Comprehensive Q&A: Legal Provisions Amidst COVID-19



The federal government created the Canada Emergency Business Account which will allow banks to provide up to $40,000 in interest-free loans to small businesses and not-for-profits. Businesses should contact their financial institution to apply for these loans, as there is no online application for it.

To qualify, the business must:

  • be a Canadian corporation in operation since March 1, 2020.
  • Have a CRA number.
  • Have paid total employment income between $20,000 to $1,500,000 in 2019.
  • have an active business account with their Bank that was opened on or prior to March 1, 2020.

The loan can only be used to pay what’s called “non-deferrable operating expenses” which means payroll, rent, utilities, insurance, property tax and regularly scheduled debt payments. It CANNOT be used for prepayment or refinancing of existing debt or payments of dividends.

A bonus to getting this loan is that 25% of this loan is forgivable if repaid by December 31, 2022, which basically means you get to keep $10,000 of the loan.

On May 19, the government expanded the eligibility criteria to include many owner-operated small businesses such as:

  • sole proprietors receiving income directly from their businesses,
  • businesses that rely on contractors, and
  • family-owned corporations that pay employees through dividends rather than payroll.

To qualify under this new expanded eligibility criteria, applicants with payroll lower than $20,000 would need:

  • a business account at a Bank
  • a CRA business number,
  • have filed a 2018 or 2019 tax return.
  • non-deferrable expenses between $40,000 and $1.5 million, as we described just before. 

The applications under the new expanded criteria will launch soon.

So that’s an overview the bigger loan program that everyone has heard about.



There are other loan programs that the government introduced that many aren’t familiar with. There is:

  • The Working Capital Loan that provides loans between $100,000
  • The Small Business Loan where businesses can access up to $100,000 in loans
  • The Business Credit Availability Program that provides a new loan or operating line of credit up to $6.25 million.

Each of these have different criteria that your bank can inform you about.



This program offers unsecured, forgivable loans to landlords, not to tenants, and the program offers rent assistance only for the months of April, May and June 2020.

The application is open until August 31, 2020.

It works like this:

For a tenant that paying $10,000 per month:

  • The government will pay 50% of the rent being $5,000 to the landlord.
  • The tenant will pay up to 25% of the rent being $2500, and
  • The landlord will have to cover the remaining 25% of the rent being $2,500, which basically means that the landlord has to take a loss of 25%



For the landlord to qualify:

  • they must have a qualified tenant in their property
  • they must enter (or have already entered) into a rent reduction agreement for the period of April, May and June 2020
  • they must sign a moratorium on eviction, and
  • they must declare their rental revenue

Commercial Properties with or without a mortgage, and Commercial properties with a residential component and multi-unit residential mixed-use properties are eligible.



For the Tenant to qualify: 

  • they must pay no more than $50,000 in monthly gross rent
  • they must generate no more than $20 million in gross annual revenues, calculated on a consolidated basis (at the ultimate parent level)
  • they must have experienced at least a 70% decline in pre-COVID-19 revenues. This 70% decline is calculated by ** comparing revenues in April, May and June of 2020 to that of the same period in 2019. OR an average of their revenues earned in January and February of 2020 to that of the same period in 2019.
  • They must have a binding lease or sublease agreement



Landlords can still apply once the 3-month period has ended and the program will be applied retroactively.

A landlord must apply for all 3 months at the same time and all impacted tenants must be included on a single application.

If rent has been collected at the time of approval, landlords must use the government funds to refund amounts paid by the small business tenant for the period in excess of 25%, or they can apply the excess to future rent owing by the tenant.


Yes, If the property is newly constructed or recently purchased, then as a landlord you may be still eligible for program so long as you entered into a lease with your tenant before April 1, 2020.



COVID-19: Commercial Rent Payments

Q: Can a tenant delay paying rent during these times?

Unfortunately, the tenant’s obligation to pay rent cannot be delayed unless the lease states otherwise. So you will need to look carefully at your lease. 

The failure to pay rent without written consent from the landlord is a clear violation of the terms of a lease and the landlord can pursue you. 

Thankfully, yesterday on June 8, The Ontario government announced it intends to put a temporary ban on commercial evictions to help small business owners who are struggling to pay their rent during COVID-19 for those who qualify for the Canada Emergency Commercial Rent Assistance program. The ban will take effect for evictions as of June 3 and last until Aug. 31. The government intends to bring this legislation forward to have it passed as soon as possible.


Q: I am a commercial landlord. Can I delay giving the keys to my tenant?

The main concern for landlords at this time is whether they will be able to deliver possession of premises to their new tenants by promised dates.

It depends on if your lease has a “Delayed Possession Clause” that allows the landlord to delay giving possession and the keys of premises to the tenant.


Q: I am a commercial tenant. I want to wait until the pandemic is over until I can start my renovations and still benefit from my rent-free renovation period. Is that possible?

The main concern for tenants in this time is whether they are able to start construction of their renovations at a later time.

It depends if your lease has a clause that allows for a delay in the renovation period AND for a delay in the start of the lease term, so that the tenant does not lose the benefit of having a rent-free period.


Q: I’ve read online that I should look at my lease for a force majeure clause to get out of paying rent. What is that exactly and is it true?

