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March 2019

Landlord rights in bankruptcy: Trustee's disclaimer of lease eliminates claim for unsecured damages

Where a tenant is in breach of a commercial lease, a landlord generally has the option to sue the breaching tenant for the unexpired portion of the lease (subject to the landlord's duty to mitigate). However, where a tenant goes bankrupt, the bankruptcy trustee has the power to disclaim the lease under section 30(1)(k) of the Bankruptcy and Insolvency Act ("BIA"). To the surprise of some landlords, this disclaimer will extinguish any right of the landlord to the unexpired term of the lease, save for a preferred three months' accelerated rent claim pursuant to section 136(1)(f).

Home renovations down again last quarter

As another sign of Canada's cooling real estate market, home renovations are in a significant decline. Recent Bank of Canada data show total renovation debt held by banks is down again for the last quarter of 2018. The most recent high for total renovation debt, $3,610,000, came in the second quarter of 2016, and the figures have declined almost 18% since then. 

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