My Space, Your Business – When Things Go Wrong in a Commercial Tenancy – Part 2

By Maxim Piva lawyer at Merovitz Potechin LLP on Friday February 14, 2025

Lockouts, Distraint & Tenant Rights in Ontario Commercial Leases

In Part 1, we explored how the Ontario Commercial Tenancies Act governs lease agreements, the rights of landlords and tenants, and under what conditions a landlord may terminate a lease, including lockouts due to non-payment or breach of lease terms. In Part 2, we will focus on situations where landlords change locks for security reasons rather than lease termination, the process of distraint, and key legal considerations to avoid complications.

Can Landlords Lock Tenants Out?

Like most legal questions, the short answer is “it depends.” Namely, it depends on the intentions of the landlord and the circumstances which led up to the locks being changed.

Landlords may change locks in two primary scenarios: to terminate the lease or to secure property.

We covered the first scenario in Part 1.

2. To Secure Property

Changing locks does not automatically terminate a commercial lease. Landlords may instead change the locks as a security measure in certain situations. For example, where a tenant has abandoned the premises or fails to open for business as may be required by the lease for a certain number of days.

Where rent has gone unpaid, landlords may be able to seize and sell tenant property to recover unpaid rent. This process, called “distraint,” will involve changing the locks to establish control over and secure the tenant’s property.

It is critical to understand that where a commercial landlord distrains against a tenant’s property, the lease is not terminated despite the locks being changed.

Distraint, meanwhile, is a process highly regulated by the Act. Landlords must be exceedingly careful to follow the correct procedure to avoid serious legal complications.

If the landlord intends that the lease should continue after changing the locks, as is required for distraint, it is crucial to:

• Inform the tenant about the change of the locks;
• Ensure that the tenant can access the property, potentially under supervision if their property has been seized; and
• Clearly communicate that the lease remains in effect and has not been terminated.

This approach helps prevent misunderstandings and ensures that changing the locks does not imply the lease has ended.

What Happens During Distraint?

Distraint allows landlords to seize and sell tenant property to recover unpaid rent. However, landlords must carefully follow the Act to avoid serious complications and legal repercussions:

Continued Lease:

• Distraint is only available if the lease is still in effect. Terminating the lease eliminates this remedy. Landlords must decide between continuing the lease to pursue distraint or ending it altogether.

Clear Communication:

• Changing locks as part of distraint requires notifying the tenant and restoring access under supervision for specific purposes. This ensures the process is transparent and insulates against claims of wrongful distraint.

Compliance with the Act:

• Landlords must meticulously follow notice requirements, timelines, and exercise care in the inventorying and sale of seized property. The consequences of failing to follow the proper process or exercise the appropriate care in the handling or sale of tenant goods can open the landlord to claims of improper distraint.

Tenants must understand their rights to ensure disputes are handled fairly and in accordance with the required legal framework. Seeking legal advice can help both parties navigate the complexities of distraint.

Why Reviewing Your Lease Matters

For tenants and landlords alike, a detailed lease clarifies rights and obligations, including:

• Establishing the responsibilities of each party in relation to the leased premises.
• What constitutes default.
• Timelines for notice or remedy in the event of a default, such as if rent is missed.
• Specific remedies available to either the Tenant or the Landlord.

By addressing these elements upfront, you can avoid ambiguity and minimize disputes.

Key Takeaways for Commercial Tenancy Disputes

The Ontario Commercial Tenancies Act offers a framework for resolving issues in commercial leases, but your lease terms often take precedence. Whether you’re a landlord or tenant, understanding your rights under the lease and the Act can prevent unnecessary conflicts and ensure smooth operations.

Need Guidance on Commercial Tenancy Disputes?

If you’re unsure about your rights as a landlord or tenant under the Ontario Commercial Tenancies Act, contact our experienced Business Law Group. We’re here to help you navigate your commercial tenancy with confidence.