This blog was originally published on June 19.
On June 16, 2020, Bill 23: Commercial Tenancies Protection Act (“Bill 23” or the “Act”) was introduced and passed the first reading. Bill 23 proposes a temporary ban on commercial evictions, rent increases and late fees due to missed rent until August 31, 2020, to help Alberta businesses that have been affected by COVID-19 related closures.
UPDATE: The Commercial Tenancies Protection Act received Royal Assent July 23, 2020 and took effect retroactively on March 17, 2020.
As passed, the Act protects commercial tenants with tenancy agreements eligible for the Canada Emergency Commercial Rent Assistance (“CERCA”) program, but whose landlords have chosen not to participate. The Act also applies to commercial lease agreements where tenants have had to close their businesses as a result of public health orders or have had their business revenue decline by 25% or more as a result of the COVID-19 pandemic. In order for a tenant to be eligible for protection under the Act, monthly rent must be less than $50,000 per location and the tenant’s business must have less than $20 million in revenues.
The Act does not apply to commercial premises where the landlord has received a forgivable loan under the CERCA program for that commercial premises. Nor does the Act apply to evictions or terminations that happened before the legislation was tabled on June 16, 2020.
As currently written, the Act applies to:
- every tenancy agreement in effect in Alberta on March 17, 2020; or
- every tenancy agreement made effective between March 17, 2020 and the day on which the state of public health emergency ends.
However, Bill 23 does not apply to a tenancy pursuant to the Residential Tenancies Act or the Mobile Home Sites Tenancies Act.
Pursuant to Section 3(1), a landlord is prohibited from giving a notice of default, distraining for rent, evicting a tenant or otherwise exercising remedies under or terminating a tenancy agreement during the March 17, 2020-emergency end date time period, in relation to:
- the non-payment of any rent, rent arrears or both due to circumstances beyond the tenant’s control caused by the COVID-19 pandemic;
- the applicability of an act of God or force majeure provision of a tenancy agreement or frustration of contract caused by the COVID-19 pandemic, or
- the breach of any continuous occupancy clause of a tenancy agreement caused by the COVID-19 pandemic.
Furthermore, Section 4 of the Act prohibits a landlord from charging a fee or a penalty for late payment of rent or non-payment of rent during the above noted period. If a tenant has paid a fee or penalty for late payment of rent, the landlord is obligated to refund the amount of the fee or the penalty or provide the tenant with credit for that amount.
Additionally, Section 5 of the Act prevents a landlord from increasing the rent payable under an existing tenancy agreement during the period beginning on March 17, 2020 and ending on the emergency end date.
If a tenant is unable to meet their rent obligations due to factors caused by the COVID-19 pandemic, the parties shall enter into a payment plan for the payment of rent, which may extend beyond the emergency end date. Under the proposed legislation, a payment plan has the effect of amending the tenancy agreement to the extent necessary to give effect to the payment plan. In the event of a failure by a tenant to adhere to a payment plan after the emergency end date, a landlord shall have all remedies available to the landlord under the tenancy agreement as modified by the payment plan (Section 6).
It should be noted that the Act does not affect the rights of a commercial landlord to evict a tenant or otherwise terminate a tenancy agreement in case of the following substantial breaches by a tenant:
- interfering with the rights of the landlord or other tenants;
- performing illegal acts or endangering persons or property in the premises;
- doing or permitting damage to the property;
- failing to maintain the premises in a clean condition;
- failing to vacate at the expiration of the tenancy if the expiration is unrelated to the COVID-19 pandemic;
- repudiating the agreement by abandoning the premises without notifying the landlord;
- making any bulk sale or becoming bankrupt or insolvent;
- receiving notice under the Bankruptcy and Insolvency Act (Canada) from any of tenants secured creditors
- if the tenant is a corporation, any order being made for the winding up of the tenant.
Under Bill 23 as currently drafted, non-compliance with the requirements on landlords will constitute a substantial breach of the tenancy agreement, for which the tenant is then entitled to exercise any rights the tenant may have in relation to such breaches under the tenancy agreement or as may be put into force in the regulations which may also be passed.