On May 29, 2020, the BC government introduced legislation that impacts all commercial landlords that do not participate in the Canada Emergency Commercial Rent Assistance program (“CECRA”).
CECRA offers rent assistance to small business tenants (“Impacted Tenants”) that have experienced a reduction of 70% or more in business revenues due to COVID-19, provided certain program criteria are met.
One of those criteria is that, for the months of April, May and June 2020, an eligible commercial landlord enters into an agreement with an Impacted Tenant to (1) reduce rent by at least 75% and (2) not evict the Impacted Tenant (a “Rent Reduction Agreement”).
Consequences for Landlords
Under Ministerial Order No. M179, Commercial Tenancy (Covid-19) Order (the “Order”), landlords that would otherwise be eligible for CECRA, had they entered into a Rent Reduction Agreement, are prohibited from doing the following if an Impacted Tenant fails to pay rent:
- exercising any contractual or other right to re-enter the leased premises;
- giving the Impacted Tenant a notice of re-entry;
- giving the Impacted Tenant a notice of termination of lease;
- distraining the Impacted Tenant’s property for overdue rent; or
- taking any steps to re-let the leased premises on the Impacted Tenant’s behalf.
(collectively, the “Prohibitions”).
The Order applies until the earlier of: (a) the state of emergency in British Columbia is over; and (b) the date after the last date for which the CECRA program provides assistance.
The Prohibitions do not apply:
(a) after the term of a lease expires - landlords with leases that are expired, but continuing on a month to month basis, may continue to exercise any rights they have under their lease on tenant default;
(b) if the tenant has abandoned or deserted the leased premises; and
(c) if the Landlord has the Impacted Tenant’s consent. However, landlords may not distrain the Impacted Tenant’s property for overdue rent even if the Tenant consents.
The Prohibitions also do not apply if a landlord is exercising the applicable right under a lease for reasons other than the Impacted Tenant's failure to pay rent, such as a breach of a non-financial covenant.
Furthermore, the Order does not apply to leases where the landlord is an Indigenous nation or a corporation owned by an Indigenous nation, or where the leased premises are held in trust for an Indigenous nation.
For more information on CECRA, please see our bulletins: