Changing The Locks

Understanding Ontario’s Moratorium on Commercial Evictions

Commercial tenants and landlords alike have been facing grueling financial challenges over the last year. The experts at Frank Feldman Law are here to help you understand your rights.

As of January 31, 2021, Ontario Regulation 763/20, made under the Commercial Tenancies Act, R.S.O. 1990 c.L.7, provides that there is effectively a moratorium on commercial evictions from December 2020 to potentially April 22, 2022.

A commercial tenant is able to implement the moratorium if they satisfy the following criteria:

1. the tenant has been approved to receive Canada Emergency Rent Subsidy (CERS);
2. the tenant provided proof of the approval to the landlord; and
3. no more than 12 weeks have passed since the day the tenant was approved.

In the recent Ontario Superior Court of Justice case, Cherry Cola’s Rock N’ Rolla Inc. v Choi, Judge Chalmers provided some insight into Ontario Regulation 763/20 and what it means for commercial landlords and tenants. It was held that the Regulation does not prescribe a time period in which the commercial tenant must provide proof of approval to their landlord. The non-enforcement period is in effect so long as proof of approval is provided to the Landlord and no more than 12 weeks have passed since the day the Tenant was approved. Chalmers, J. held that “[t]he regulation does not state that the non-enforcement period applies only if the CERS funds are paid in full to the landlord. Although there is no requirement in the Regulation, there is an expectation that the tenant and landlord will work out an arrangement to pay the rent, or a portion thereof.”

The outcome of this matter may provide some insight was to how commercial landlords may navigate the new CERS regulations. The court stated that there is no obligation stipulated on the part of the tenant to provide the CERS payment to their landlord in order to qualify for the moratorium on eviction.

The lack of for the tenant to pay CERS funds to landlords may allow tenants to forego payment of commercial rents and maintenance and pocket the CERS subsidies, without fear of eviction. Currently the law lacks teeth for commercial landlords and these oversights in Ontario Regulation 763/20 should be remedied in order to ensure that government subsidies are applied as they were intended, not as tenants see fit.

The intention of Parliament, in creating CERS was to provide funds for the purposes of rent payments and other maintenance. However, the decision in Cherry Cola’s Rock N’ Rolla Inc. v Choi muddies the waters and commercial landlords cannot rely upon the assumption that CERS proceeds will be directed towards rent arrears.

The pandemic has been unequal in its treatment, with some industries disproportionately affected compared to others. Neither CERS nor Ontario Regulation lends clarity to the plight of those commercial landlords adversely affected by the pandemic. However, landlords and tenants who have been affected by the pandemic and subsequent public health restrictions, may be eligible for the Canada Emergency Wage Subsidy (CEWS) among other emergency economic relief.

To learn more visit: https://www.canada.ca/en/department-finance/economic-response-plan.html#businesses

Call today  (647) 347-9573, ext. 1.