Ontario Government Enacts Legislation to Protect Commercial Tenants Amid Shutdowns

Published on: January 2021 | What's Trending

The Ontario Government has recently amended the Commercial Tenancies Act to provide protections for commercial tenants eligible for COVID-19 emergency relief programs.

On December 8, 2020, Ontario Bill 229 came into force, which made several amendments to Part IV (ss. 79-87) of the Commercial Tenancies Act. These amendments establish “non-enforcement periods” for qualifying commercial tenants. During a non-enforcement period, courts are prohibited from issuing eviction orders for non-payment of rent, and landlords are prohibited from re-entering and terminating leases due to any type of default by the tenant and from distraining on the goods of a tenant. Commercial tenants who are struggling to make ends meet as a result of COVID-19 may find some relief in the tenant-friendly protections afforded by these changes. Conversely, commercial landlords should be aware that these changes place significant limitations on their rights and non-compliance may expose them to liability.

On December 17, 2020, a new regulation under the Commercial Tenancies Act (O. Reg 763/20) was made and specifies the dates for non-enforcement periods depending on whether a tenancy meets certain criteria:

  • From October 31, 2020 to January 31, 2021, a tenancy will be eligible if:
    • the landlord is or was eligible to receive Canada Emergency Commercial Rent Assistance (“CECRA”);
    • the landlord is receiving or has received assistance under CECRA;
    • the landlord would have been eligible for CECRA if the landlord entered into a rent reduction agreement with the tenant containing a moratorium on evictions; and
    • the landlord would have been eligible for CECRA if applications were being accepted (and applications are no longer being accepted).
  • From December 17, 2020 to April 22, 2022, tenancy will be eligible if:
    • the tenant has been approved to receive Canada Emergency Rent Subsidy program (“CERS”);
    • the tenant has provided proof of the approval of CERS to their landlord; and
    • not more than 12 weeks have passed since the day the tenant was approved.

Importantly, the amended legislation also includes provisions with retroactive effect. If a landlord terminated a lease between October 31, 2020 and December 7, 2020, it is required to restore possession of the premises to the tenant as soon as reasonably possible, unless the tenant declines to accept possession. If the landlord is unable to restore possession of the premises to the tenant, the landlord is required to compensate the tenant for all damages sustained by the tenant by reason of the inability to restore possession.

Similarly, if a landlord distrained upon a tenant’s goods for arrears of rent between October 31, 2020 and December 7, 2020, it must return any unsold goods to the tenant as soon as reasonably possible.

A landlord who fails to comply with such retroactive provisions will be liable to the tenant for any damages that the tenant sustains as a result of the landlord’s non-compliance. This liability applies in addition to any other remedies that may be available to the tenant at law.

It is likely that the non-enforcement periods will continue to be extended as the pandemic continues.

Co-Author: Daniel Waldman, Lawyer

The authors would like to thank Allan Tung, Articling Student, for his assistance with this article.