Government of Ontario introduces new bill to extend prohibition on commercial landlords’ rights of re-entry and distress



On November 5, 2020, the Government of Ontario introduced Bill 229, Protect, Support and Recover from COVID-19 Act (Budget Measures), 2020, which will enact, amend and repeal various statutes as part of the government’s comprehensive plan to respond to the impacts of COVID-19. The Act can be found here, but remains subject to change as it makes its way through the legislative process. If passed, schedule 5 of the Act will extend the temporary protections provided to certain commercial tenants under Part IV of the Commercial Tenancies Act, including protection from commercial landlords’ rights of re-entry and distress.

Overview of protections for commercial tenants

The Act provides that, during the “Non-Enforcement Period” (being the period commencing on the date the Act receives Royal Assent and ending on a yet to be prescribed date), the following prohibitions will apply with respect to those commercial tenancies detailed below: (i) judges will be prohibited from ordering a writ of possession if the basis for ordering the writ is an arrears of rent; and (ii) landlords will be prohibited from exercising a right of re-entry and from seizing any goods or chattels as a distress for arrears of rent.

The above prohibitions will apply to tenancies in which the landlord: (i) is or was eligible to receive assistance under the Canada Emergency Rent Assistance (CECRA) program; (ii) is receiving or has received assistance under the CECRA program; (iii) would have been eligible to receive assistance under the CECRA program if it had entered into a rent reduction agreement with the tenant that contained a moratorium on eviction; and (iv) would have been eligible to receive assistance under the CECRA program if applications under the program were still being accepted. Note that the CECRA program ended on September 30, 2020 and has been effectively replaced by the Canada Emergency Rent Subsidy (CERS) and Lockdown Support subsidy for commercial tenants (for more information on CERS and the Lockdown Support subsidy, see our recent Dentons Insight here). Interestingly, the CECRA program continues to serve as a touchstone in determining which tenancies fall within the scope of protections offered by the Act, despite the program’s retirement in late September in favour of CERS and the Lockdown Support subsidy.

If a landlord exercises a right of re-entry between October 31, 2020 and the day before the Act receives Royal Assent, the landlord must, as soon as reasonably possible, restore possession of the premises to the tenant (unless the tenant declines to accept possession) or, if unable to do so, compensate the tenant for damages. Additionally, if a landlord seizes a tenant’s goods between October 31, 2020 and the day before the Act receives Royal Assent as a distress for arrears of rent, the landlord must return any unsold goods to the tenant. A landlord that contravenes any of the above prohibitions or fails to comply with the remedies prescribed above will be liable to the aggrieved tenant for any damages sustained as a result of such contravention or non-compliance.

The above protections were first introduced to the Commercial Tenancies Act on June 18, 2020 and applied retroactively from May 1, 2020 to August 31, 2020. These protections were subsequently extended to apply until October 30, 2020 in response to the federal government’s extension of the CECRA program, however the length of this most recent extension is currently not known. Additionally, the Act provides that regulations may be made to provide for a different non-enforcement period that applies in respect of other prescribed tenancies. Dentons will continue to monitor the developments resulting from COVID-19 and further details announced on Bill 229. For more information, please contact Vince Fuda or any other member of Dentons’ Commercial Real Estate Law team.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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