It happens A LOT. Imagine a commercial tenant’s business suddenly starts to slow down and starts going through tough times, and naturally falls behind in rent. The landlord sends a terrifying notice letter that says “if you fail to pay in 5 days from the date of this letter, as per the lease agreement, we will terminate your lease and kick you out!” Cash is so tight for the tenant that he cannot arrange to pay with 5 days. The landlord finally decides to terminate the lease and arranges to have the locks changed, shutting the tenant’s business down. Is it too late for the tenant so save his business?

You will need to look at your lease for 1) a default clause in the lease and 2) a notice clause in the lease.

• Default Clause: a written lease will state how many days of non-payment will lead to a default of the lease. If the written lease is silent on that point and does not mention any days, OR if it is an oral lease, then by law, it is 15 days[1].
• Notice Clause: a written lease may state whether or not the landlord needs to give you notice that he has not received your rent on time and stating how many days you have until the lease is terminated. If the written lease does not mention any notice letter being required, then by law the landlord is not obligated to give you any notice! 

TO ILLUSTRATE HOW THE DEFAULT CLAUSE AND NOTICE CLAUSE ARE IMPORTANT IN DETERMINING IF YOU REALLY ARE IN DEFAULT OF YOUR LEASE:

IF LEASE SAYS 5 DAYS NON-PAYMENT IS A DEFAULT + NO NOTICE CLAUSE

If the rent is due on the 1^st of each month and is not paid, and your lease says you will be in default if not paid within 15 days of when its due

• You have until the 16^th for the rent to be paid before the landlord can terminate your lease

IF LEASE SAYS 5 DAYS NON-PAYMENT IS A DEFAULT + NOTICE CLAUSE

If the rent is due on the 1st of each month and is not paid, and your lease says you will be in default if not paid within 15 days of when its due

• The landlord can send a notice letter no earlier than on the 2^nd and you have until the 17^th for the rent to be paid before the landlord can terminate your lease.
• If the landlord delayed in sending its notice letter to you until the 5^th you have until the 20^th for the rent to be paid before the landlord can terminate your lease.

In Part 2, I will explain what happens if you still fail to make your rent payment and the landlord decides to terminate your lease!

[1] Section 18(1) of the Commercial Tenancies Act (Ontario).

Please note the content on this web site is provided for general information purposes only and does not constitute legal or other professional advice of any kind.