The client
A buyer of a mixed-use building in Val-d'Or -- two residential units above a ground-floor commercial unit -- purchasing for $485,000 at 25% down.
Purchase price
$485,000, Val-d'Or
25% down, conventional
Residential rent (2 units)
$1,900/month
Uncontested
Commercial unit rent
$1,200/mo (wrong) / $1,850/mo (actual)
Capped by mistake, then corrected
Other debt
$210/mo car loan
The problem
Quebec's Tribunal administratif du logement has jurisdiction over residential leases only, under the Civil Code of Quebec -- a commercial lease is governed instead by ordinary contract rules and the regular courts. The appraiser's rent schedule nonetheless capped the commercial unit's rent at $1,200/month, as though a TAL-style residential rent ceiling applied to it.
Why the cap never applied
- ▸The TAL's jurisdiction, by its own governing legislation, covers residential dwellings -- it has no authority over a commercial lease at all
- ▸The commercial unit's actual signed lease showed a freely-negotiated $1,850/month rent, agreed between two commercial parties with no tenant-protection ceiling in play
- ▸The appraiser's residential-style assumption had no legal basis for this specific unit
The two residential units above were genuinely subject to the TAL's rules. The commercial unit below never was.
The numbers
Correcting the commercial unit's rent changed the qualifying-income picture directly.
| Combined rent, before and after the correction | Amount |
|---|---|
| Residential rent (uncontested) | $1,900/mo |
| Commercial rent, corrected | $1,850/mo |
| Combined rent, corrected | $3,750/mo |
| Qualifying income | With the wrong commercial figure | Corrected |
|---|---|---|
| Combined rent | $3,100/mo | $3,750/mo |
| 50% add-back applied | $1,550/mo | $1,875/mo |
| Buyer's own income | $6,200/mo | $6,200/mo |
| Total qualifying income | $7,750/mo | $8,075/mo |
The corrected $8,075/mo qualifying income brought total debt service to 40.8%, against 42.5% on the mistaken commercial figure -- consistent with the margins rental vacancy rate data suggests a well-located mixed-use unit can support.
The solution
A courtier hypothécaire licensed under Quebec's Act respecting the distribution of financial products and services confirmed the TAL's actual jurisdiction before accepting the appraisal's own rent conclusion.
First, confirmed with the TAL directly that it has no jurisdiction whatsoever over the building's commercial lease. The tribunal's own governing rules cover residential dwellings only.
Second, supplied the actual, signed commercial lease, showing its freely-negotiated $1,850/month rent -- a figure the residential-style cap had never had any basis to override.
Third, moved the appraisal's market-rent conclusion for the commercial unit off the mistaken residential assumption entirely, rather than treating the appraiser's first estimate as final.
The outcome
The purchase funded at 40.8% total debt service on the corrected combined rental income, with Quebec's welcome tax on the $485,000 purchase coming to $5,386.
Because this is a conventional, uninsured purchase at 25% down, CMHC's ratio maximums do not apply directly; the 42.5% and 40.8% figures are informational, showing exactly what the correction itself changed.
What to take from this file
- 01The Tribunal administratif du logement has jurisdiction over residential leases only. A commercial unit in the same building is governed by ordinary contract rules, not the TAL's tenant-protection framework.
- 02Never let a residential rent-control assumption carry over onto a commercial unit by default. Confirm which regime actually governs each lease in a mixed-use property.
- 03A signed commercial lease is the reliable source for that unit's rent, not an appraiser's assumption borrowed from the residential units above it.
- 04Quebec's welcome tax is owed on the purchase itself, independent of how each unit's rent is eventually classified.
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%.
- ▸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.
- ▸Gouvernement du Québec — Droits sur les mutations immobilières — Quebec's transfer duties ('welcome tax') — 2026 indexed brackets.
Illustrative in this file — lender-specific, not rules:
- ▸5.20% contract rate — rates move daily; not a quote.
- ▸the 50% add-back convention — each lender publishes its own treatment for rental income; there is no universal rule.
- ▸the TDS figures — this is a conventional, uninsured purchase at 25% down -- there is no CMHC ratio ceiling; the numbers are informational.
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.