Canada: Collecting Overdue Rent From Commercial Tenants: Two Options Better Than Terminating The Lease

Last Updated: September 11 2019
Article by Caroline J. Smith

If a commercial tenant is behind on its rent, should the landlord terminate its lease and evict the tenant? Maybe not — commercial landlords have other, often better, options. This article outlines two of those options: distress and re-leasing on behalf of the delinquent tenant.

This article deals only with tenancies for premises located in Saskatchewan that are commercial and not residential or agricultural in nature. Different rules apply to residential tenancies and farm leases. It also does not address the special considerations applicable to insolvent tenants.

Why not Terminate?

Terminating the lease of an unprosperous tenant may seem the best option because it provides a simple, clean break. However, if a commercial landlord terminates the lease, its sole remedy to collect the arrears and future rent due under the lease is to sue the tenant. Lawsuits can drag on for years, and judgments can be difficult to enforce, particularly after the passage of time. Before terminating a lease, commercial landlords should consider the remedies of distress and (if available in their lease) re-leasing on behalf of the delinquent tenant.

The Remedy of Distress

Commercial landlords have a potentially powerful tool for collecting overdue rent known as the remedy of distress (also known as distraint). It allows the landlord to seize and sell the tenant's property to pay the arrears. This remedy comes from The Landlord and Tenant Act, so any commercial landlord can use it unless their lease says otherwise.

To use the remedy of distress, a landlord hires a third party known as a bailiff who is licensed to perform tasks like these. The bailiff goes to the rented premises, seizes the tenant's property (except property subject to a purchase-money security interest in favour of someone else), and gives the tenant a "notice of distress" listing the rental arrears and the property seized.

After the property is seized, the tenant has, pursuant to section 35 of The Landlord and Tenant Act, five days to pay the arrears. If the tenant pays the arrears, the tenant gets its property back. If the tenant does not pay the arrears, the tenant's property may be sold and the proceeds applied to the arrears.

Landlords can claim some or all of the costs of the distraint from the tenant or out of the proceeds of the goods. The type and amount of the costs that may be claimed are determined by The Distress Act and the terms of the lease.

It is important for landlords to know that the remedy of distress is available only if the lease has not been terminated. The landlord must not terminate the lease before distraining and should not do anything that could be interpreted as terminating the lease, such as denying the tenant access to the rented premises.

Landlords often want to terminate the lease after the distraint is complete if they do not receive enough from the distraint to pay the arrears. It is therefore also important for landlords to know that courts have in some cases interpreted landlords' use of the remedy of distress as meaning that the landlord will not terminate the lease for failure to pay rent. Accordingly, if a landlord wishes to terminate the lease after the distraint is complete, the landlord should obtain legal assistance in managing both the distraint and the termination.

Re-Leasing the Premises on Behalf of the Tenant

Some leases provide that landlords may take possession of the rented premises and re-lease them to a third party on behalf of the tenant without terminating the lease. These clauses usually state that the landlord will receive rent directly from the third party.

Re-leasing on behalf of a tenant may seem to achieve a result similar to terminating the lease. However, the key advantage to re-leasing is that if the landlord uses a re-leasing clause, it does not necessarily have to sue the tenant to recover the arrears and any future rent the tenant may owe. Instead, re-leasing clauses typically allow the landlord to collect the delinquent tenant's arrears and the landlord's costs of re-letting from the new tenant's rent, then to credit the new tenant's rent against the future rent that would have been owing by the delinquent tenant. The delinquent tenant remains on the hook if there is any shortfall between what the delinquent tenant would have paid under the lease and what the new tenant paid. Accordingly, if the new tenant pays a higher rent than the delinquent tenant, the landlord could end up paid in full for the delinquent tenant's arrears, re-leasing costs, and future rent by the end of the delinquent tenant's lease. In contrast, if the landlord terminates, the landlord must sue the delinquent tenant in order to collect the arrears and any future rent the delinquent tenant may owe.


Terminating the lease is often not the best option for collecting rental arrears. Instead, if the delinquent tenant has goods on the leased premises that could be seized and sold in an economical manner, a commercial landlord should consider distraint. Commercial landlords should also review their leases to see whether they are permitted to re-lease the premises on their delinquent tenant's behalf without terminating the lease, as such clauses may permit landlords to recover the arrears without a lawsuit.

Commercial landlord and tenant law can be complicated and technical. It is easy for a landlord to compromise its rights or act unlawfully without intending to do so. Commercial landlords should seek legal advice before taking any action to collect arrears.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions