On May 29, 2020, the B.C. Minister of Public Safety and Solicitor General issued Ministerial Order No. M179 (the “Order”) which has broad sweeping implications for numerous commercial tenancies in the Province. The preamble to the Order outlines one of the purposes of the Order which is that “measures are needed to prevent the eviction of small business tenants”. It then goes on to reference the Canada Emergency Commercial Rent Assistance program (“CECRA”) which is a program we have blogged about previously and which blogs you can find here, and here. As an aside, although many landlords in Canada have applied to CECRA for assistance, there are a number of strict requirements that have to be met which means that other landlords simply do not qualify either because of their own circumstances or those of their tenants.
To which leases does the Order apply? Section 3(1) states that it applies to any lease between a tenant and a landlord who is not eligible for assistance under CECRA for the sole reason that the landlord has not entered into a rent reduction agreement with the tenant that includes a moratorium on eviction. Put another way, if a landlord could have availed itself of CECRA and met all other requirements except that it has not entered a rent reduction agreement that prevents an eviction, then the Order operates in respect of that lease. Conversely, if there are other reasons why CECRA may not apply, other than the existence of a rent reduction agreement that prevents an eviction, then the Order is inapplicable to that particular lease. There are also some other exemptions contained in the Order which are dependent on the status of the landlord, including in respect of various First Nations.
If the Order applies to a particular commercial lease, what does the Order prohibit? If the tenant fails to pay rent, the landlord must not:
- exercise a contractual right of re-entry;
- terminate the lease;
- distrain the tenant’s property for rent due; or
- take steps to rent out the premises on the tenant’s behalf.
Curiously, the Order does not prevent a landlord from commencing a court action for the non-payment of rent which is the other main and common remedy available to a landlord when faced with a tenant who has defaulted in the payment of rent.
The prohibited actions identified in the Order do not apply where the tenant has abandoned or deserted the premises or where the lease expired before the Order was made. The Order also ceases to have effect if the lease expires when the Order is operative.
Finally, for how long are landlords prohibited from exercising the contractual or common law rights and remedies caught by the Order? The Order states that it is in effect during the period that starts on the day of the Order (May 29) and ends on the earlier of the date on which the last extension of the provincial state of emergency expires or is cancelled and the date after the last date for which CECRA provides assistance. Currently, CECRA only provides assistance for the period ending June 30 but, of course that date could be extended.
As such, commercial landlords need to be especially mindful of the Order when deciding what to do if a tenant fails to pay rent during these difficult times.
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