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News & Events

Leasing: Ontario and Canada Emergency Rent Assistance Programs

Apr 30, 2020

By: Minden Gross LLP Commercial Leasing Group

Government of Canada Plan

As part of the Government of Canada’s COVID-19 Economic Response Plan, the federal government is partnering with the provinces and territories to implement the Canada Emergency Commercial Rent Assistance (CECRA) program to assist small business tenants with their commercial rent obligations. The program will be administered by the Canada Mortgage Housing Corporation (CMHC) on behalf of the governments. On April 29, the CMHC released additional details on the CECRA.

As of April 29, the details of the program are as follows:

  • The program will provide forgivable loans to qualifying commercial property owners to cover 50% of the tenant’s gross monthly rent payments for April, May, and June.
  • The loans will be forgiven if the mortgaged property owner agrees to reduce the tenant’s gross rent by at least 75% for the three month period. In this case, the property owner would be “responsible” for at least 25% of the rent, the federal government and province would contribute 50% through the forgivable loan, and the tenant would be responsible for the balance. The landlord and tenant must enter into a rent forgiveness agreement that includes a moratorium on eviction for three months. The forgivable loans would be disbursed directly to the mortgage lender.
  • Eligible small business tenants are businesses, including non-profit and charitable organizations, who:
    • pay no more than $50,000 in monthly gross rent per location (as defined by a valid and enforceable lease agreement),
    • generate no more than $20 million in gross annual revenues, calculated on a consolidated basis (at the ultimate parent level), and
    • have temporarily ceased operations or have experienced at least a 70% decline in pre-COVID-19 revenues (the “Minimum Revenue Drop”), to be determined by comparing revenues in April, May, or June to the same three month period in 2019 or alternatively comparing average revenues for January and February 2020.
  • The CECRA is expected to be operational by mid-May, with commercial property owners lowering the rent (for their small business tenants) payable for April and May, retroactively, and for June.
  • The property owner must be the registered owner and landlord of the property.
  • The property owner must have a mortgage loan secured by the commercial real property. If the property owner does not have a mortgage, CMHC notes that an alternative mechanism will be implemented. CMHC notes that further information on this subject will be provided in the near future.
  • The property owner must have declared rental income on their tax return (personal or corporate) for tax years 2018 and/or 2019.
  • Property owners may apply for the CECRA once the three-month period has ended if they can prove eligibility during these months.
  • Property owners must refund amounts paid by the small business tenant during the three-month period. If rent has been collected at the time of approval for the CECRA, a credit to the tenant for a future month’s rent (i.e., July for April) is acceptable if agreed upon by both the property owner and the tenant.
  • The deadline to apply is August 31, 2020.
  • The loan will be forgiven if the property owner complies with all applicable program terms and conditions, including to not seek to recover rent abatement amounts after the program is over.

The CMHC noted that program details, including how funds will be disbursed and how to apply, are being finalized and will be available soon.

Government of Ontario Plan

On April 24, the Province of Ontario released details on the Ontario-Canada Emergency Commercial Rent Assistance Program (OCECRA), which are somewhat at odds with the federal announcements:

  • Most notably, OCECRA funding does not cover the property owner’s profits derived from rental income. In applying for this program, the property owner agrees to “forego profit” for April, May, and June.
  • The forgivable loan would be conditional on the property owner and tenant entering into a rent forgiveness agreement (including a moratorium on eviction for three months) pursuant to which the property owner would reduce the tenant's monthly rent to 25% of rent that relates to “fixed costs” for three months. The property owner would be responsible for the remaining 25%.
  • The OCECRA specifies that eligible small business tenants who have temporarily ceased operations must be non-essential businesses.
  • Commercial property owners have until September 30, 2020, to apply for the OCECRA.
  • Commercial properties with a residential component and residential mixed-use properties are eligible for the OCERCA as long as the commercial component is 30% or more.
  • The following small businesses are excluded from the OCECRA program:
    • Entities owned by individuals holding political office;
    • Entities that promote violence, incite hatred, or discriminate on the basis of race, national or ethnic origin, color, religion, sex, age, or mental or physical disability; and,
    • An entity in the Lenders special accounts or Restructuring Group prior to March 1, 2020.

