Member Article

Protection for commercial tenants, similar to what was previously announced in British Columbia, is now potentially coming to Alberta. See the Alberta government’s news release, dated June 16, 2020. On June 16, 2020, the Alberta government introduced Bill 23: the Commercial Tenancies Protection Act, which is intended to protect commercial tenants from evictions and lease terminations during the COVID-19 pandemic. This legislation and an upcoming regulation (expected to be made publicly available within the next two weeks) will cover the period between March 17, 2020 and August 31, 2020. The draft legislation specifically provides that it does not apply to any evictions or lease terminations that occurred prior to first reading, which occurred on June 16, 2020.

At this stage, the legislation would apply to the following:

• Commercial tenants with tenancy agreements who were eligible for the Canada Emergency Commercial Rent Assistance program but whose landlords chose not to participate; and
• Commercial lease agreements where tenants have had to close their business due to public health orders, or have had their business revenue decline by 25% or more as a result of the COVID-19 pandemic.
  
  

Section 3 of the Act would prevent landlords in the above noted situations from providing notices of default, distraining for rent, evicting commercial tenants, and terminating commercial tenant leases in relation to any of the following:

1. Non-payment of rent, rent arrears, or both due to circumstances beyond the tenant’s control caused by the COVID-19 pandemic;
2. 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
3. The breach of any continuous occupancy clause of a tenancy agreement caused by the COVID-19 pandemic.
   
   

The Act provides that landlords and tenants are to enter into a payment plan in regard to any missed payments caused by the COVID-19 pandemic. Landlords would retain the right to evict a tenant or terminate a tenancy agreement where there have been certain substantial breaches of a tenancy agreement, so long as the tenancy agreement identifies the particular breach as a cause for eviction or termination, and the breach is not due to the reasons noted above. Potential examples of substantial breaches include tenants performing illegal acts, endangering persons or property, or the tenant undergoing bankruptcy. In addition the landlord can evict or terminate if the tenant defaults in the payments under the payment plan required by the Act.

In addition, landlords will be prohibited from raising rent and charging late fees and penalties on missed rent. It should be noted that any late fees, penalties or rent increases imposed on a commercial tenant by their landlord between March 17, 2020 and August 31, 2020 would be required to be reimbursed to the tenant. Any payment plans entered into between the parties must account for this reimbursement.

While Bill 23: the Commercial Tenancies Protection Act passed its first reading, as it is still early in the legislative review process, the Bill will take some time to come into force and could be subject to amendment in this process.

If you have any questions regarding the above, we would encourage you to get in contact with the writers, or any member of our Real Estate Group to discuss further.