Manitoba Commercial Eviction: Re-Entry, Distress, and Default Procedures

Commercial landlords in Manitoba hold significantly stronger, more immediate rights concerning eviction and property reclamation than residential landlords. The process is governed primarily by the commercial lease agreement, The Landlord and Tenant Act, and common law contract principles.

Summary of Commercial Eviction Remedies

The Right of Re-Entry (Eviction)

In commercial real estate, eviction is typically executed through a landlord exercising their "right of re-entry" — legally re-entering the premises, changing the locks, and terminating the tenancy.

Non-Payment of Rent Under The Landlord and Tenant Act and The Real Property

Act, a commercial landlord has a statutory right to re-enter the leased premises if rent remains unpaid for 15 days or more:

• On the 16th day following the rent due date, the landlord may change the locks
• The landlord does not need a court order to re-enter (unlike residential tenancies)
• The tenant loses the right to possession once the landlord lawfully re-enters

Important: While the statute provides the 15-day buffer, a commercial lease can override this. A lease might stipulate:

• The landlord gains the right of re-entry after only 5 days of non-payment
• A formal notice of default is required before re-entry
• A cure period allowing the tenant to remedy the default before re-entry

Breach of Covenant

If a commercial tenant materially defaults on a major lease term (a "breach of covenant"), the landlord may also exercise re-entry if the default continues for 15 days under the statute. Common breaches include:

• Operating an unapproved business type in the premises
• Failing to maintain required insurance coverage
• Making unauthorized alterations to the premises
• Subletting without consent
• Violating exclusivity clauses in the building

Commercial leases typically contain detailed default clauses specifying exact cure periods:

| Insurance lapse | Immediate or 5 days | | Bankruptcy/insolvency | Often no cure period |

The Remedy of Distress (Distraint)

Unique to commercial tenancies, the remedy of distress allows a landlord to seize tenant goods to recover unpaid rent.

How Distress Works

1. Rent must be in arrears — Distress can only be exercised for unpaid rent, not future rent, damages, or other debts
2. Landlord enters and seizes goods — The landlord (or a certified bailiff) enters the premises and seizes the tenant's business assets
3. Five-day notice — The landlord must provide the tenant with 5 days' written notice before selling the seized goods
4. Sale of goods — If the tenant does not pay the arrears within the notice period, the landlord may sell the goods at public auction
5. Surplus returned — Any proceeds exceeding the rent owed must be returned to the tenant

Critical Distinctions

Wrongful Eviction Claims

If a landlord exercises re-entry without properly following the lease provisions or the statute:

• The tenant may sue for wrongful eviction and claim damages
• Damages can include lost profits, moving costs, and damage to business reputation
• Courts may reinstate the tenant's lease or award substantial compensation
• Following the lease's exact default and cure period language is critical

Tenant Bankruptcy and Insolvency

When a commercial tenant files for bankruptcy:

• The Bankruptcy and Insolvency Act (BIA) imposes a stay of proceedings that prevents the landlord from exercising re-entry or distress without court approval
• The trustee in bankruptcy has the right to disclaim the lease (walk away) or assign it to a new tenant
• If the trustee disclaims, the landlord can claim damages as an unsecured creditor
• Landlords should consult legal counsel immediately upon learning of a tenant's bankruptcy

Best Practices for Commercial Evictions

1. Follow the lease precisely — Do not rely solely on the statutory 15-day right if your lease specifies a different notice and cure period. Failing to follow your own lease's provisions can expose you to wrongful eviction claims
2. Use certified bailiffs — When exercising distress or changing locks, use a certified commercial bailiff for professional, legally defensible execution
3. Choose your remedy carefully — Before acting, consult legal counsel on whether re-entry, distress, or a lawsuit is the most appropriate remedy for your situation
4. Document everything — Maintain a complete paper trail of all default notices, communications, and actions taken
5. Secure the premises — After lawfully re-entering, change all locks, secure utility meters, and photograph the condition of the premises
6. Inventory tenant property — If the tenant has left goods behind, create a detailed inventory before disposing of or storing anything
7. Issue proper notices — Serve all notices in the manner prescribed by the lease (usually by registered mail or personal delivery)
8. Act promptly but deliberately — Delay in exercising remedies after a default may be interpreted as waiver of the breach

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