Emphyteutic Lease Agreement
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Introduction
The owner of an immovable sometime wants to ensure that the latter be further developed, without wanting to handle such development. On the other hand, a developer may want to develop a site without being able to purchase it. In both cases, given the costs associated with real estate development, such development may require many years before the initial investment is recouped. The major scenarios to frame this an operation are the lease with permission to build, which will be the subject of a future document, and the emphyteutic lease governed by the Civil Code of Quebec.
According to François Frenette, the term "emphyteutic lease" as used in practice, is misused or rather used inappropriately:
«[…] la très grande majorité des conventions d’emphytéose, sinon la totalité, portent l’étiquette inappropriée et trompeuse de bail emphytéotique. Qui plus est, ces contrats sont rédigés suivant les formules traditionnellement usitées en matière de louage».
To learn more about the fundamental aspects of the emphyteutic lease, we refer the reader to document E06.005 of the Business Precedents.
This document establishes the legal framework of such an operation.
Description
The Emphyteutic Lease Agreement is the legal instrument by which a person referred to as the bare owner, transfer its property rights on a building for a period of time, to another person called the emphyteutic lessee for a consideration which involves an obligation to contribute some added value to the building which is the subject of a lease.
Use
The emphyteutic lease is a system of hybrid ownership over time, involving the alternance of active and passive rights. The lease is often used to allow the development of Crown Lands of Canada or of a province, which must remain in the public domain but which may be used in a way which adds value to such land (parks, seaports, etc.). In addition, this type of contract may also be used in various situations involving the private domain in which the same economic and legal issues arise.
Table of Contents
0.00 INTERPRETATION
0.01 Definitions
0.01.01 Activities
0.01.02 Agreement
0.01.03 Best Effort
0.01.04 Breach
0.01.05 Change in Control
0.01.06 Confidential Information
0.01.07 Emphyteusis
0.01.08 Encumber or Encumbrance
0.01.09 Event of Default
0.01.10 Force Majeure
0.01.11 Full Term
0.01.12 Fundamental Provisions
0.01.13 Immoveable
0.01.14 Improvements
0.01.15 Initial Term
0.01.16 Insurance
0.01.17 Intellectual Property
0.01.18 Land Taxes
0.01.19 Law
0.01.20 Legal Representatives
0.01.21 Operating Expenses
0.01.22 PARTY
0.01.23 Person
0.01.24 Prime Rate
0.01.25 Related Person
0.01.26 Rent
0.01.27 Subsidiary
0.01.28 Surface Area of the Immoveable
0.01.29 Total Destruction
0.01.30 Total Surface Area
0.02 Precedence
0.03 Jurisdiction
0.03.01 Governing Law
0.03.02 Non-compliance
0.04 Miscellaneous
0.04.01 Cumulative Rights
0.04.02 Time and Dates
0.04.03 Financial References
0.04.04 References within Agreement
0.04.05 Gender and Number
0.04.06 Headings
0.04.07 Presumptions
0.04.08 Knowledge
0.04.09 Approval
0.04.10 GAAP
1.00 PURPOSE
1.01 Emphyteusis
1.02 Conditions
1.02.01 Required by BARE OWNER
1.02.02 Required by EMPHYTEUTIC LESSEE
1.02.03 Choice
2.00 CONSIDERATION
2.01 Improvements
2.02 Base Rent
2.03 Additional Rent
2.04 Percentage Rent
