As your legal attorney, we can protect and provide a number of remedies in situations where a commercial tenant has fallen into default under their commercial lease.
Under the Commercial Tenancies Act, a commercial landlord has one of two choices when a commercial tenant is in arrears of rent. The landlord can either terminate the tenancy, or proceed by distress to seize the tenant’s goods and assets and sell them to recover the debt. The two remedies are mutually exclusive. The landlord cannot terminate and sell the goods. However, in either instance, our offices should be used.
In the case of a termination, we are authorized to take possession of the premises away from the tenant. The goods inside belonging to the tenant cannot be seized at that point, but they must be cared for. When we take custody of the premises, we become responsible for ensuring that the tenant can get their goods out, even if they owe the landlord money. Generally speaking, the police will not interfere to assist a landlord unless the landlord has retained a professional to take control and responsibility for the premises.
In the case of distress, the tenancy continues, but we take custody and control of the tenant’s assets, with the intention of selling them to make good on arrears of rent if the tenant does not voluntarily pay. We will enter the premises, assess the value of the goods relative to the value of the arrears owing, and seize sufficient goods to cover the amount of the arrears, the legal fees, storage costs, appraisal costs, and auctioneer costs. Certain goods are exempt from seizure and it is up to us to determine what can and cannot be seized. We do not need to provide the tenant with any notice before going into seize goods, so long as the tenant is at least 15 days in arrears. We have the right, as the legal attorney for the landlord, to enter the premises and proceed to tag goods, after showing the tenant the Warrant for Distress signed by the landlord and posting a Notice of Distress on the entries to the premises. We use a tag on the goods that are too large to move. Otherwise, the goods subject to seizure can be physically removed from the site. Pictures are taken and an Inventory of the goods seized is compiled.
The tenant then has five days to pay the arrears and costs. During this time, the tenant continues to have the right to operate their business on the premises. If the goods were not removed from the premises, then we will usually change the locks and attend to open and close for the tenant each day, at the tenant’s cost.
After the five days, if the tenant has not paid, we arrange for an appraisal of the value of the goods seized, to be conducted by two qualified appraisers. If the arrears still are not paid, we can thereafter sell the goods at public auction.
While residential tenancy law has changed greatly and frequently over the decades, commercial tenancy law remains similar to what it was a hundred years ago. Commercial landlords are granted some very powerful tools under the CTA that allow them to terminate tenancies or seize goods and sell them for non-payment of rent without need of going to Court to get permission. However, the extraordinary nature of these remedies means that they must be implemented properly, failing which there are repercussions for the landlord. Leave it to us to ensure that it is done correctly.