Under Ontario’s Commercial Tenancies Act, if a tenant is 15 days late on rent, a landlord can either terminate the lease and change the locks, or seize the tenant’s assets (distress). You cannot do both at the same time, and using a licensed commercial bailiff is highly recommended to avoid legal liabilities.
Owning commercial real estate in Mississauga can be highly profitable, but dealing with a commercial tenant who stops paying rent is a major source of stress. 🏢 Unlike residential leases, which heavily favour the tenant, commercial leases in Ontario provide landlords with swift and powerful tools to protect their investments.
When a tenant defaults on rent at your retail plaza or industrial unit, acting quickly is essential to protect your cash flow. ⚖ The Commercial Tenancies Act (CTA) governs these disputes. Understanding your options will help you recover the money owed or reclaim your property so you can find a more reliable business tenant.
Step-by-Step Process for Landlords in Ontario
Commercial lease disputes can escalate quickly. Whether your property is located in Meadowvale or along Dixie Road, following a strict legal process is crucial to ensure you are not sued for wrongful eviction.
Step 1: Review the Lease Agreement
Before taking any action, you or your lawyer must carefully read the commercial lease agreement. 📄 While the CTA provides default rules (like the 15-day waiting period), your specific lease might have custom clauses that dictate how many days’ notice you must give before taking action. The lease is the ultimate rulebook.
Step 2: Choose Your Remedy (The Election)
Ontario law forces landlords to make a strict choice when rent is unpaid. You can choose to lock the tenant out (Termination) OR you can seize their equipment and inventory to sell it (Distress). 🔍 You absolutely cannot do both simultaneously. If you change the locks, you lose the right to seize their goods for unpaid rent without a court order.
Step 3: Hire a Commercial Bailiff
Whether you choose to terminate the lease or seize assets, it is highly recommended to hire a licensed commercial bailiff rather than doing it yourself. 👮 A bailiff understands exactly how to legally enter the property, change the locks, post the required legal notices on the door, and document any seized inventory properly.
Step 4: Pursue a Lawsuit for Damages
If locking out the tenant or seizing goods does not cover the unpaid rent and future lost rent, you may need to file a lawsuit. 🏛 Your lawyer will file a Statement of Claim at the Superior Court of Justice (often utilizing the Brampton courthouse) to sue the tenant or the personal guarantor of the lease for the remaining balance.
How Much Does It Cost to Evict a Commercial Tenant?
Taking action against a defaulting tenant involves upfront costs, though many commercial leases allow the landlord to add these legal and bailiff costs to the tenant’s outstanding debt. 💵 Here is a general breakdown:
| Service Type | Estimated Cost (CAD) | Description |
|---|---|---|
| Commercial Bailiff Services | $500 – $1,500+ | Cost to have a professional physically change the locks and post legal notices. |
| Lawyer (Demand Letter/Advice) | $750 – $2,000 | Drafting a formal notice of default and advising on the best legal strategy. |
| Litigation (Suing for Arrears) | $5,000 – $15,000+ | Taking the matter to the Superior Court of Justice if the tenant refuses to pay. |
How Long Does the Process Take?
Under the CTA, a landlord must generally wait 15 days after rent is due before they can change the locks or seize goods. ⏱ Once the 15-day mark has passed, a commercial bailiff can usually execute a lockout within 24 to 48 hours, making it a very fast process compared to residential evictions.
Frequently Asked Questions (FAQ)
Does the Landlord and Tenant Board handle commercial leases?
No. The Landlord and Tenant Board (LTB) strictly handles residential tenancy disputes under the Residential Tenancies Act. Commercial lease disputes are governed by the Commercial Tenancies Act and are handled through the Superior Court of Justice.
What happens if the tenant files for bankruptcy?
If your commercial tenant formally files for bankruptcy, an automatic “stay of proceedings” is triggered. You immediately lose the right to seize their assets or change the locks without court permission, and you must deal directly with their bankruptcy trustee.
Can I turn off the utilities to force them out?
It is generally not advised to shut off utilities as a pressure tactic, as it can be deemed an illegal interference with the tenant’s business. You must rely on the legal remedies of termination or distress to reclaim your property.
Can a tenant sue me if I lock them out improperly?
Yes. If you change the locks before the 15-day grace period expires, or if you violate specific notice clauses in your lease agreement, the tenant can sue you for “relief from forfeiture” and claim massive financial damages for the interruption of their business.
Leave a Reply