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The Canada Emergency Commercial Rent Assistance (“CECRA”) Program – An Explainer

Last week the federal government released further details on CECRA and how it would assist commercial tenants and landlords. Commercial rent is under the jurisdiction of the provinces and both the federal and provincial governments will contribute to this relief program; in B.C. the total amount available will be around $300 million with the provincial government contributing approximately $80 million of that amount.

If a commercial tenant is eligible this program will pay for 50% of a tenant’s commercial rent for the months of April, May, and June. The funds are paid from the government to the landlord’s mortgage lender through the Canada Mortgage and Housing Corp. (more details need to be released to confirm if landlords with no mortgage on their commercial property are eligible). If the landlord reduces the rent that needs to be paid to 75% then this 50% paid by the government is forgiven. The tenant would then be responsible for paying the 25% top up. If the landlord does not reduce the rent owing, then the money provided by the government needs to be repaid by the landlord, and the tenant would be responsible for a 50% top up.

The logic at the end of the day is that if the landlord reduces the rent then the government pays 50%, the tenant pays 25%, and the landlord absorbs the 25% reduction.

Another important note to keep in mind is that if the landlord is willing to reduce the rent and participate in this agreement, then for so long as the agreement is in place the landlord cannot evict the tenant.

For a commercial tenant to be eligible the tenant’s rent needs to be less than $50,000 per month, and they need to have seen at least a 70% drop from their pre Covid-19 revenue. Charities and not-for profits are eligible for this as well, but further details need to be released. The plan is currently an agreement in principal between the federal and provincial government, and more details should be released soon to see CECRA in place by mid May.

If you are a commercial tenant you are reliant on your landlord to apply for this program. If this is something that you could benefit from and you meet the above requirements then begin conversations with your landlord. Unfortunately, as the program will not be rolled out until the middle of May, it means commercial tenants will still be looking for a way to make May’s rent so begin these discussions with your landlord as soon as possible.

The foregoing is intended for general information purposes only and should not be construed or relied upon as legal advice. If you require legal advice, please contact the author who would be pleased to discuss the issues above with you in the context of your particular circumstances. We are available for videoconference and phone calls to adhere to physical distancing recommendations.

Alison McLeod is a real estate and business lawyer at Doak Shirreff Lawyers LLP. She can be reached at [email protected] or 250.979.2561.