Commercial leases: Terminating a lease and evicting a tenant without Court intervention

Many commercial landlords insert in their leases a clause which stipulates that in the case of a default on the part of the tenant, they can evict the tenant without obtaining a Court order beforehand. In other words, with such a clause, landlords may evict a commercial tenant simply because they consider that a tenant has defaulted.

Indeed, the Quebec Court of Appeal has acknowledged that such clauses are valid, but has also cautioned landlords to be nonetheless prudent in such unilateral evictions, as they may expose themselves to be condemned for damages, should a Court decide at a later stage that the expulsion was abusive or unfounded.

Such a clause has very different consequences and implications for a landlord as for a tenant.

Indeed, this clause may provide to the Landlord a sense of extra security allowing him or her to terminate the lease and evict the tenant without the necessity of obtaining authorization from the Courts. By enforcing this clause, the landlord may re-acquire, without too much delay, the rented premises (should a default under the lease occur) and lease it to a new tenant. Without such a clause, the landlord must necessarily apply to the Courts for a legal order confirming the termination of the lease and the right of the landlord to evict the tenant which can take up to a year and a half or longer before obtaining a judgment.

With that said, there is a substantial risk for the landlord in exercising such a clause without the intervention of the Court; following an eviction, a tenant may file proceedings before the Court and request damages. The Court could then conclude that the landlord's eviction of the tenant was improperly founded or done abusively or in bad faith. In such circumstances, the Court may award substantial damages as such evictions may cause great prejudice to a tenant's ability to operate.

At a minimum, if a landlord does wish to proceed that way, he or she must send a written notice to the tenant within a reasonable time before the contemplated eviction outlining the defaults and the landlord's intention to terminate the lease and evict the tenant. Naturally, he or she must also ensure that the tenant is in fact in default of a material provision of the lease.

As for a tenant, this clause can be particularly prejudicial. Even though the tenant may seize the courts after the fact to request a condemnation declaring the landlord's eviction abusive or improper, it does put the tenant in a substantially more difficult position. Indeed, the mere right of the landlord to proceed with an eviction without a Court order may compel the tenant to compromise much more in any dispute it may have with the landlord, than it would have had such a clause not been accepted. Moreover, quantifying these damages after the fact is difficult and requires the tenant to prove that these damages are a direct result of the landlord's abusive or unfounded behaviour.

If you are currently involved in negotiating a commercial lease or dealing with the application of such a clause, we would be pleased to assist you.