3.00 TERMS OF PAYMENT
3.01 Base Rent
3.01.01 Deposit
3.01.02 Monthly Payments
3.02 Additional Rent
3.02.01 Estimate
3.02.02 Adjustment
3.03 Percentage Rent
3.03.01 Monthly Statement of Gross Revenue
3.03.02 Annual Statement of Gross Revenue
3.03.03 Books and Registers
3.03.04 Examination and Verification Right
3.03.05 Remittance of the Statements of Gross Revenue
3.04 Place of Payment
3.05 Imputation
3.06 Renunciation to Compensation
3.07 Post-dated Cheques
3.08 Disbursements
3.09 Interest
3.10 Loss of Term
4.00 SECURITY
4.01 In favour of BARE OWNER
4.02 In favour of EMPHYTEUTIC LESSEE
4.03 Movable Hypothec without Delivery
4.04 Movables as Security
4.05 SURETYSHIP
5.00 MUTUAL REPRESENTATIONS AND WARRANTIES
5.01 Status
5.02 Authority
5.03 Binding Agreement
5.04 Canadian Resident
5.05 Commission
5.06 Insurance
5.07 Nominee
5.08 Fundamental Provisions
5.09 Disclosure
6.00 REPRESENTATIONS AND WARRANTIES OF BARE OWNER
6.01 Status
6.02 Authority
6.03 Binding Agreement
6.04 Canadian Status
6.05 Insurance
6.06 Nominee
6.07 Fundamental Provisions
6.08 Disclosure
7.00 REPRESENTATIONS AND WARRANTIES OF EMPHYTEUTIC LESSEE
7.01 Status
7.02 Authority
7.03 Binding Agreement
7.04 Canadian Status
7.05 Insurance
7.06 Nominee
7.07 Fundamental Provisions
7.08 Disclosure
8.00 MUTUAL DUTIES AND OBLIGATIONS
8.01 Confidential Information
8.01.01 Undertaking
8.01.02 End of Agreement
8.02 Insurance
8.02.01 Insured Risks
8.02.02 Amount of Coverage
8.02.03 Issuer
8.02.04 Co-insured
8.02.05 No Limitation
8.03 Indemnification
8.03.01 “Loss”
8.03.02 Scope
8.03.03 Procedure
8.03.04 Deductible
8.03.05 Limitation on Claims
8.04 Disclosure of Agreement
9.00 DUTIES AND OBLIGATIONS OF BARE OWNER
9.01 Quiet Enjoyment
9.02 Services
9.03 Preliminary Work
9.04 Operating Costs
10.00 DUTIES AND OBLIGATIONS OF EMPHYTEUTIC LESSEE
10.01 Condition of the Premises
10.02 Improvements
10.02.01 Undertaking
10.02.02 Execution of the Disbursements
10.02.03 Schedule
10.02.04 Partial Destruction
10.02.05 Surveillance of the Work
10.02.06 End of Emphyteusis
10.03 Insurance
10.03.01 Property Damage and Civil Liability
10.03.02 Sums in deposit
10.03.03 Total Destruction
10.03.04 Terms
10.03.05 Insurance Policies
10.03.06 Increased Risks
10.03.07 Copies of Insurance Policies
10.04 Taxes
10.04.01 Liability
10.04.02 Proof of Payment
10.04.03 Contestation
10.04.04 Adjustments
10.05 Visiting of the Premises
10.05.01 Time
10.05.02 Verification
10.06 Heating
10.06.01 Maintenance of the System
10.06.02 Maintaining Adequate Temperature
10.07 Maintenance
10.07.01 Undertaking
10.07.02 Notice
10.08 Cleaning and Cleanliness
10.08.01 Undertaking
10.08.02 Garbage Removal
10.09 Fire Prevention
10.10 Use of Premises
10.10.01 Purpose
10.10.02 Restrictions
10.10.03 Permitted Activities
10.11 Respect of Standards
10.12 Assignment and Sublease
10.12.01 Required Consent
10.12.02 No Discharge
10.12.03 Waiver
10.12.04 Novation
10.12.05 Fees
10.12.06 Reserve
10.12.07 Conditions of Consent
10.12.08 BARE OWNER's Options
10.12.09 Advertisement
10.12.10 Change of Control of the Corporation
10.12.11 Sale of Business
10.13 Constructions, Works and Plantations
10.13.01 Right to Effect
10.13.02 Removal
10.13.03 Taxes on Improvements
10.13.04 Privileges and All Charges
10.13.05 Complementary Work
10.13.06 Prohibitions
10.14 Fees for the Preparation of the Agreement
10.14.01 Payment
10.14.02 Exception
10.14.03 Fees
10.15 Waiver of BARE OWNER's Liability
