November 26th, 2018
Lerners’ 2nd Annual Leasing Seminar was held on November 22, 2018, at the London Club. Four Lerners’ lawyers – David Lyons, Nicholas Cummings, David Woodward and Clark Armstrong – discussed topical legal issues relating to commercial tenants, landlords, and leases.
Starting the morning off was David Lyons with a consideration of “Hot Topics in Shopping Centre Leases”. David addressed the implications of cannabis legalization and changes to the Construction Act (formerly the Construction Lien Act). David summarized the private dispensary licensing regime (effective in Ontario on April 1, 2019), and highlighted the liabilities, opportunities, and restrictions present for tenants – and landlords – in a brave new world of legalized cannabis. He also described changes to the Construction Act effected this summer, including the extension of timelines for registering and perfecting liens, and how the grandfathering provisions work.
Nicholas Cummings then brought the audience’s attention to recent developments with the Building Code Act, 1992, the Accessibility for Ontarians with Disabilities Act (“AODA”), and the coming Accessible Canada Act, a planned federal law. These statutory developments seek to improve and promote accessibility for disabled individuals, which are legal requirements commercial tenants – and landlords – need to consider. For instance, Nicholas described how section 3.8 of the Building Code Act, 1992, which differentiates between “basic” and “extensive” renovations, can trigger requirements for accessible, barrier-free spaces (e.g. paths of travel, universal washrooms, doorways and ramps, and walkways). Importantly, Nicholas reminded attendees that the AODA’s requirements are a legal floor, and not a ceiling, since the AODA’s minimum thresholds may be elevated by the Ontario Human Rights Code or the Canada Human Rights Act.
Our third speaker, David Woodward, discussed how leases can serve as collateral not only for landlords, but also for tenants. Most are familiar with how landlords use leases for cash flow and collateral, but there are also opportunities for some tenants to leverage their leases as collateral. David explained how this counter-intuitive process works: though lease payments are a liability (and a major one at that) for tenants, anchor tenants, or tenants with desirable locations, have value and worth. Such leases may be assignable by a tenant to a third-party, and thus constitute an asset which could be sold by the tenant, or by the tenant’s lender.
Clark Armstrong described how recent court cases are considering late, deficient, or contested options to extend or renew a commercial lease’s term. While a tenant’s strict compliance with the terms of such an option is critical, Clark discussed how recent court decisions have granted – or denied – relief to tenants requesting a renewal/extension of a lease’s term where the tenant, for a variety of reasons, fails to comply with the conditions to exercise the option contained within the lease. Strict tenant compliance (or diligent attempts to comply when compliance is impossible) in accordance with the option’s conditions remains advisable; landlords, on the other hand, need to be wary about the representations and assurances they provide to tenants respecting extensions and renewals of leases.
Lerners would like to congratulate Adrian Willsher for winning the Toronto Maple Leafs tickets door prize, and Lerners thanks all attendees for their committed participation in this year’s event. We hope to see you next year for the 3rd Annual Leasing Seminar!