Commercial Tenancies

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KPA Lawyers has experience effectively representing both commercial landlords and commercial tenants in Ontario.

Overview

The law that governs commercial tenancies in Ontario is called the Commercial Tenancies Act (“CTA”). Unlike the residential context, there is no “landlord & tenant board” for commercial tenancy disputes. Disagreements are resolved either in Superior Court or, depending on the lease agreement, through out-of-court arbitration. In commercial tenancy cases, it’s important to have a lawyer with knowledge of how the CTA works and experience in dealing with commercial litigation issues.

COVID-19 has also resulted in serious but temporary changes to the law, such as temporary eviction bans for some commercial tenants. You can read more about that by clicking here.

It’s important to keep in mind that there are other significant differences between residential tenancies and commercial tenancies in Ontario. For example, in Ontario, residential landlords are required to use Ontario’s standardized lease which is largely intended to protect the rights of the tenant and prevent them from being exploited by landlords. However, there is no standardized lease that commercial landlords are required to use. Within certain legal limits, commercial landlords and tenants are given a lot more freedom and latitude to structure the terms and conditions of their relationship.

What can Transpire

Although there are a multitude of commercial leasing disputes that can arise, here is just one example of how an issue such as non-payment of rent might proceed: if a commercial tenant does not pay their rent on time, then the landlord can choose between one of the following two options, but the landlord can’t do both: 

Option #1: On the 16th day after the rent was due, they can end the tenancy by changing the locks on the rental unit without any advanced warning or notice to the commercial tenant. So, for example, if the rent was due on January 1st, then they could have the locks changed on January 17th . In this case, the landlord should give the tenant reasonable access to the premises for the tenant to retrieve their property.

Option #2: The other option they have is to take the tenant’s goods, inventory or other property located on the premises. This can happen significantly sooner than described in option 1. For example, if the tenant’s rent was due on January 1st, and it was not paid on that day, then the landlord can seize the tenant’s property on January 2nd, the very next day. The landlord isn’t even required to give advance notice to the tenant that they intend to take the tenant’s property, unless the lease agreement requires the landlord to do so. However, landlords are required to notify the tenant of how much money required to resolve the issue, or in legal terms this is called “curing the default”, and the landlord has to provide this information to the tenant before proceeding to sell the seized property. Furthermore, before the landlord sells the property that they took from the tenant, the landlord must also hold it for five days. If the proper payment is made by the tenant in this five day period, then the landlord is not permitted to sell the tenant’s property. However, if the 5-day waiting period has been completed, then after the proper appraisals are made to determine the value of the property, then the tenant’s property can be sold. As you can imagine, depending on the kind of business that the tenant was running, the value of the physical assets located on the premises could add up to quite a bit of money. 

If you need to speak with a lawyer with experience dealing with commercial tenancy issues in Ontario, feel free to book a telephone consulation with a lawyer by clicking here.

Commercial Lease Agreements

There is no standardized lease that commercial landlords are required to use. Within certain legal limits, commercial landlords and tenants are given a lot more freedom and latitude to structure the terms and conditions of their relationship.

Evictions

Most commercial leases include reasons why and how landlords may evict commercial tenants. The most popular reason is, of course, non-payment of rent or for some violation of the lease, typically referred to as a “material breach” of some important requirement set out in the lease agreement.