BC Offers Additional Support To CECRA – Real Estate and Construction – Canada – Mondaq News Alerts

On Monday, June 1, 2020, the BC Provincial Government
announced its intent to provide assistance to small businesses
seeking commercial rent relief by putting measures in place to
prevent the eviction of small business tenants.  The details
of this announcement were released shortly after the initial press
release by way the enactment of Ministerial Order No. M179.

Ministerial Order No. M179 expressly references the Canada
Emergency Commercial Rent Assistance program (CECRA) implemented by
the Government of Canada and administered by the Canadian Mortgage
and Housing Corporation (CMHC) in its preamble. (We have previously
published articles providing information regarding the
implementation of CECRA available at Clark Wilson LLP’s COVID-19 Resources webpage.) The CECRA program
provides forgivable loans to commercial property owners that:

• have one or more “impacted small business tenant”;
  and
• enter into a binding rent reduction agreement with its impacted
  small business tenants for the period of April, May and June 2020
  reducing the tenant’s gross rent by at least 75% per
  month.

Applications for the forgivable loans provided by the CECRA can
only be made by commercial property owners (not the small business
tenants). A rolling application process for the CECRA program
opened on May, 25, 2020.

Ministerial Order No. M179 applies to leases entered into
between tenants and landlords where the landlord is not eligible
for assistance under the CECRA for the sole
reason that the landlord has not entered into a rent
reduction agreement with the tenant that includes a moratorium on
eviction.

Ministerial Order No. M179 prohibits landlords from taking the
following actions on a tenant’s failure to pay rent:

• evicting, or exercising any other contractual or other right of
  re-entry to a tenant’s leased property;
• giving a tenant a notice of re-entry or notice of termination
  of lease;
• distraining the tenant’s property for any rent due;
  and
• taking any steps to rent out the tenant’s leased property
  on the tenant’s behalf.

It appears from the BC Provincial Government’s press release that Ministerial Order No. M179
is intended to apply only to “impacted small business
tenants” as defined by the CECRA.

The CECRA defines “impacted small business tenants” as
one that:

• pays no more than $50,000 in monthly gross rent per
  location;
• generates no more than $20,000,000 in gross annual revenues (as
  calculated on a consolidated basis at the ultimate parent level);
  and
• has experienced at least a 70% decline in pre-CVOID-19 revenue
  from “ordinary activities in Canada”, as measured against
  April, May and June of 2020, or against an average of the revenues
  earned in January and February 2020.

Other exceptions apply to Ministerial Order No. M179, in
particular the restrictions on landlords will not apply if:

• the tenant has already abandoned or deserted the leased
  property; or
• the lease expired before June 1, 2020.

The Order will also not apply to extend the term of a lease that
expires during the period of the order.

Ministerial Order No. M179 is effective from June 1, 2020 and
expires on the earlier of the termination or expiry of the current
B.C. State of Emergency, or, the last date for which the CECRA
program will provide assistance.

It remains to be seen how many commercial property owners and
tenants this Order will impact as the CECRA continues its rollout.
We will keep you advised of further details regarding Ministerial
Order No. M179 and the roll-out of the CECRA program as they become
available.

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.