COVID-19 Commercial Rent Relief

The Federal Government announced today a new Canada Emergency Commercial Rent Assistance (CECRA) program intended to assist businesses that have been impacted by the COVID-19 Global Pandemic. CECRA will be provided in collaboration with Provincial Governments and is intended to provide relief to help businesses cover their rents for April, May and June.

The full details of the CECRA program have yet to be released but the following is what the Federal Government has outlined to date:

  • Commercial landlords will be offered forgivable loans to cover 50 percent of three-monthly rent payments;
  • To be eligible, tenants must be paying less than $50,000.00 in rent and have temporarily ceased operations or experienced at least a 70 percent drop in pre COVID-19 revenues;
  • CECRA is available to corporations as well as non-profit and charitable organizations;
  • The Federal Government loan will be forgiven if eligible landlords reduce the rent charged to eligible tenants by at least 75 percent for the three corresponding months under a rent forgiveness agreement;
  • The rent forgiveness agreement will include a term not to evict the tenant while the agreement is in place;
  • The tenant will cover the remainder of the rent, up to 25 percent;
  • The Canada Mortgage and Housing Corporation will administer the CECRA;
  • The intention is for CECRA to be operational by mid-May; and
  • Participating commercial property managers who lower their rents now for tenants will be paid retroactively for April and May.

In effect, if a landlord reduces rent to 25% of the contracted rent, for three months the rent for qualifying leases will be born 25% by the tenant, 50% by the Government and 25% by the landlord.

It is not yet clear whether this plan will impact existing abatement or deferral arrangements and whether the relief applies to lease payments only or also to additional obligations such as triple net charges.

Today’s announcement provides valuable relief to businesses that have experienced significant challenges as a result of COVID-19. We will provide additional information on the CECRA program as it becomes available.

Alfred Kempf practices in civil and commercial litigation.

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