Hello. My name is Ira Smith and I am a bankruptcy trustee in Toronto. Everyone is scared today because of the COVID19 issues. First of all, I hope that you are safe and healthy and protecting yourself and your family
Today is Tuesday, March 31st and it is about seven o'clock in the evening. Yesterday and today I have received a lot of phone calls from business owners wanting to know what they can do because they will not be able to pay their commercial property rent tomorrow on time on April 1st.
Ontario people are scared
So I'm making this short video because there is a lot of misinformation out there about what happens if your business cannot pay its April commercial property rent. There are a lot of scared people now. Because I'm in Toronto my comments are only for the province of Ontario. But I am sure if you check your provincial law if you're outside of Ontario I think the concepts I am going to tell you remain the same. So hang on and watch the short video to the end because I know you will get value from it.
Commercial property rent
Business with a premises lease. It's a commercial tenancy, so the Landlord and Tenant Board in Ontario won't help you because that is only for residential tenancies.
Your commercial lease for the premises you occupy is a contract between you and the landlord. The landlord promises to let you use the space and you promised to pay the rent. Now I know there are a lot more pages and a lot more words but that is basically it.
So what happens if you cannot pay the rent on time?
The landlord will certainly send you a letter making a demand for the commercial property rent and telling you that you are in breach of the lease. Now, what can the landlord do? The landlord has three options:
- You will tell the landlord that your business is shut down and you cannot earn any revenue. You, therefore, can't pay the rent. He can choose to work with you and try to work out an arrangement that works for both of you. Keep in mind the landlord has expenses too.
- Secondly, the landlord can terminate the lease and tell you to get your property out of there and look to the tenant and anyone that has guaranteed the lease for damages.
- Or third, the landlord can distrain on the assets.
By distraining on the assets, the landlord cannot stop you from going into the premises but you will not be able to use or remove any of the assets. But in order to distrain the landlord has to retain a bailiff. Notices have to be tacked on the door. Notices have to be sent out and then a date is scheduled for the sale of the assets. So you don't lose them right away.
In today's environment who is even going to show up for the sale? So just because you didn't pay the rent it doesn't mean you lose everything immediately.
Now I'm not a lawyer. I'm a bankruptcy trustee in Toronto. So for legal advice, you have to consult your lawyer.
So I hope you found this video informative. And if you have any questions or any comments, get in touch with me. My contact details are all on the website.
I will be posting more videos on a regular basis on issues affecting people, businesses and their finances. I appreciate you watching this video. My aim is to provide value to you. In such scary times, with a lot of either misinformation or no reliable information to answer your questions, people get nervous. In my small way, I wish to provide information in videos like this one as a Public Service Announcement.
Also, please check out our Resources page. There you can download my no-cost e-Book titled "8 Mistakes To Avoid When You Are Having Money Problem". Check back to that page regularly too. I will be adding more no-cost resources for you from time to time.
So please, stay healthy, stay protected and best of luck. Above all else, remember that we are all in this together. Be kind to someone today. You will get repaid many times over for showing small and kind gestures to oth