Resources & Insights

COVID-19: Canadian Emergency Commercial Rent Assistance

The federal and provincial governments recently announced the Canadian Emergency Commercial Rent Assistance (CECRA) initiative which is intended to provide some relief to small business tenants and their landlords during the COVID-19 pandemic and the resulting economic uncertainty.

The program divides the tenant’s rent obligations for the months of April, May, and June 2020 among four different payors. The landlord effectively pays 25% of the rent by waiving its right to collect that amount, the tenant pays 25% of its rent during these months, and the remaining 50% of the rent is paid by a forgivable loan funded though the CECRA funding. For example:

In a situation where monthly rent for a small business is $4,000, the rent for April, May, and June 2020 would be addressed as follows:

  • $1,000 would be paid by the tenant;
  • The Landlord would waive its right to collect $1,000 of the rent for each of the months of April, May and June;
  • $2,000 would be covered by the program, through CECRA funding provided by the federal and provincial government


The forgivable loans issued through the CECRA funding are being administered by the Canada Mortgage and Housing Corporation (CMHC). Applications for the funding must be made by the landlord. It is anticipated that commercial landlords will be able to apply for funding until August 31, 2020; currently, any funding granted will be retroactive and apply only to rent for the months of April, May, and June 2020.

Rent Forgiveness Requirements

To be eligible to receive a forgivable loan, landlords who meet certain criteria (outlined below), should submit a rent forgiveness agreement signed by the tenant and landlord with the application to CMHC. The agreement should set out and confirm:

  • the landlord’s intention to waive its right to collect 75% of the rent for the months of April, May and June 2020 from its commercial tenant;
  • the tenant’s obligation to pay 25% of its rent for the same time period;
  • an agreement and acknowledgement that landlord will apply under the CECRA program for funding for the remainder of the rent amount owing during this time period;
  • a declaration from the landlord that it will not evict the tenant during this time period

The agreement should be carefully prepared to ensure the rights of both parties are preserved outside this time period.

Criteria for Landlord and Tenant Eligibility

To be eligible to receive a forgivable loan funded through CECRA, the landlord must:

  • be the owner of real property located in Canada that generates rental income;
  • have “impacted small business tenants” (or subtenants) whose ability to pay their contracted rate of rent is threatened;
  • have a mortgage that is secured on the real property occupied by commercial tenants;
  • have declared rental income on their tax return for 2018 and/ or 2019

Landlords with mixed-use properties can apply for these loans for the portion of rental income generated through commercial leases.

For landlords and property owners who do not have a mortgage secured against the property that produces rental income, an alternative program to provide some relief from loss of rental income is expected to be announced.

Eligibility for the CECRA loan will depend, in part, on whether the tenants meet the definition of “impacted small business”; an impacted small business is a tenant, including non-profit and charitable organizations, which:

  • has less than $20 million in gross annual revenues (calculated on a consolidated basis at the ultimate parent level);
  • pays less than $50,000 in monthly rent per location;
  • has either completely ceased operations (i.e. have no revenue) or has experienced a 70% decline in revenues in April, May, or June 2020 as compared to April, May, or June 2019 (or, as an alternative, as compared to January and February of 2020).

A link to a very simple example of a rent forgiveness agreement follows below. This document is not a one-size-fits-all example. It is strongly recommended that landlords and tenants seek legal advice when preparing to enter into a rent forgiveness agreement to ensure their respective rights and obligations are protected, and to ensure that the terms of their lease resume and remain unchanged following the period of time covered by the CECRA program.

Sample Rent Forgiveness Agreement

Janice Mumberson, Senior Associate

*Update: The Canada Mortgage and Housing Corporation is actively posting updated information surrounding COVID-19 and resources available to both renters and landlords, including their own precedent agreement. For more information, visit their website:

*Update 2: In a webinar with the Sandbox Centre on July 16th, Janice Mumberson discussed Commercial Leasing: Tips and Tricks. The webinar recording and slide materials can be found here. 

*Originally published on May 13th 2020.