In Ontario, commercial tenancies are governed by the Commercial Tenancies Act (CTA), not the Landlord and Tenant Board. If a business tenant is 15 days late on rent, a commercial landlord has the legal right to hire a bailiff to change the locks (forfeiture) or seize their inventory (distress) without a court order.
Dealing with a tenant who refuses to pay rent is the nightmare scenario for any property owner. However, there is a massive legal distinction between renting out an apartment and renting out a storefront. While residential landlords in Ontario are paralyzed by months-long wait times at the Landlord and Tenant Board (LTB), commercial landlords wield significant, fast-acting power. Commercial leases are strictly business-to-business contracts.
Whether you manage a warehouse in Mississauga, a retail plaza in Markham, or office space in London, the Ontario Commercial Tenancies Act (CTA) is your primary tool. 📍 When a commercial tenant defaults on rent, you do not need to wait for a tribunal. You can act swiftly to protect your real estate asset. This guide explains how to properly execute a commercial eviction or asset seizure in May 2026 without running afoul of the law.
Step-by-Step Process for Handling Commercial Rent Default in Ontario
While the CTA gives landlords immense power, one misstep can result in the tenant suing you for illegal lockout or damages in the Superior Court of Justice. Here is the rigorous step-by-step process commercial lawyers recommend.
Step 1: Verify the Default Period and the Lease Agreement
Before you touch the locks, you must read your commercial lease agreement. While the CTA allows action after 15 days of rent arrears, your specific lease might have a different grace period. If your lease explicitly says the tenant has 5 days to cure a default after receiving written notice, you must honour the lease terms first.
Ensure that the missed payment is actually “rent.” Commercial leases often include TMI (Taxes, Maintenance, and Insurance) as “additional rent.” If they paid the base rent but skipped the TMI, you can still act, provided your lease defines TMI as rent.
Step 2: Choose Between Forfeiture or Distress (You Cannot Do Both)
This is the most critical decision in Ontario commercial real estate law. You have two mutually exclusive options.
| Remedy Type | What It Means | When to Use It |
|---|---|---|
| Forfeiture (Eviction) | You change the locks and terminate the lease entirely. The tenant loses the space. | When you want a bad tenant out permanently so you can lease to a better business. |
| Distress (Seizure) | You seize their inventory/equipment to sell it and recover the unpaid rent. The lease continues. | When the tenant has valuable physical assets inside and you want your money, not the empty unit. |
You cannot lock the tenant out to terminate the lease AND seize their property to sell for rent arrears at the same time. If you terminate the lease, you lose the right of distress. If you distrain their goods, you cannot simultaneously evict them.
Step 3: Retain a Private Bailiff
Never change the commercial locks yourself or attempt to seize restaurant equipment on your own. You must hire an authorized, private commercial bailiff. The bailiff acts as an impartial enforcer. They will attend the property, usually after hours or early in the morning, change the locks, and post the legal Notice of Forfeiture or Notice of Distress on the front door.
Step 4: Handle the Tenant’s Property
If you chose Forfeiture (changing the locks), the tenant’s equipment and inventory inside still belong to them. You cannot sell it to cover the rent. You must provide the tenant with a reasonable window of time (often escorted by the bailiff) to clear out their desks, computers, and inventory. If they abandon it, you must follow strict legal procedures to dispose of it.
How Much Does it Cost in Ontario?
Commercial evictions bypass the LTB, which saves time, but they do require upfront cash to execute properly. 💵 In CAD, expect the following costs:
- Commercial Lawyer Consultation: Before acting, a lawyer reviewing your lease to ensure you have the right to re-enter usually costs $400 to $800 CAD.
- Bailiff Fees: Hiring a commercial bailiff to change the locks and post notices generally ranges from $500 to $2,000 CAD, depending on the complexity of the property.
- Locksmith Fees: The physical cost of drilling out and replacing commercial-grade locks is usually $200 to $400 CAD.
- Litigation Risk: If the tenant fights back in the Superior Court of Justice, defending your actions can cost $10,000 to $30,000+ CAD.
How Long Does the Process Take?
Speed is the greatest advantage of the Commercial Tenancies Act. The mandatory waiting period is exactly 15 days after the rent was due (unless your lease specifies a shorter notice period). On day 16, the bailiff can be dispatched, and the locks can be changed in under one hour. Unlike residential evictions, there is no waiting months for a tribunal date.
Frequently Asked Questions (FAQ)
Does the Landlord and Tenant Board handle commercial disputes?
Absolutely not. The LTB only deals with residential housing under the RTA. Any commercial lease disputes, evictions, or lawsuits in Ontario must be handled privately or through the Superior Court of Justice.
What is Relief from Forfeiture?
If you lock out a commercial tenant, they can apply to the Superior Court of Justice for “relief from forfeiture.” If they can immediately pay all the rent arrears, plus your legal and bailiff costs, a judge may order you to give them the unit back and reinstate the lease.
Can a commercial tenant withhold rent if the roof leaks?
Generally, no. In commercial law, the obligation to pay rent is an independent covenant. Even if the landlord is failing to do maintenance, the tenant cannot simply stop paying rent. If they do, they risk being locked out after 15 days.
Can I shut off the utilities instead of changing the locks?
This is highly risky. While some leases allow the interruption of services for non-payment, judges often view shutting off heat or water as a “constructive eviction.” It is much safer to follow the formal, legal forfeiture process by using a bailiff.
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