The situation
Here is a hypothetical. You run a small food manufacturing business from an industrial unit in Ontario. A slow-paying customer put you two months behind on rent, and you have been emailing the landlord about a payment plan.
On Monday morning you arrive to find the locks changed. A notice on the door says the landlord has re-entered and the lease is terminated. Inside are your ovens (one leased from a finance company), your ingredients and a week of finished orders. The property manager says you will get nothing back until you pay everything owed. Can the landlord do this?
What the law says
Re-entry for unpaid rent often needs no court order. Re-entry means the landlord ending the lease by taking back the premises, often by changing the locks when no one is inside. Most commercial leases set out when the landlord may re-enter. If the lease is silent, Ontario’s Commercial Tenancies Act allows re-entry once rent has been unpaid for 15 days after it was due, even without a formal demand. The re-entry must be peaceable. So a lockout for unpaid rent is often lawful (see the landlord’s side).
Other breaches need notice first. For a breach other than unpaid rent (for example, using the premises for a different business), the landlord must first serve a written notice describing the breach and give the tenant a reasonable time to fix it.
When a lockout may be improper. A re-entry may be challenged if, for example, the rent was not overdue for the required period, a notice or cure period in the lease was skipped, the required notice for another breach was missing, or the landlord accepted rent after the default in a way that treated the lease as continuing. A tenant wrongly locked out may claim damages and ask the court to restore possession.
Distress has its own limits. Distress is the landlord’s remedy of seizing and selling a tenant’s goods on the premises to pay rent arrears. It treats the lease as continuing, so a landlord that has terminated by re-entry generally cannot also distrain, and after a termination the tenant’s goods remain its own. Goods belonging to someone else, such as leased equipment, are generally protected, and a landlord that seizes wrongfully or excessively can be liable in damages.
Relief from forfeiture. Forfeiture is the loss of the lease because of a breach. A tenant can ask the Superior Court of Justice for relief, which is discretionary and, for unpaid rent, usually conditional on paying the arrears and the landlord’s costs. Courts look at the tenant’s conduct, how serious the breach was, and whether losing the lease would be out of proportion to the harm to the landlord. Delay, repeated defaults or a new tenant in the premises can make relief harder to get.
Urgent court orders. Where harm cannot wait, the court can make an urgent order, for example letting the tenant back in or allowing it to remove goods. These orders are discretionary and depend on the strength of the tenant’s case and the harm on each side.
Residential tenancies are different. Homes and apartments fall under the Residential Tenancies Act, 2006, which generally requires a Landlord and Tenant Board order before a landlord takes back a unit.
What to do
- Do not force your way back in. It can create new problems.
- Record everything. Photograph the notice and the locks, and keep every email and text about the arrears and any payment plan.
- Read the lease. Check the default, notice and re-entry clauses, and when each payment was due.
- Ask for your goods in writing. Request a time to remove inventory and equipment, and tell any equipment lessor or lender whose property is inside.
- Decide quickly whether you want the premises back. If you do, be ready to pay or secure the arrears and costs, and move before the landlord re-lets the unit.
- Get advice the same day. The court expects an urgent motion to be brought promptly.
- Note your deadlines. Claims for damages are generally subject to the two-year limitation period under the Limitations Act, 2002.
If you are on the other side
A landlord considering a lockout should follow the lease and the Act exactly. Confirm the rent has been unpaid for the required period, give any notice the lease requires (and written notice with time to fix any other breach), re-enter peaceably when no one is inside, and keep the notice on the door consistent with the remedy chosen. Once the lease has ended, do not hold the tenant’s goods until it pays, since distress is a separate remedy that treats the lease as continuing. Keep records of every step, answer requests to retrieve goods promptly, and expect that a tenant able to pay the arrears may seek relief from forfeiture.