Although the Canada Emergency Commercial Rent Assistance Program (CECRA) opened for applications last week, complaints about the program have continued from both small business tenants and commercial landlords.
Small business tenants have complained that landlords continue to refuse to apply to CECRA, the eligibility requirement for a revenue loss of at least 70 percent was too high and the number of months of relief should be expanded. Today, Ontario extended the state of emergency until June 30, 2020 although Premier Doug Ford stressed that the gradual and safe re-opening of the economy would continue. It is unlikely most eligible tenants will be able to make their full rent payment on July 1, 2020, even if they receive rent relief for the months of April, May and June, 2020 under CECRA. Landlords have complained that the application process is too confusing, costly, time-consuming and risky. Under CECRA, landlords are required complete the application on behalf of their tenants, including obtaining and confirming the accuracy of the tenant’s financial information and eligibility for the program.
While Premier Doug Ford has repeatedly warned Ontario landlords that failure to apply for CECRA will have consequences, the Ontario government has not taken any steps to implement a moratorium on commercial tenant evictions during COVID-19. In contrast, the B.C. government took steps yesterday to protect small business tenants from eviction by issuing Ministerial Order No. M179 (the “B.C. Order”) to restrict the remedies available to landlords that choose not to apply to CECRA. The B.C. Minister of Finance stated, “We’re listening to small businesses and have their backs. Preventing landlords who are eligible for CECRA from evicting tenants can encourage landlords to apply for the program and give some temporary relief to businesses who have been hardest hit by the pandemic”.
The B.C. Order applies to lease agreements where the tenant is not eligible for assistance from CECRA “for the sole reason that the landlord has not, as required to be eligible for the program, entered into a rent reduction agreement with the tenant that includes a moratorium on eviction”. It does not apply to lease agreements where: (a) the tenant has abandoned the leased premises; (b) the lease expired already; and (c) the landlord has the tenant’s consent to take the prohibited steps.
The B.C. Order prohibits the landlord from:
1. Exercising any contractual or other right of re-entry to the leased premises;
2. Delivering a notice of termination or notice of re-entry to the tenant;
3. Exercising any distraint remedies on the tenant’s property; and
4. Taking any steps to rent the leased premises on the tenant’s behalf.
The B.C. Order is effective from May 29, 2020 to the earlier of: (a) the date the B.C. state of emergency expires or is cancelled – currently, June 9, 2020 although it is expected to be extended; and (b) the date after the last date for which CECRA provides assistance – currently, July 1, 2020.
Although the B.C. government’s efforts to encourage landlords to apply for CECRA are laudable, it may be delaying the inevitable considering the significant impact of COVID-19 on small businesses so far and the expected ongoing impact on small businesses due to the gradual re-opening of the economy. Commercial rent relief under CECRA may simply be not enough. We suggest that landlords and tenants obtain legal advice in respect to navigating commercial lease issues in these unprecedented times, including a review of the commercial lease agreement and an assessment of viable legal solutions beneficial to both parties.
Our lawyers have expertise and experience in commercial lease matters and real estate litigation matters and can assist you in resolving your legal issues in a timely and cost-effective manner. Please contact us for an initial consultation through our Request Consultation Form, email to info@gilbertsondavis.com or by telephone (416) 979-2020.
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