27.6% TDS -- comfortably inside a common lender comfort guideline, and never dependent on a vacancy the tenant was never obligated to create.
Because this is a conventional, non-owner-occupied purchase, there is no CMHC ratio ceiling to clear; 44% is referenced elsewhere in this file only as a common lender comfort guideline, not a regulatory maximum.
What to take from this file
- 01A tenant's right to assign their lease under Quebec's Civil Code can defeat an assumed post-vacancy rent bump entirely. Qualify on the rent that will actually keep being paid.
- 02A landlord can refuse a lease assignment only for serious cause. That's a narrow standard, not a general right to prefer a new tenant at a higher rent.
- 03Price the file both ways -- continuing rent and assumed market rent -- before deciding which one to rely on. Knowing the file still works on the conservative number removes the pressure to count on a vacancy.
- 04Ask the tenant directly about their own plans, not just the listing's marketing assumptions. A tenant who intends to stay, or to assign, changes the file's real numbers.
- 05An eventual market-rent re-rent isn't lost forever if it doesn't happen right away. Treat it as upside the file didn't need, not a number the file was quietly depending on.
Sources
Every regulatory figure in this file traces to one of these primary sources. Client details and anything that varies by lender are illustrative, as flagged below.
- ▸OSFI — Minimum qualifying rate for uninsured mortgages — the minimum qualifying rate — greater of contract rate + 2% or 5.25%.
- ▸Gouvernement du Québec — Droits sur les mutations immobilières — Quebec's transfer duties ('welcome tax') — 2026 indexed brackets.
- ▸Provincial/territorial mortgage-broker legislation fetched directly (bclaws.gov.bc.ca, legisquebec.gouv.qc.ca, fcaa.gov.sk.ca, web2.gov.mb.ca, nslegislature.ca, assembly.nl.ca) plus FCNB's own site for NB and CanLII's index for PE — see notes for per-province method — provincial mortgage regulators and licence titles.
Illustrative in this file — lender-specific, not rules:
- ▸4.95% contract rate — rates move daily; not a quote.
- ▸44% referenced as a comfortable TDS guideline — this is a conventional, non-owner-occupied purchase -- CMHC's standard homeowner schedule applies to owner-occupied 1-4 unit loans only, so there is no CMHC ratio ceiling here; 44% is illustrative of common lender practice, not a regulatory rule.
- ▸the 50% rental-income offset — each lender publishes its own rental-income offset or add-back convention; 50% is illustrative of one common practice, not a universal figure.
- ▸whether a specific refusal of an assignment would actually meet the ‘serious cause’ standard — what counts as serious cause to refuse a lease assignment under the Civil Code is fact-specific and ultimately a question for the Tribunal administratif du logement if contested; this file treats the tenant's right as the safer planning assumption, not a certainty either way.
Authority & provenance
How this case file was built
We publish the origin, the verification method and the reviewer for every case file, so you can judge how far to trust it before you rely on it with a client.
Where it comes from
Derived from files handled by Treadstone’s fulfillment desk and from scenarios contributed by partner brokerages. Names, employers, exact amounts and dates are changed so no client or file is identifiable.
Provenance: Composite — a pattern seen repeatedly on fulfilled files, not a single transaction.
What is verified
Every regulatory figure traces to a primary source listed above and was checked against it on the date shown. The arithmetic is recomputed by machine on every rebuild.
Anything that varies by lender is labelled illustrative rather than stated as a rule.
Who reviewed it
Reviewed for Canadian regulatory accuracy before publication, and re-checked whenever a cited rule changes.
Reviewed by: Nicholas Parson, Treadstone Associates — reviews every case file before publication.
This case file is professional reference material for licensed mortgage professionals. It is not advice to a borrower, and it is not a lender commitment. Insurer rules, qualifying rates and provincial taxes change — confirm the current position with the insurer, regulator or lender before you rely on any figure here in a live file.