Under the Ontario Commercial Tenancies Act, if a tenant fails to pay rent, a landlord can legally lock them out and terminate the lease on the 16th day after rent was due. Alternatively, the landlord can seize their assets (distress). You must choose one action or the other, and hiring a professional bailiff is highly recommended.
Owning commercial property in Toronto can be a lucrative investment, but dealing with a problematic tenant can quickly turn your asset into a massive financial liability. Whether you own a retail strip in Etobicoke or a warehouse in North York, commercial tenancies operate under vastly different rules than residential ones. The strict tenant protections you hear about on the news generally apply to housing, not commercial enterprises.
In Ontario, the relationship between a commercial landlord and tenant is governed by the Commercial Tenancies Act (CTA) and the specific wording of your lease agreement. 🚨 When a business stops paying rent or starts conducting illegal renovations, landlords actually hold a significant amount of power to resolve the issue swiftly. However, executing an eviction or seizing assets requires strict adherence to legal procedures. Finding a local commercial litigation lawyer from our directory can prevent costly lawsuits from a wrongfully evicted tenant.
Step-by-Step Process in Toronto
When dealing with a commercial default, moving quickly but legally is essential to protect your property and your income. Here is the standard process a Toronto landlord should follow when dealing with lease violations.
Step 1: Identify the Type of Breach
The law treats unpaid rent entirely differently than other lease violations. 📝 If the tenant has not paid rent, it is a “monetary default.” If they are violating the lease in another way—such as carrying out unapproved construction, causing a nuisance, or failing to maintain insurance—it is a “non-monetary default.” Your legal response depends entirely on which type of breach has occurred.
Step 2: Provide the Appropriate Notice
For unpaid rent, the CTA states you must wait 15 full days after the rent was due before taking action. On the 16th day, you can act without any prior written warning (though a demand letter is good practice). For non-monetary defaults, you must provide written notice specifying the breach and give the tenant a “reasonable” amount of time to fix the issue before you can terminate the lease.
Step 3: Choose Between Lockout or Distress (For Rent Arrears)
If the 15-day grace period for unpaid rent has passed, you face a critical legal choice. You can either terminate the lease and change the locks (Lockout/Forfeiture), OR you can seize the tenant’s inventory and equipment to sell for the unpaid rent (Distress). 🔒 In Ontario, you cannot do both at the same time. If you terminate the lease, you lose the right to seize their goods.
Step 4: Hire a Bailiff or Go to Court
It is incredibly risky to change the locks or seize goods yourself. The standard practice in Toronto is to hire a private commercial bailiff to execute the lockout or distress on your behalf. If the tenant is fighting the eviction, or if the dispute involves a complex non-monetary breach, your lawyer will need to apply to the Superior Court of Justice for an order to recover possession of the property.
How Much Does it Cost in Toronto?
Removing a commercial tenant involves enforcement fees and legal costs. 💵 Here is a look at what landlords can expect to pay in Ontario:
- Commercial Bailiff Fees: Hiring a bailiff to change locks and post termination notices usually costs between $500 and $1,500 CAD. If they are performing a distress (seizing and selling assets), fees are higher and usually calculated as a percentage of the recovered goods.
- Locksmith Fees: You will need to pay a commercial locksmith to re-key the doors simultaneously with the bailiff, which generally costs $150 to $400 CAD.
- Lawyer Fees: Having a lawyer draft formal notices of default typically costs $300 to $600 CAD. If court litigation is required, expect to pay hourly rates of $350 to $700+ CAD.
- Court Filing: Applying to the Superior Court of Justice for a writ of possession costs about $258 CAD in government filing fees.
How Long Does the Process Take?
Compared to residential evictions, commercial remedies are exceptionally fast. For unpaid rent, a landlord can legally lock out a tenant in exactly 16 days from the date the rent was missed. If you choose distress, seizing and auctioning assets generally takes 2 to 4 weeks. However, if the tenant challenges the eviction and you must proceed through the Superior Court of Justice, obtaining a judge’s order can take 3 to 6 months or longer.
| Type of Breach | Required Notice Period | Common Landlord Remedy |
|---|---|---|
| Unpaid Rent | 15 Days (Act on the 16th day) | Bailiff Lockout or Distress (Seizure) |
| Non-Monetary (e.g., noise, damage) | “Reasonable” time to fix | Notice of Default, followed by Eviction |
| Bankruptcy of Tenant | Governed by federal law | File claim with Licensed Insolvency Trustee |
Frequently Asked Questions (FAQ)
Does the Residential Tenancies Act apply if the tenant lives in the back?
If the space is mixed-use (e.g., a storefront with an apartment in the back rented on a single lease), the rules become incredibly complex. The Residential Tenancies Act may override your commercial rights, and you cannot simply use a bailiff to lock them out. You must consult a lawyer immediately.
Can I turn off the electricity or water to force them out?
No. Shutting off vital utilities to force a tenant to leave is highly illegal and opens the landlord to massive lawsuits for business interference and damages. You must use formal legal channels like termination or distress.
What happens to the tenant’s equipment if I lock them out?
If you terminate the lease for non-payment, the tenant still owns their equipment and inventory inside. You must give them supervised, reasonable access to remove their property. You cannot hold their goods hostage unless you executed a formal “Distress” before terminating.
Can I keep the security deposit if I evict them?
Generally, yes. Under most commercial leases in Ontario, the landlord can apply the security deposit toward the unpaid rent or the costs associated with the tenant’s breach of contract. Your specific lease wording will dictate how deposits are handled.
Leave a Reply