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In assisting commercial landlords and tenants, it appears to me that the top story in 2026 is developments concerning duties on the transfer of immovables (also known as “land transfer duties”, and perhaps best known as “mutations tax”), as they relate to long-term commercial leases.  A lot of details on this are in my article on this issue at this link that was originally published on June 30, 2026 in Law360 Canada, an online legal publication with national reach that is published by LexisNexis Canada Inc.

In this context, a long-term commercial lease has the definition found in Quebec’s Act respecting duties on transfers of immovables (also known as the Mutations Tax Act), namely is it a “contract of lease of a property with a term exceeding 40 years, including extensions or renewals.”  In 2026, we have seen the issue of mutations tax come up with regard to long-term commercial leases, and knowing that this issue is arising forewarns commercial landlord and tenants, so that they can try to be forearmed. We sometimes refer to these leases as “40 Year Leases” in this article.

Firstly, note that such long-term commercial leases are relatively common, for example they are often held by successful small businesses or institutional-type tenants that have been in a particular location for a while.

In the past, mutations tax came up for leases when a tenant would register the lease at the land registry office to block a possible new owner of the property from terminating the lease on statutory notice (of 6 months, that can be sent once 12 months passes after a new owner takes title to the property).  (See this at article 1887 of the Civil Code of Quebec.)  Upon registration of the lease, the land register typically obliged the tenant to declare mutations tax at the regular rate applying to a sale of the property, but reduced to reflect the relative area occupied by the tenant in comparison with the entire property.

All of a sudden in 2026, the City of Montreal finance department is telling those who inquire that the amount of the tenant’s mutations tax in such a situation is much higher, with the property value upon which the mutations tax is calculated being in fact equal to past and future rent payable under the lease, which is much larger usually than the abovementioned relative area formula that the City of Montreal has told us that they used to use.  To our knowledge, there is no jurisprudence backing up the city’s apparent new position.

A second issue arising in 2026 is that some commercial landlords are starting to themselves raise the mutations tax issue with their tenants whose leases have or will approach the 40 year mark.   These landlords have been concerned that since unregistered transfers of ownership have been subject to mutations tax since 2016, there might be logic in the mutations tax also applying to unregistered long-term leases.  (We are not aware of any jurisprudence on the issue.)  These landlords are apparently concerned that the city arguably has a lien (a legal hypothec) against the property arising by law for unpaid mutations tax, even though the tenant under the long-term lease is not the owner of the property.

Questions on these issues have therefore arisen with often no clear answer: Are unregistered 40-Year Leases subject to mutations tax?  How does one calculate mutations tax for a lease?  When does one conclude that a 40 Year-Lease exists, is it a soon as an original lease or an extension or renewal is signed that provides for the potential of a total present or future term of greater than 40 years?  For unregistered leases, when calculating the 40 years, does one include or not the period prior to unregistered real estate sales clearly becoming subject to mutations tax back in 2016?  What is a new lease (of presumably less than 40 years) as compared to an older 40 Year Lease?  If a related party tenant is introduced in a new lease, does that risk anti-avoidance penalties under the mutations tax legislation (there is no material case law under the anti-avoidance provision relating to this legislation).  Are commercial landlords justified in for example asking for indemnities in relation to possible mutations tax from their tenants under 40-Year Leases, and should liability under such indemnities be divided among the landlord and tenant?

Also interesting is the type of procedure that must be used to pay mutations tax under a 40 Year Lease that has already progressed, for the presents and future, beyond 40 years.  Arguably late declarations of an unregistered 40 Year Lease of mutations tax relating to the lease, must be made to Revenu Quebec under the voluntary disclosure program as described in Revenu Quebec’s new voluntary disclosure Interpretation Bulletin of March 31, 2026 (ADM. 4/R9).

We look forward to assisting commercial landlords and tenants in these matters that are newly arising in relation to long-term commercial leases.  Please do not hesitate to contact me with any questions.