When a commercial tenant falls into arrears, the landlord has a number of options against the tenant. However, to ensure a successful result, landlords must understand the remedies available to them and the legalities surrounding these.
In British Columbia landlord remedies for defaulting tenants, as well as limitations on those remedies, are set out in the lease and in the Commercial Tenancy Act and the Rent Distress Act, as well as under the general common law.
Before taking any action, an important first step is to verify what the lease provides regarding possible remedies and any limits on those remedies. Notice of default, for example, is often required before the landlord can act on a tenant default.
Some possible remedies include:
- Distraint - The landlord has the right to seize - typically through the services of a bailiff - the goods of the tenant to cover rental arrears.
- Continue the lease and sue for rent arrears - The landlord can affirm the lease and sue the tenant for amounts in arrears.
- Continue the lease and re-let the premises - If the tenant has vacated the premises but the landlord again wishes to continue the lease, the landlord can affirm the lease, and then seek out another tenant to pay the rent, with the original tenant remaining liable on the lease.
- Terminate the lease and sue for future rent - The landlord can accept the tenant's default as terminating the lease and then sue the tenant for all future rent and other obligations under the lease.
Some of these remedies are mutually exclusive: pursuing one means forsaking others. Others can have unintended consequences. Distraint, for example, is a confirmation of the lease, and a landlord cannot pursue distraint and terminate the lease at the same time. Landlords do well to consult in advance with a lawyer experienced in navigating creditor remedies.