On December 8, 2020, the Government of Ontario passed Bill 229, Protect, Support and Recover from COVID-19 Act (Budget Measures), 2020 which, among other things, extended 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 (which includes terminating the lease) and distress. The province has now enacted Ontario Regulation 763/20, which introduces a new class of protected tenants under the Act.

Overview of changes

The Act provides that, for those commercial tenancies in which the landlord was or would have been eligible to receive funding under the Canada Emergency Commercial Rent Assistance (CECRA) program, the following prohibitions apply: (i) judges are prohibited from ordering a writ of possession if the basis for ordering the writ is an arrears of rent; and (ii) landlords are prohibited from exercising a right of re-entry (i.e. terminating the lease) and from seizing any goods or chattels as a distress for arrears of rent. The above protections apply only during the “Non-Enforcement Period” which began on December 8, 2020 and, pursuant to the regulation, is now scheduled to end on January 31, 2021.¹

The regulation also provides that a tenant that has: (i) been approved to receive funding under the Canada Emergency Rent Subsidy (CERS) program²; and (ii) provided its landlord with proof of such approval, will benefit from the above noted protections for a 12-week period beginning on the date that the tenant is approved for CERS funding. Pursuant to the regulation, the earliest possible date that a CERS-approved tenant can be protected under the Act is December 17, 2020, and the latest possible date is April 22, 2022. Furthermore, if a protected tenant reapplies for CERS and receives additional funding for a subsequent qualifying period, then the 12-week protective period offered by the Act will restart as of the date of the new CERS approval, so long as the tenant provides proof of the new approval to its landlord. The Government of Ontario has published a webpage summarizing these points, which can be found here.

Key considerations

As detailed above, tenants can now benefit from the protections afforded by the Act if they have been approved for CERS and have provided proof of such approval to their landlords. It’s clear that the above criteria may not be satisfied at the same time. What remains unclear, however, is whether leniency will be shown to those tenants who have been approved for CERS, but failed to report such approval prior to their landlords exercising those rights prohibited by the Act. As such, landlords will need to proceed cautiously when exercising any re-entry, termination or distress rights, as doing so after the tenant has been approved for CERS, but prior to the tenant delivering proof of such approval may result in the undoing or invalidation of the landlord’s exercised rights of re-entry, termination or distraint.

It should also be noted that the protections offered by the Act to CERS-eligible tenants will not apply retroactively to October 31, 2020 as they did for CECRA-approved tenants. Additionally, the Act appears to offer no protections for CERS-approved tenants whose landlords may have exercised a right of re-entry or distress prior to December 17, 2020. This is in contrast to the Act’s treatment of CECRA-approved tenants, who were protected retroactively if their landlords exercised a right of re-entry or distress between October 30, 2020 and the date the Act came into effect (being December 8, 2020).

For more information on Bill 229 and Ontario Regulation 763/20, please contact Vince Fuda or any other member of Dentons’ Commercial Real Estate Law team.

1. For more information on the protections offered under the Act, see our previous Dentons Insight on the topic here. ↩
2. For more information on CERS, see our two Dentons Insights on the program here and here.↩