On Monday, June 1, 2020, the BC Provincial Government announced its intent to provide assistance to small businesses seeking commercial rent relief by putting measures in place to prevent the eviction of small business tenants.  The details of this announcement were released shortly after the initial press release by way the enactment of Ministerial Order No. M179.

Ministerial Order No. M179 expressly references the Canada Emergency Commercial Rent Assistance program (CECRA) implemented by the Government of Canada and administered by the Canadian Mortgage and Housing Corporation (CMHC) in its preamble. (We have previously published articles providing information regarding the implementation of CECRA available at Clark Wilson LLP’s COVID-19 Resources webpage.) The CECRA program provides forgivable loans to commercial property owners that:

• have one or more “impacted small business tenant”; and
• enter into a binding rent reduction agreement with its impacted small business tenants for the period of April, May and June 2020 reducing the tenant’s gross rent by at least 75% per month.

Applications for the forgivable loans provided by the CECRA can only be made by commercial property owners (not the small business tenants). A rolling application process for the CECRA program opened on May, 25, 2020.

Ministerial Order No. M179 applies to leases entered into between tenants and landlords where the landlord is not eligible for assistance under the CECRA for the sole reason that the landlord has not entered into a rent reduction agreement with the tenant that includes a moratorium on eviction.

Ministerial Order No. M179 prohibits landlords from taking the following actions on a tenant’s failure to pay rent:

• evicting, or exercising any other contractual or other right of re-entry to a tenant’s leased property;
• giving a tenant a notice of re-entry or notice of termination of lease;
• distraining the tenant’s property for any rent due; and
• taking any steps to rent out the tenant’s leased property on the tenant’s behalf.

It appears from the BC Provincial Government’s press release that Ministerial Order No. M179 is intended to apply only to “impacted small business tenants” as defined by the CECRA.

The CECRA defines “impacted small business tenants” as one that:

• pays no more than $50,000 in monthly gross rent per location;
• generates no more than $20,000,000 in gross annual revenues (as calculated on a consolidated basis at the ultimate parent level); and
• has experienced at least a 70% decline in pre-CVOID-19 revenue from “ordinary activities in Canada”, as measured against April, May and June of 2020, or against an average of the revenues earned in January and February 2020.

Other exceptions apply to Ministerial Order No. M179, in particular the restrictions on landlords will not apply if:

• the tenant has already abandoned or deserted the leased property; or
• the lease expired before June 1, 2020.

The Order will also not apply to extend the term of a lease that expires during the period of the order.

Ministerial Order No. M179 is effective from June 1, 2020 and expires on the earlier of the termination or expiry of the current B.C. State of Emergency, or, the last date for which the CECRA program will provide assistance.

It remains to be seen how many commercial property owners and tenants this Order will impact as the CECRA continues its rollout. We will keep you advised of further details regarding Ministerial Order No. M179 and the roll-out of the CECRA program as they become available.