Canada: Commercial Landlord Remedies: Terminating The Lease And Re-Entering

When a tenant defaults on rent, one of the remedies available to commercial landlords is that of terminating the lease and re-entering to take back possession. The Commercial Tenancy Act contains rules to regulate this remedy. When exercising this right, landlords do well to ensure that their actions are carried out closely in accordance with the Act's provisions.

The Act requires a landlord to issue the proper demands for payment before terminating the lease. If a landlord issues notices, but the tenant fails to meet the demands for payment, the landlord can then evict the tenant. The landlord may subsequently take back possession of the premises and sue the tenant for rental arrears.

Is termination and re-entry effective?

Termination and re-entry may be a viable option if the landlord's goal is to completely sever the relationship with the non-paying tenant. This remedy also opens up to the landlord the opportunity to seek a new tenant.

Since the landlord's actions are backed by the court, the risk of a landlord encountering future consequences in the exercise of this remedy is minimal – so long as all of the proper processes and rules have been observed.

Note that this remedy typically involves going to court to take action against the tenant. The landlord must be careful to obtain all necessary court orders and to ensure that all action taken is legally valid as set out in the Act. Since court processes are involved, the time-consuming and costly nature of litigation is a possible downside to this remedy.

Must this remedy be specified within the lease?

The Commercial Tenancy Act outlines the steps that must occur to terminate the lease and take back possession of the premises. Prudent landlords nonetheless add the provision within the commercial lease. This clause should specifically stipulate that where the tenant is in default of rent, the landlord retains the right to terminate the lease. The lease should also provide timelines for termination.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.