1. Know the sources of your rights and obligations  

(a) The lease and collateral contracts  

(b) Commercial Tenancy Act  

(c) Rent Distress Act  

(d) Personal Property Security Act  

(e) Bankruptcy and Insolvency Act  

(i) S. 136(1)(f) provides preferred claim to 3 months arrears of rent  

(f) Common law  

(g) Contracts with third parties  

2. Consider your best alternative to a negotiated agreement (BATNA)  

(a) Understand your rights and obligations  

(b) Can you locate a replacement tenant?  

(c) At what cost?  

(d) How will the way in which you handle this default affect future problems/negotiations with this tenant? Other tenants?  

(e) Have you done everything properly?  

(i) Your rights under the lease may be affected if you are also in breach of the lease  

3. Working with a defaulting tenant  

(a) Plan a course of action before engaging in one  

(b) Document everything  

(c) Ensure that the steps you take are consistent with the rights and obligations of the parties and, when it is not, tackle it head on  

(d) Do not lead the tenant down the garden path  

(e) Know when it’s a lost cause

4. Ending your relationship with a defaulting tenant  

(a) Plan a course of action before engaging in one  

(b) Avoid “I can therefore I will” thinking  

(i) While you may be permitted to take a particular course of action, it may not be wise to do so  

(c) Default vs. termination  

(i) Different rights and obligations under each  

(d) Distress  

(i) Common law rule is no distress after termination  

(ii) Commercial Tenancy Act allows distress after termination  

(iii) Tenant must still be in possession of premises (i.e. no distress after you have changed the locks)  

(iv) Who is the tenant or who owes the rent?  

A. Be sure that you are distraining property of the correct person otherwise you may be liable for wrongful distress  

(v) For what amounts is distress available?  

A. Rent - yes  

B. Accelerated rent - no  

C. Penalties - no  

D. Damages - no  

(vi) Damages for wrongful distress includes double the value of the property distrained and full costs