The Ontario government recently passed the Protecting Small Business Act, 2020,
amending the Commercial Tenancies Act to temporarily
halt or reverse evictions of commercial tenants and to protect
those tenants from having their assets seized or being locked out
during COVID-19.
The restrictions apply to: (1) landlords eligible to receive
assistance under the Canada Emergency Commercial Rent Assistance
for small business program (the “CECRA”); and (2)
landlords who would be eligible to receive assistance under the
CECRA if the landlord entered into a rent reduction agreement with
the tenant containing a moratorium on eviction.
The legislation, though, raises several significant questions,
primarily around the definition of “eligible”. Under the
CECRA a landlord is likely only eligible if a tenant is also
eligible, but what happens if a tenant fails to co-operate? If
challenged in court, how will a judge interpret eligibility?
Of specific concern is the fact that the restrictions apply to
those landlords who would be eligible if a rent reduction agreement
was entered into. What happens if a landlord is willing to enter
into the rent reduction agreement, but the tenant is not? Under a
strict reading of the legislation, that landlord would still not be
allowed to evict the tenant for non-payment of rent.
If the restrictions apply, a judge is not allowed to order a
writ of possession that is effective during the non-enforcement
period if the basis for ordering the writ is an arrears of rent.
The non-enforcement period starts June 18, 2020 and runs until
September 1, 2020, unless terminated earlier.
During the non-enforcement period landlords are also prohibited
from exercising a re-entry right, and if a landlord exercised a
right of re-entry on or after May 1, 2020, possession must be
returned to the tenant. If possession can’t be returned to the
tenant, the landlord must compensate the tenant for all damages
sustained by the tenant by reason of the inability to restore
possession.
Landlords are also prohibited from seizing any goods or chattels
as a distress for arrears of rent, and if the landlord seized any
goods or chattels as distress for arrears of rent on or after May
1, 2020, any unsold goods and chattels must be returned to the
tenant.
Any landlord who fails to comply with these requirements is
liable to the tenant for any damages sustained by the person as a
result of the contravention or non-compliance.
It’s important to remember that these restrictions only
apply to those landlords eligible to receive the CECRA, or who
would be eligible to receive the CECRA if a rent reduction
agreement was entered into. Other commercial tenancy arrangements
remain unaffected.
The legislation also does not apply to landlords approved to
receive the CECRA, since in those cases the landlord and tenant
relationship would be instead governed by the rent reduction
agreement and the terms of the CECRA program.
COVID-19 continues to have a significant impact on many aspects
of our lives, and has created an ever-changing legal landscape. The
restrictions discussed above are subject to change, perhaps with
very little notice. If any landlord or tenant has any questions
around their commercial lease arrangement it is more important than
ever to speak with their lawyer for legal advice.
Originally published 18 June, 2020
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.
