Alberta Commercial Eviction Process: Tenant Default & Remedies

Commercial evictions in Alberta operate under fundamentally different rules than residential evictions. There is no equivalent to the RTDRS for commercial disputes, and the landlord's remedies are primarily defined by the lease agreement, the Civil Enforcement Act (RSA 2000, c. C-15), the Law of Property Act (RSA 2000, c L-7), and common law principles established by the Supreme Court of Canada.

Grounds for Commercial Eviction

Commercial lease termination is typically triggered by:

1. Non-payment of rent — The most common ground for eviction. Note that under the Law of Property Act, s. 18(b), unless otherwise agreed in the lease, there is an implied agreement that the landlord may re-enter only if rent has been in arrears for 15 days.
2. Breach of lease terms — Unauthorized use, failure to maintain, assignment without consent.
3. Insolvency or bankruptcy — While leases often include insolvency clauses, the federal Bankruptcy and Insolvency Act (BIA) and the Companies' Creditors Arrangement Act (CCAA) impose an automatic stay of proceedings. Landlords are generally prohibited from terminating a lease or evicting a tenant based on insolvency without leave of the court.
4. Abandonment — Tenant vacates without notice.
5. Breach of permitted use clause — Operating a different business than permitted.
6. Failure to maintain insurance — Required policies lapse.

Landlord Remedies: The Core Options

The Supreme Court of Canada in Highway Properties Ltd. v. Kelly, Douglas & Co. established four mutually exclusive options for landlords when a commercial tenant defaults. In addition, landlords retain the common-law right of distress.

Option 1: Sue for Rent (Lease Remains in Force)

• The landlord does not terminate the lease
• The tenant may remain in possession
• The landlord sues for all unpaid and future rent as it comes due
• Key risk: The landlord must continue to provide the premises

Option 2: Terminate and Sue for Accrued Rent

• The landlord terminates the lease and evicts the tenant
• The landlord can sue only for rent and damages that accrued before termination
• Cannot claim future rent — the lease is ended

Option 3: Re-Let on Tenant's Account

• The landlord advises the tenant that the premises will be re-let on the tenant's behalf
• The landlord enters possession as the tenant's agent for re-letting purposes
• The landlord can claim the difference between the original rent and the new rent

Option 4: Terminate and Sue for Prospective Rent

• The landlord terminates the lease and retakes possession
• The landlord reserves the right to sue for both accrued and prospective rent
• Requires clear, well-documented notice preserving future claims

Option 5: Distress (Seizure of Goods)

Distress is a common-law "self-help" remedy that allows a landlord to seize and sell a tenant's property to satisfy rent arrears without first going to court.

What Landlords Need to Know

• Distress is a valid remedy — Contrary to some misconceptions, distress for rent was not abolished in Alberta. While the Commercial Tenancies Protection Act (2020) introduced a temporary moratorium during the pandemic, that legislation has expired.
• Governed by the Civil Enforcement Act — The procedural requirements for distress are strictly regulated by Section 34 of Alberta's Civil Enforcement Act (RSA 2000, c. C-15).
• Mandatory use of Agency — Landlords cannot personally seize goods. The seizure must be carried out by a certified Civil Enforcement Agency.
• Mutually Exclusive — Generally, a landlord cannot distrain for rent and terminate the lease at the same time. Choosing distress usually means the lease continues to exist.

Re-Entry and Lock Changes

Commercial landlords may have the right to re-enter the premises (change locks) if the lease includes a forfeiture clause and proper notice is provided.

Statutory Notice Requirements

Pursuant to the Law of Property Act, s. 10(1), a landlord's right of re-entry for a breach of covenant (other than non-payment of rent) is not enforceable unless the landlord serves a notice on the tenant:

• Specifying the particular breach;
• Requiring the tenant to remedy the breach if it is capable of remedy; and
• Requiring the tenant to make compensation in money.

The tenant must be given a "reasonable time" to remedy the breach, regardless of any shorter notice periods specified in the lease.

Risks of Re-Entry

• Wrongful re-entry — If the landlord re-enters without proper legal grounds, they may be liable for damages, including the tenant's lost profits.
• Accepting keys — If the landlord accepts the tenant's keys without clearly stating the lease remains in effect, this may constitute a surrender of the lease.
• Waiver — Accepting rent after becoming aware of a breach may waive the right to re-enter for that breach.

Court Process

Commercial eviction disputes are resolved through the courts. Landlords are prohibited from performing self-help evictions; physical removal must be handled by authorized agencies.

1. Alberta Court of King's Bench — Primary court for commercial lease disputes under the Court of King's Bench Act (RSA 2000, c. C-31).
2. Order for Possession — The judicial order required to authorize the eviction if the tenant refuses to vacate.
3. Writ of Possession — An enforcement instrument issued by the court pursuant to an Order for Possession under Section 82 of the Civil Enforcement Act.
4. Enforcement — Under Section 83 of the Civil Enforcement Act, only a certified Civil Enforcement Agency may enforce the writ and physically remove the tenant.

Timeline

Commercial eviction timelines vary significantly:

Best Practices for Landlords

1. Choose your remedy carefully — The options are often mutually exclusive; get legal guidance before acting.
2. Document everything — Keep records of all communications, breaches, and notices.
3. Never accept keys casually — If a tenant offers to surrender, clearly state in writing whether you accept or maintain the lease.
4. Use proper notice — Serve written notice as required by the Law of Property Act and the lease.
5. Engage professionals — Use a civil enforcement agency for physical re-entry, service of process, or exercising distress. Landlords are prohibited from self-help evictions.
6. Act promptly — Delay in enforcing lease terms after a breach may constitute waiver.
7. Review the lease thoroughly — Understand your specific rights under the forfeiture, re-entry, and default clauses.
8. Consult legal counsel — Commercial eviction mistakes can be extremely costly, especially regarding federal stays in bankruptcy.

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