On June 8, 2020, the Ontario government announced its intention to introduce changes to the Commercial Tenancies Act in order to protect commercial tenants from being locked out or having their assets seized by their landlords as a result of the impact of COVID-19. The news release can be found here.
If passed, the proposed changes to the Act would temporarily ban evictions of businesses that qualify for rent assistance offered by the federal or provincial governments. The proposed legislation would overturn evictions that occurred on or after June 3, 2020, and would make it illegal for a landlord to evict its commercial tenant until August 31, 2020.
Premier Doug Ford indicated that the impetus for this announcement was the fact that only a small portion of commercial landlords have applied for the Canada Emergency Commercial Rent Assistance program. The Ontario government is encouraging more commercial landlords to take advantage of this program and hopes that the temporary ban on evictions will persuade landlords to do so.
On June 18, 2020, the Protecting Small Business Act, 2020 (the “Act”) came into force. The Act amends the Commercial Tenancies Act to prohibit landlords from taking certain actions against their commercial tenants if the landlord is or would be eligible to receive assistance under the Canada Emergency Commercial Rent Assistance program (“CECRA”). The Act does not apply to a landlord if and as of the time that the landlord is approved to receive assistance under CECRA.
The Act limits the landlord’s remedies against a tenant eligible under CECRA such that:
- 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 seize any goods or chattels as a distress for arrears of rent during the non-enforcement period*.
* The non-enforcement period is a period commencing on June 18, 2020, and ending on the earlier of: (a) September 1, 2020, or (b) an earlier date to be proclaimed by the Lieutenant Governor.
In addition, the Act has a retroactive effect. Specifically:
- If a landlord re-entered the leased premises between May 1, 2020, and June 17, 2020 (inclusive), the landlord is now required to restore possession of the leased premises to the tenant (unless the tenant refuses to accept possession) or, if the landlord is unable to do so (other than by reason of the tenant’s refusal to accept possession), compensate the tenant for damages.
- If a landlord seized a tenant’s goods or chattels between May 1, 2020, and June 17, 2020 (inclusive), as a distress in order to recover arrears of rent, the landlord is now required to return to the tenant all unsold goods and chattels to the tenant.
For more information on the Act, please click here. If you have any questions regarding the Act or require assistance with your leasing matter, we will be pleased to assist you.