Commercial Real Estate Law

Author: Dharam Dhillon

On October 9, 2020, the federal government announced the successor to the recently expired Canada Emergency Commercial Rent Assistance program (“CECRA”). CECRA provided commercial tenants impacted by COVID-19 with rent relief and rent abatement solutions. CECRA was in place between April 2020 to September 2020. As the program has expired, the federal government intends to continue its assistance of businesses adversely impacted by COVID-19 by providing rent and mortgage support through its recently announced Canada Emergency Rent Support program (“CERS”).

Details Regarding CERS Currently Available

While details are yet to be fully provided, CERS will seek support businesses, charities and non-profits that have suffered a revenue drop by subsidizing a percentage of their “eligible expense” up to a maximum of 65% until December 19, 2020. In addition to the 65% subsidy, organizations that have temporarily shut down pursuant to a mandatory public health order may be eligible for an additional subsidy of up to 25%.

Unlike the CECRA program, CERS will (a) be provided directly to commercial tenants rather than through their landlords; and (b) provide independent support to property owners. CERS is expected to be enacted retroactively and will provide rent and mortgage support to qualifying organizations from September 27, 2020 to June 2021.

Further details regarding CERS and its implementation will become available in the coming weeks once the actual legislation creating CERS is announced.

Questions We Hope to Answer in the Coming Weeks

  • Will the eligibility criteria for CERS be the same as under CECRA, or if different, how?
  • How will the term “eligible expenses” be defined?
  • What support will be available for property owners?
  • Will the relief provided for the December 19, 2020 to June 2021 period remain the same as the relief provided prior to December 19, 2020, or if different, how so?
  • For the purposes of the 25% top-up, does a business need to meet a certain threshold or requirement to shut down and how will the corresponding top-up be calculated?

Practical Considerations

Both landlords and commercial tenants should be mindful of CERS in any ongoing lease related discussions. Similarly, businesses should be mindful of this upcoming relief when making decisions regarding their operations and finances. While key details of CERS are still unknown, the Government of Canada’s announcement indicates that the new program will be more flexible and easier to access than CECRA.  We will provide additional updates regarding CERS as information becomes available.

If you wish to know more information, please feel free to connect with Dharam Dhillon if you have any questions in the interim.

This update is intended as a summary only and should not be regarded or relied upon as advice to any specific client or regarding any specific situation.