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Jan 7, 2021

Ontario Government Announces Changes to Eviction Moratorium

By Monty Warsh, Marco Gammone, Faruk Gafic, Kenneth Pimentel and Peter A. Dalglish

Bill 229 (Protect, Support and Recover from COVID-19 Act (Budget Measures), 2020) received Royal Assent on December 8, 2020. Bill 229 essentially extended the moratorium originally imposed under Bill 192 (Protected Small Business Act, 2020) (as extended under Bill 204 (Helping Tenants and Small Businesses Act, 2020)). The moratorium under Bill 229 applies to tenancies where the landlord: (i) was eligible (or would be eligible) to receive assistance under the Canada Emergency Commercial Rent Assistance Program (“CECRA”); (ii) is receiving or has received assistance under CECRA; (iii) would be eligible to receive assistance under CECRA if the landlord entered into a rent reduction agreement with its tenant containing an eviction moratorium; or (iv) would have been eligible to receive assistance under CECRA if applications under the program were still being accepted. Bill 229 also extended protections to “prescribed tenancies” (though prescribed tenancies were not defined in the legislation).

The moratorium on evictions applies retroactively to October 31, 2020, and Bill 229 did not provide a date by which the moratorium would expire.

On December 17, 2020, the Ontario government enacted a new regulation to Bill 229, being O. Reg. 763/20: Non-Enforcement Period - Prescribed Tenancies (the “Regulation”).

The key elements of the Regulation are as follows:

  • The definition of “non-enforcement period” as it relates to CECRA-related tenancies has been amended to expire on January 31, 2021.
  • The Regulation extends the protections offered under Bill 229 to tenancies that satisfy the following criteria:
  • the tenant has been approved to receive the Canada Emergency Rent Subsidy (“CERS”);
  • the tenant has provided proof of its CERS approval to its landlord; and
  • not more than 12 weeks have passed since the day the tenant was approved for CERS.
  • The Regulation includes a definition of “non-enforcement period” in relation to CERS-related tenancies, being the period commencing on December 17, 2020 and expiring on April 22, 2022.

How Does the Regulation Affect Landlords and Tenants?

The practical effect of the Regulation is as follows:

  • Tenants occupying premises under CECRA-related tenancies will continue to receive the benefit of the protections offered by Bill 229 until January 31, 2021. Following January 31, 2021, only tenants that can satisfy the CERS criteria set out above will be entitled to the protections offered under Bill 229 (provided the moratorium in relation to CECRA-related tenancies is not further extended by subsequent legislation).
  • Tenants not previously eligible for CECRA (and therefore unable to receive the benefit of the eviction moratorium) can now receive the benefit of the protections under Bill 229 provided they qualify for CERS and otherwise satisfy the criteria under the Regulation (including the requirement that the tenant provide to its landlord proof of its CERS approval).
  • The applicability of the moratorium to any particular tenant must be determined on a rolling basis. In other words, tenants apply for CERS for specific claim periods (to date, each composed of 27-day periods) and may or may not be approved for any particular period going forward. Tenants receive the benefit of the moratorium for up to 12 weeks following approval, but this date is reset every time a tenant is approved for CERS during a particular claim period. For example, if a tenant is approved for CERS for period 1, is not approved for period 2, but approved for period 3, the 12-week period would begin to run from the date of approval for CERS for period 3.

A key objection raised by landlords in connection with Bill 229 was that it was sometimes difficult (if not impossible) to determine whether the landlord would be eligible to receive CECRA (and therefore subject to the eviction moratorium). The Regulation resolves this ambiguity as tenants must now provide proof of their CERS approval in order to receive the benefit of the eviction moratorium. If a landlord has not received the requisite proof of approval from the tenant, it is entitled to exercise its remedies under its lease arising as a result of a tenant’s default.

How Do Tenants Qualify for CERS?

In order to qualify for CERS, an eligible business, charity or non-profit must have experienced a revenue decline as a result of the COVID-19 pandemic during the claim period for which they are applying (as compared to the same period in the previous year). A 70% or greater decline in revenue entitles the tenant to claim 65% of eligible expenses under CERS, up to a maximum cap of $75,000 per location (up to a maximum of $300,000). This entitlement is correspondingly decreased as a tenant’s revenue declines also decrease. For more information on CERS entitlements and eligibility, read our previous CERS publication entitled “From CECRA to CERS: What You Need to Know About the Canada Emergency Rent Subsidy.”

Our Commercial Leasing Group will continue to monitor developments and any new information that may arise in connection with CECRA. We are always available to assist landlords and tenants in navigating successful completion of relief under CECRA and to help overcome the hurdles presented by COVID-19. We are committed to keeping clients informed on matters pertaining to commercial leasing, including providing continued updates on interpreting CECRA.

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