10.15.01 Discharge
10.15.02 No Liability
10.16 Major Repairs
10.17 Deterioration and Excavation
10.17.01 Damages
10.17.02 Work
10.18 Surrender
10.19 Excess Load
10.20 Walls
10.21 Delivery of Leased Premises
10.21.01 Condition
10.21.02 Removal
10.22 Internal Bylaws
10.22.01 Coming into Force
10.22.02 Undertaking
10.22.03 Duration
10.23 Injunction
10.24 Penalty Clause
10.25 Proof of Performance
10.26 Alternative Execution
10.26.01 Acknowledgement
10.26.02 Payment
10.27 Commercial Equipment and Accessories of EMPHYTEUTIC LESSEE
10.28 Installation and Use of Signs
10.28.01 Consent
10.28.02 Procedure
10.29 Merchandise Placed in the Installations and Common Areas
10.30 Installations and Common Areas
10.31 Parking Areas
10.31.01 Rules
10.31.02 Removal
10.31.03 Modifications
10.31.04 No Liability
10.31.05 Rental
10.31.06 Fees and Rates
11.00 SPECIAL PROVISIONS
11.01 Assignment
11.01.01 Prohibition
11.01.02 Effect of Breach
11.01.03 Exception
11.02 Force Majeure
11.02.01 No Default
11.02.02 Duty
11.02.03 Rights of Other PARTY
11.03 Relationship
11.03.01 Independent Contractors
11.03.02 No Control over Performance
11.03.03 No Authority to Bind
11.04 Further Assurances
11.05 Other Remedies
11.05.01 Choices
11.05.02 No Limitations
11.06 Prescription
11.07 Pre-incorporation Contract
11.07.01 Acknowledgement
11.07.02 Suretyship
11.08 Hypothec and Transfer by BARE OWNER
11.08.01 Sale or Financing
11.08.02 Subordination
11.08.03 EMPHYTEUTIC LESSEE'S Declaration
11.08.04 Publication in Priority of a right
11.08.05 Execution of Deeds or Certificates
11.08.06 Assignment by BARE OWNER
11.09 Registration
11.09.01 Authorization
11.09.02 Radiation
11.09.03 Mandate
11.10 Total Expropriation
11.10.01 Indemnity
11.10.02 Computation
11.10.03 Use
11.11 Partial Expropriation
11.11.01 No Indemnity
11.11.02 Improvements
12.00 GENERAL PROVISIONS
12.01 Notice
12.02 Dispute Resolution
12.02.01 Good Faith Negotiations
12.02.02 Mediation
12.02.03 Arbitration
12.03 Election
12.04 Counterparts
12.05 Amendment
12.06 Waiver of Rights
12.07 Electronic Transmission
12.08 Language
13.00 TERMINATION
13.01 Mutual Consent
13.02 Unilateral Termination
13.03 Without Notice
13.03.01 Authorization
13.03.02 Procedure
13.04 On THIRTY (30) Days Notice
13.04.01 Authorization
13.04.02 Procedure
13.05 Expropriation
13.05.01 Total
13.05.02 Partial
13.05.03 Indemnity
13.05.04 Rent Payment
13.06 Damage or Destruction of the Leased Premises
13.06.01 Repairs
13.06.02 Authorization to Terminate
13.06.03 Vacation
13.06.04 No Deemed Termination
13.06.05 Repairs
13.06.06 Original Plans
14.00 EFFECTIVE DATE
14.01 Retroactivity
14.02 Execution
14.03 Deferral
15.00 DURATION
15.01 Probationary or Trial Period
15.02 Initial Term
15.03 Early Occupancy
15.04 Renewal
15.05 Extended Occupancy
15.06 Delayed Occupancy
15.07 Survival
16.00 SCOPE
SCHEDULE A – RESOLUTION OF THE BARE OWNER
SCHEDULE B – RESOLUTION OF EMPHYTEUTIC LESSEE
SCHEDULE 0.01.13 – PLAN AND LOCATION OF THE IMMOVEABLE
SCHEDULE 0.01.14 – IMPROVEMENTS
SCHEDULE 4.03 – MOVABLE HYPOTHEC WITHOUT DELIVERY
SCHEDULE 4.05 – SURETYSHIP
SCHEDULE 9.03 – PRELIMINARY WORK TO BE EXECUTED BY THE BARE OWNER
SCHEDULE 10.22 – REGULATIONS OF THE IMMOVEABLE
SCHEDULE 11.08.03 - DECLARATION BY EMPHYTEUTIC LESSEE
SCHEDULE 11.09 A) – REGISTRATION REQUISITION
SCHEDULE 11.09 B) – DECLARATION OF CERTIFICATION
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