While there is no universally accepted definition of “force majeure”, force majeure is latin for “superior force” and generally means any unforeseeable circumstances that prevent a party from fulfilling its responsibilities under the lease, which would in turn free the party from liability or its responsibility.

Typically, unforeseeable circumstances include war, strike, riot, crime, plague, or an event described by the legal term act of God (hurricane, flood, earthquake, etc).

Standard force majeure clauses rarely include the word “pandemic” “epidemic”, or “public health emergency”. However, each force majeure clause is worded differently. We recommend that you check if there’s any mention of the word “pandemic” in your force majeure clause, as it may possibly allow you to delay rent payment and certain other responsibilities. 

At the end of the day, each scenario is fact specific so there is no black and white answer, and it will be up to the courts to make that decision.


COVID-19: Force Majeure/Unforeseeable Circumstances

Q if I have a force majeure clause in my lease and it has the word “pandemic” in it, can I use it automatically to delay rent payments?

Unfortunately not. It is important to know that a force majeure clause cannot be invoked simply because the pandemic exists - the pandemic must have 1) prevented performance of your tenant responsibility AND 2) caused economic hardship to you as a tenant. For example, some essential businesses like Walmart and Costco who are thriving in this environment, are not having their revenues negatively affected at all, so they cannot rely on this clause to their benefit.


Q: What’s the difference from Rent Abatement and Rent Deferral?

Rent Abatement is a reduction in the amount of rent you pay per month. However, you will still have to pay this reduced amount every month. This is the more likely option landlords will choose if they rely on rent payments to pay their own mortgages or if they require it for operating costs for the premises.

Rent Deferral allows the tenant to stop paying their rent for a certain period until a later date, such as at the end of the pandemic. Once that date arrives, the tenant is then required to pay the full amount of rent that they did not pay, either as bulk payment or in installments, on top of their regular rent payments. Landlords will likely choose this option if they own multiple units and most of them have essential businesses still running, so are not as cash tight. 

Landlords should not defer the payment of rent past the lease expiry date, and that upon early termination of the lease, the deferred rent payments will be immediately payable. 


Employment Law Questions

My Employer has advised me that I am temporarily laid off.  What does this mean? Am I entitled to termination pay?

A temporary lay off is the cutting back or complete cut of an employee’s employment with the understanding that they will be called back to their full-time position within a specified period of time.

During these unprecedented times, it is becoming more common for an employer to enact temporary lay offs. During a temporary lay off, an employee is usually not entitled to any sort of pay including termination pay.

On May 29, 2020, the provincial government filed a new regulation under the Employment Standards Act.  It provides some clarity with respect to the legal implication so layoffs that take place during the pandemic. It covers lays off conducted during the period of March 1, 2020 up until 6 weeks after the state of emergency is over. In this regulation, the province has stated that temporary lay offs or temporary reduction in employee wages or hours does not constitute a constructive dismissal under the Employment Standards Act.

Are Employers Required to Buy Personal Protective Equipment (PPE) for Employees?

Employers have a duty to provide a safe working environment relative to the expected duties of the employee and the risks in the workplace. This can vary with every type of job. If employees run the risk of becoming infected at work because of the work they perform, the employer must provide personal protective equipment.

Residential Tenancies Questions:

My tenant has not paid rent for this month, what are my options as a landlord?

Your tenant is still responsible to pay rent on time and in full.  However, if a tenant does not pay rent at this time, you cannot take any steps to evict them, as the Landlord and Tenant Board has suspended all orders for eviction, and the Court has suspended the enforcement of these orders.  The best option is to try and work with your tenant to reach some sort of agreement to at least receive a portion of the rent for the time being.

Can I still give my tenant notice of termination of the tenancy during the suspension of eviction orders?

As a landlord, you can still give a notice of termination  to your tenant.  However, if they do not leave by the stated date voluntarily, you cannot obtain an order for eviction from the Landlord and Tenant Board. You can still file your application online, however your hearing date will not be scheduled during this time. It is unclear at this time how the Landlord and Tenant Board will treat these applications that were filed during this suspension once they resume operation.

My current tenant is scheduled to move out by June 30, 2020 and I have a new tenant scheduled to move in on July 1, 2020. What happens if my current tenant does not move out by that date?

If the current tenant does not move out by the termination date or the date on which they agreed to vacate, you will not be able to obtain an order for eviction during this time.

Unfortunately, as you have a new tenant moving in, if you cannot give your new tenant access to the property, you may be liable for any damages they may incur. This can include moving costs or short-term rental costs. It would best to speak to your current tenant and confirm that they will be leaving by the agreed upon date. If they are not, you should try to reach an agreement with your new tenants with respect to commencing the tenancy.

My tenant has asked for a reduction in their rent as a result of one of them losing their jobs.  Am I obligated to accept less than the full rent?

You as the landlord are entitled to rent on time and in full. As there is no way of evicting tenants at this time, it is very beneficial to try and work with him/her, so if your tenant really does not have the income at this time to make payment, it is better to receive at least a portion of the rent, as opposed to nothing.

This will maintain your relationship with your tenant, and the parties can agree to a payment plan to receive the outstanding balance. You can remind your tenant that he/she is still obligated to pay rent and can point them in the direction of financial assistance and if they are eligible you may be able to receive your rent payment from those funds.


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