Further Information Required

As of April 29, there are many gaps in the program details with respect to both eligibility for the program and its mechanics, including the following:

  • It is unclear what OCERCA means by “profit” and “rent that relates to fixed costs.” These terms are not referenced in the CERCA and they are not defined in the OCERCA. Does “forego profit” mean that a landlord cannot collect any management or administration fees or something else? Does “rent that relates to fixed costs” refer to the fixed gross monthly rent, or does it refer to only operating costs and realty taxes?
  • Is HST included in the $50,000 calculation of monthly rent?
  • Can a tenant that is an essential business that pays monthly rent not exceeding $50,000 and has temporarily closed qualify for the OCECRA?
  • Where a tenant has multiple leased locations:
    • Does the tenant apply for the OCECRA for each location separately?
    • Does it make a difference if the tenant holds different locations under different legal entities?
    • Is the Minimum Revenue Drop tied to each location or to the business generally?
  • Will the tenant be required to include written evidence of the Minimum Revenue Drop with the rent forgiveness agreement?
  • How does the OCECRA apply where there is a ground lease, license arrangements, or a sublease?
  • Can a landlord participate in the program for less than three months (i.e., only May and June)?
  • Will the moratorium on rent evictions apply even if a tenant does not pay the remaining 25% of rent for which it is responsible?
  • What if a tenant defaults during the three month period?
  • Do properties owned by bare trustee corporations qualify for the program, as the beneficial owners of the property (i.e., the landlord) are not the registered owners?


We have also identified some concerns regarding the CECRA and OCECRA:

  • The program is supposed to assist small business tenants, but they may not receive the intended benefits if their landlords are unwilling to opt-in to the program (as the program is not mandatory) and be responsible for at least 25% of the monthly rent.
  • There appear to be some noteworthy disincentives including:
    • since the OCECRA requires that landlords forego all “profit” derived from the rental income for the three-month period, a landlord participating in the OCERCA may be forgiving more than 25% of the monthly rent. The language around requiring the landlord to “forego profit” requires clarification before a landlord will consider opting into this program; and
    • the administrative burden of applying for and complying with the program, especially in cases where parties have already entered into rent relief agreements.

While it is a positive step that the provincial and federal governments are willing to step in and provide rental assistance to some landlords and tenants, more information is needed to better understand the impact and applicability of the program. There remains much uncertainty around how much time it will take to finalize the terms and mechanics of the program and how much time it will take to process each application and receive the funding. Based on the information currently available, there are growing concerns that the program may not end up providing assistance to many small businesses in need, since it requires their landlord to “opt-in” to a program that may not be beneficial to the landlord. While the program is ostensibly aimed at helping small business tenants, the true impact of the program seems to protect banks and other mortgagees, at the expense of landlords and taxpayers.

Until further program details are released, nothing prevents a landlord and tenant from working independently on rent relief arrangements.

As more information is released on the OCECRA and CECRA, we will update this bulletin. In the interim, if you have any questions or would like to obtain legal advice on the OCECRA and CECRA, please contact any lawyer in our Commercial Leasing Group. For more information on managing your business during COVID-19, visit our resource page at:

Stephen Posen
Chair – Commercial Leasing Group
p: (416) 369-4103

Michael Horowitz
Partner - Commercial Leasing Group
p: (416) 369-4121

Christina Kobi
Partner - Commercial Leasing Group
p: (416) 369-4154

Boris Zayachkowski
Partner - Commercial Leasing Group and Commercial Real Estate Group
p: (416) 369-4117

Benjamin Radcliffe
Partner - Commercial Leasing Group
p: (416) 369-4112

Melodie Eng
Associate - Commercial Leasing Group
p: (416) 369-4161

Steven Birken
Associate - Commercial Leasing Group
p: (416) 369-4129

Leonidas Mylonopoulos
Associate - Commercial Leasing Group
p: (416) 369-4324

Catherine Francis
Partner - Litigation Group and Bankruptcy and Insolvency Group
p: (416) 369-4137

Ian Cantor
Partner - Litigation Group
p: (416) 369-4314