CANADA Law and Practice Contributed by: Rachel V Hutton, Michael L Dyck, Mario Paura and Patrick Morin, Stikeman Elliott LLP
included in the Civil Code. Some provinces and territories also have legislation governing com - mercial tenancies generally, without specific pro - visions in respect of any particular category of commercial property. Where legislation does not exist or does not address an issue, common-law principles apply. During the pandemic, rent-subsidy programmes and eviction moratoriums applied to commercial and residential tenancies, respectively. 6.15 Effect of the Tenant’s Insolvency Subject to the specific terms and conditions of a lease, a tenant’s insolvency would likely trigger an event of default under the lease and permit a landlord to terminate the lease; however, bank - ruptcy legislation would apply to the tenancy relationship. In Alberta, the Landlord’s Rights on Bankruptcy Act contains specific rules as to what may happen with a lease or sublease upon bankruptcy. 6.16 Forms of Security to Protect Against a Failure of the Tenant to Meet Its Obligations A landlord may require a tenant to pay a security deposit (which is typically paid in cash, but may be provided through a letter of credit) and may require the tenant to grant the landlord security over the tenant’s personal property. Landlords may also require a third-party guarantee from a parent company or subsidiary of the tenant. 6.17 Right to Occupy After Termination or Expiry of a Lease Commercial tenants generally do not have the right to continue to occupy the relevant real estate after the expiry or termination of the lease term. However, leases often contain an “over - holding” clause whereby a tenant may remain in possession on a monthly basis, usually at
increased rent (up to 200% of the monthly rent payable during the term). If a tenant continues in possession after the expiry or termination of the lease term, the land - lord may be entitled to obtain a court order for delivery of possession. 6.18 Right to Assign a Leasehold Interest Most leases provide that the landlord must first consent to any assignment of a lease, any sub - letting of the leased premises, or any change of corporate control of the tenant. The lease will dictate whether that consent may or may not be unreasonably withheld and will state the conditions for that consent. Most common-law jurisdictions dictate certain circumstances under which the landlord may withhold consent. Com - mercial leases may also give the landlord the right to terminate the lease upon a request for assignment, sublet or change of control, or to otherwise impose conditions on the granting of a consent. 6.19 Right to Terminate a Lease A landlord will typically have the right to termi - nate a lease upon the tenant’s failure to pay rent, upon another material breach that is not cured within a specified time, upon the tenant’s insol - vency, and upon substantial damage or destruc - tion of the leased premises/building. Tenants typically either have no right to terminate a lease or may only do so in limited circumstances, such as upon damage or destruction of the leased premises. Where a tenant negotiates an early termination right, fees will often be payable, including for example based on the unamortised value of leasehold improvements paid for by the landlord.
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