Here’s How to Evict a Commercial Tenant in Mississauga
Published June 8, 2018 at 1:09 pm
Commercial tenancies in Mississauga and beyond don’t attract the same level of attention and discussion as residential tenancy issues, and probably for good reason.
Residential tenancies and the laws that govern that area of life affect far more people than commercial tenancies.
For the most part, the world of commercial tenancies is limited to owners of commercial property, their real estate agents, and the business owners that occupy that property.
Residential tenancies in Ontario are governed by the Residential Tenancies Act, 2006, S.O. 2006, c. 17 whereas commercial tenancies are governed by the Commercial Tenancies Act, R.S.O. 1990, c. L.7.
Although there are laws that govern commercial tenancies, compared to residential tenancies, lawmakers have seen fit to provide far more discretion for commercial landlords and tenancies to structure the terms and conditions of the tenancy.
It’s not unusual for a commercial tenancy agreement be more than 100 pages long with several schedules, diagrams and illustrations attached.
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For all the differences between residential tenancies and commercial tenancies, at the end of the day, the rent needs to be paid, and there are serious consequences if the tenant fails to pay the rent or commits some other type of material breach of the lease.
Evicting a tenant in residential tenancies requires an Order from the Landlord and Tenant Board, whereas the process for eviction in a commercial is much more straightforward, and does not require the landlord to commence a lawsuit.
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.
Eviction for non-payment of rent
Sometimes commercial tenants simply fail to pay their rent. Such circumstances are governed by the Commercial Tenancies Act.
First, the landlord may re-enter the premises, which typically involves changing the locks and preventing the tenant from using the rented premises. However, there are important deadlines to keep in mind. Commercial landlords are required to wait 16 days after the rent was due before re-entering and changing the locks.
Landlords also have a second option. Upon re-entry without notice, the landlord may seize and sell the tenant’s property. As one can imagine, this is a very serious step, and there are, again, certain requirements that must be followed. For example, before selling the tenant’s property, the landlord must provide the tenant with five days’ notice.
Eviction for a material breach
It’s quite common for commercial leases to include several duties and obligations that tenants must observe in addition to simply paying the rent in full and on time.
If the tenant fails to perform such obligations or does something that is not permitted under the lease, then the landlord may be able to terminate the lease and evict the tenant.
All steps in the process must be carried out in compliance with the Commercial Tenancies Act, and it is prudent to engage a commercial litigator for such circumstances, as failure to observe the act may expose the landlord to liability.
Despite that level of detail typically involved in commercial leases, the situation is not always clear whether the tenant has breached the lease. In those cases, the landlord may wish file an Application in Court so that a Judge may decide if the tenant has breached the lease. Keep in mind that any such Court proceeding would provide an opportunity to the tenant appear at the hearing to make arguments as to why they did not breach the lease and/or should not be subject to eviction.
What can commercial tenants do?
If a commercial tenant has been evicted from their place of business, they may, in some circumstances, be able to apply to the Court for “relief from forfeiture” and be granted re-entry to the premises.
The Ontario Court of Appeal has clarified that the Court does have the jurisdiction to excuse a tenant from certain types of obligations and grant the tenant re-entry into the premises, provided that the tenant can demonstrate that the tenant has made “diligent efforts to comply with the terms of the lease which are unavailing through no default of his or her own.”
It’s important to keep in mind that cases concerning commercial tenancies are not heard at the Landlord and Tenant Board, and the legal process (if any is engaged) will typically involve a much higher (and more expensive) level of Court.
Litigants who find themselves in a dispute concerning a commercial tenancy will most likely have their case heard in the Ontario Superior Court of Justice, and they will almost certainly need a commercial litigator (i.e. a lawyer) to deal with the matter.
It’s usually best to have a lawyer review the lease agreement before it’s signed.
Obviously, no one can predict how a tenant’s business might perform, so the tenant’s ability to pay the rent might be somewhat difficult to estimate, but material obligations that could give rise to an eviction can be spelled out clearly in the lease, and those obligations should be reviewed very carefully in advance of any actual dispute.
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