Update on Temporary Ban on Evictions of Commercial Tenants
Below is an update to my previous blog, Temporary Ban on Evictions of Commercial Tenants Extended, posted on October 20, 2020.
The temporary ban on commercial evictions, which was originally introduced in June 2020, has been further extended. In December 2020, the Protect, Support and Recover from COVID-19 Act (Budget Measures), 2020 (the “Act”) received Royal Assent and Ontario Regulation 763/20, made under the Commercial Tenancies Act, came into force (the “Regulation”). The Act and the Regulation prohibit a landlord from taking certain actions against its commercial tenant if:
- The tenant has been approved to receive the Canada Emergency Rent Subsidy (“CERS”);
- The tenant has provided proof of the CERS approval to its landlord; and
- Not more than 12 weeks have passed since the day the tenant received the CERS approval.
It a commercial tenant reapplies for CERS and receives additional funding for a subsequent qualifying period, the 12-week protective period offered to the commercial tenant under the Act will restart from the date of the new CERS approval. The last date on which a CERS-approved commercial tenant could be protected under the Act and Regulation is April 22, 2022.
The Act and the Regulation limit a commercial landlord’s remedies against a CERS-approved commercial tenant as follows:
- A judge cannot order a writ of possession that is effective during the non-enforcement period if the reason for the order is an arrears of rent.
- A landlord cannot exercise its right of re-entry during the non-enforcement period.
- A landlord cannot, during the non-enforcement period, seize any goods or chattels as a distress for arrears of rent.
Note: The non-enforcement period is a period commencing on December 17, 2020, and ending on April 22, 2022.
A landlord who, during the non-enforcement period, exercises its right of re-entry or seizes any goods or chattels as a distress for arrears of rent is liable to the CERS-approved commercial tenant for any resulting damages sustained by the tenant. The tenant may also have other remedies available at law.
However, the protections offered by the Act to CERS-approved tenants will not apply retroactively as they previously did for commercial tenants eligible under the Canada Emergency Commercial Rent Assistance program. No protections are offered to CERS-approved tenants whose landlords exercised a right of re-entry or distress prior to December 17, 2020.
At present, it is unclear whether courts will be lenient with commercial tenants who have been approved for CERS, but who failed to provide proof of such approval to their landlords before they exercised the rights of re-entry and distress. Accordingly, landlords are advised to proceed cautiously when exercising their termination rights, re-entry rights, or their rights of distraint. If the commercial tenant has been approved under the CERS, the landlord’s exercised rights of termination, re-entry, or distraint may be invalidated and undone.