commercial lease rights and remedies 2009 alberta

Download Commercial Lease   Rights And Remedies   2009 Alberta

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A presentation to property owners and managers on commercial lease enforcement in the Province of Alberta

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  • 1. COMMERCIAL LEASES Landlord Rights & Remedies Presented by: Peter Collins, Partner Kevin Schouten, Associate Katherine Kowalchuk, Associate
  • 2. Objectives of this Seminar Learn about: Landlords rights and remedies upon lease default Tenants rights and remedies Practical Issues
  • 3. Rights and Remedies - Landlord Topics Lease Remedies/External Remedies What constitutes a default Keep or Evict the Tenant Monetary v. Non-monetary defaults Remedies on Default
  • 4. Lease Remedies/External Remedies Two categories of Landlords remedies upon a tenants default: Remedies in Lease External Remedies Remedies provided by law
  • 5. Lease Remedies Read the Lease: Every lease is different! Topics: Is it a Default? Keep or Evict the Tenant? Discussion of Various Remedies
  • 6. Is it a default? Landlords have extensive common law rights Most leases expand on common law rights Read the lease - every lease is different! Is Tenants act/conduct a default? Must notice of default be given? Does the Tenant have a cure period?
  • 7. Flowchart
  • 8. Keep or Evict the Tenant? This is a business decision Likelihood of future defaults Financial condition of tenant Desirability of tenant Lease and Legal Remedies depend on the Keep/Evict decision
  • 9. Keep the Tenant If you decide to keep the Tenant, then respond to the default Read the lease - every lease is different! Determine type of default Determine Landlords rights
  • 10. Is it a Non-Monetary Default? Non-Monetary = defaults other than payment defaults Example failure to repair Read the lease - every lease is different! Does Landlord want to remedy Tenants default? Does Landlord have right to remedy Tenants default? Without notice? Only after notice and cure period?
  • 11. Converting a Default Read the lease - every lease is different! Can Landlord charge the tenant for costs of curing tenants non-monetary default? If so, follow procedure to make the claim for reimbursement Claim for reimbursement, when not paid, is a Monetary Default Most leases state all monies due are rent
  • 12. Rights on Monetary Default-Seizure Civil Enforcement Act (Alberta) permits rent distress Rent distress permits a bailiff to seize Tenants goods on premises, and potentially sell them to pay rent arrears Lease might permit seizure of goods removed from the premises, also
  • 13. Seizure, contd. Beware excess seizure Individuals who are tenants have certain exemption rights Must keep lease alive to carry out and complete a seizure If you seize, then terminate the lease, the seizure is released.
  • 14. Rights on Default Re-entry Alberta has no Commercial Tenancies Act Retake possession Self-help Court order
  • 15. Rights on Default Termination Read the lease - every lease is different! Give appropriate notices required by lease Await cure period, if any If default not cured Terminate lease Retake possession Carefully Comply With All Lease Requirements
  • 16. External Remedies Topics Lease Repudiation Specific Performance Injunction
  • 17. Lease Repudiation Discussion above focused on landlords remedies WITHIN lease Landlord also has remedies OUTSIDE the lease, in certain cases Main external remedy/right arises when tenant repudiates the lease
  • 18. What is repudiation? A clear continuing act inconsistent with continuation of lease A fundamental breach going to the heart of the lease Examples: Failure to pay rent Cease operating, contrary to continuous use provision Abandonment of premises
  • 19. Landlords Options upon Tenants Repudiation Where a tenant repudiates the lease, landlord has four options: 1. Do nothing instalment litigation 2. Terminate and sue for rent arrears to date of termination 3. Re-rent on tenants account 4. Accept repudiation, terminate and sue for past and future damages (Highway Properties case)
  • 20. The Do Nothing Option Use where: Tenant is financially viable Landlord wants to keep Tenant OR There are no better options for space at that time (even if vacant)
  • 21. Terminate The Stop The Loss option, use where: Tenant not financially viable for future rent Tenant not desirable to keep in place Likelihood of collecting damages for balance of rent is low Not worthwhile to preserve lease rights Take your licks and move on
  • 22. Re-rent on Tenants Account Use where: Tenant has financial resources to pay some/all future rent Tenant presence/continuation not desirable Give notice to Tenant Act as tenants agent Re-rent sublease Tenant liable to Landlord for any deficiency Landlord liable to Tenant for any surplus
  • 23. Highway Properties Remedy Give notice to Tenant Tenant has repudiated lease Landlord accepts repudiation Tenant is liable for all past rent Tenant is liable for all other damages, including a part of future rent Retake possession and re-rent the premises
  • 24. Highway Properties, contd. Future rent recovery: Present value of unpaid future rent for balance of lease term LESS Actual Rental Value for balance of lease term [NOTE: loss from breach of cont. op. covenant is also recoverable]
  • 25. Duty to Mitigate LANDLORD HAS DUTY TO MITIGATE LOSS, whether: Re-renting on tenants account Termination and damage claim
  • 26. Specific Performance Where there is a lease breach, innocent party can sue for Specific Performance Specific Performance is a court order FORCING the breaching party to perform its lease obligations
  • 27. Specific Performance, contd. Rarely awarded an equitable remedy Requires a clear and strong case Damages must not be an adequate alternative Must be easily enforceable court is not a property manager Anchor tenant example
  • 28. Inj