It’s exciting when your business grows beyond the family basement (or your dining room table) and is ready to take up commercial space of its own. Leasing space, whether a storefront or an office, is a sign of business legitimacy, sustainability, and growth. Like any contract, a commercial lease sets out the terms that the […]read more
Nova Scotia Eviction Moratorium and Rent Deferral
The real estate industry in Nova Scotia has been greatly affected by COVID-19. Consequently, the Nova Scotia government announced several initiatives intended on supporting Nova Scotia businesses and residents including an eviction moratorium and a rent deferral program.
Hon. Chuck Porter, the Minister of Municipal Affairs and Housing, issued a direction on March 27, 2020 (the “Direction“) announcing a moratorium on commercial tenancy evictions and prohibiting commercial and retail landlords from exercising a notice to quit or distress under a commercial lease, commercial agreement or the Tenancy and Distress for Rent Act. This applies to the non-payment of rent due on or after March 22nd, 2020 by a retail or commercial tenant who was required to close their business or whose business was substantially and directly restricted by a COVID-19 public health order under the Health Protection Act. The Direction remains in place until at least April 19, 2020 and will remain in force for the duration of the Nova Scotia Provincial State of Emergency.
Unfortunately, the Minister did not provide guidance on what it means to be “substantially and directly restricted” by a COVID-19 public health order. Therefore, this broad language could include a variety of scenarios, including each of the following examples:
- a restaurant required to suspend dine-in services and only permitted to provide take-out or delivery service;
- a dental practice that is restricted to only providing emergency dental procedures; or
- a store that is unable to operate effectively because of social distancing requirements (i.e. 5 person gathering limit) and is forced to close because of an inability to cover its overhead costs.
Landlords, whether individuals or corporations, should take note of the significant penalties of failing to comply with the Direction. A violation could result in a summary conviction with fines ranging between $500 to $10,000 for individuals and up to $100,000 for a corporation, per incident.
On March 19, 2020, the Province of Nova Scotia announced that, effective as of March 19, 2020, residential landlords were prohibited from evicting a tenant if their income was affected by COVID-19. This order remains in effect until June, 30, 2020.
Although the Province merely stated that landlords are prohibited from evicting a tenant if the tenant’s income was affected by COVID-19, landlords should note that it may be nearly impossible to terminate a tenancy or enforce an eviction order for any other reason during the COVID-19 pandemic. This would include an eviction for harmful behaviour such as causing damage to the property or affecting other tenant’s quiet enjoyment of the property. Therefore, landlords should closely monitor their properties during this time, address issues as they arise and work with their tenants to find agreeable solutions to any of these issues.
Commercial Rent Deferral
In addition to the commercial eviction moratorium, the Province has strongly encouraged commercial landlords and tenants to enter into rent deferral agreements which are designed to relieve the economic burden on qualified tenants. The Province offered support to landlords who voluntarily enter these deferral agreements through the newly announced COVID-19 Rent Deferral Support Program (the “Deferral Program“). The Deferral Program provides government guarantees to landlords for deferred rent payments between April 1, 2020 and June 30, 2020 of up to $5,000 per month, per tenant, and a maximum of $50,000 per landlord.
There are a number of requirements in order to qualify for the Deferral Program. In particular, the tenant business must:
- not be a part of a franchise with locations outside Nova Scotia;
- be an active business as defined in the Income Tax Act;
- be registered to do business in Nova Scotia; and
- be primarily engaged in one of a list of prescribed activities found here: https://novascotia.ca/coronavirus/COVID-19-Rent-Deferral-Support-Program-Guidelines.pdf.
A landlord qualifies by renting commercial or retail premises to a qualified business in Nova Scotia and, prior to April 1, 2020, agreeing to grant rent deferral to a qualified business as a result of a public health order under the Health Protection Act.
If you have questions about how the provincial government’s programs apply to you or your business, please reach out to any of our Real Property team members for assistance. This article was written with contributions from Yan Lu, articled clerk at Cox & Palmer.