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Harvey Haber’s Leasing Tips September 2012

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LEASING TIPS

By Harvey M. Haber, Q.C

What’s After Termination?

A key issue for a landlord to remember in deciding whether to terminate a tenant’s lease is that, once the lease is terminated and notice is given (pursuant to the Kelly Douglas case), the landlord has the obligation to mitigate its losses if it wishes to pursue a claim against the former tenant.

That’s important, as once the landlord terminates the lease, it can no longer distrain (i.e. seize) against the tenant’s goods, chattels and inventory, for rent arrears.

In other words, once the landlord terminates the lease (having given the proper notice to the tenant), it must mitigate its damages by endeavouring to locate a new tenant, lease the space and offset against the amount owing by the tenant the amount it receives from the new tenant.

Landlord’s Options 
A landlord faced with a tenant in arrears of rent has the following options:
  • Negotiate a solution to the problem;
  • Obtain security for the rent arrears by way of guarantee, indemnity, bond, letter of credit or security interest;
  • Seize the tenant’s goods for rent arrears;
  • Allow the tenant to remain on the premises but sue the tenant for arrears as they come due; or
  • Terminate the lease and sue the tenant for the arrears and for damages for losing the benefit of the balance of the term.
These commercial leasing tips are provided by Harvey M. Haber, Q.C., J.D., LSM, DSA, C. MED., C. ARB., B.A. (retail, office and industrial leasing, lease interpretation, mediation and arbitration) Senior Partner, Goldman Sloan Nash & Haber LLP, Barristers & Solicitors in Toronto.

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