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Covid-19 and Force Majeure: Tenants of a Commercial Lease May Not Have to Pay Their Rent

The Quebec government ordered, on Monday, March 23, the closure of all stores and businesses that do not provide essential services. If you are a commercial tenant, and are subject to this prohibition, you may be released from your obligation to pay your rent for the period your premises must be closed.

Rental Contract

In Quebec, article 1854 of the Civil Code of Quebec (Code) sets out the landlord’s main obligation to provide its tenant with peaceful enjoyment of the property for the duration of the lease:

1854. The lessor is bound to deliver the leased property to the lessee in a good state of repair in all respects and to provide him with peaceable enjoyment of the property throughout the term of the lease.

He is also bound to warrant the lessee that the property may be used for the purpose for which it was leased and to maintain the property for that purpose throughout the term of the lease.

In return for this obligation, the tenant is required to pay the agreed rent:

1855. The lessee is bound to pay the agreed rent and to use the property with prudence and diligence during the term of the lease.

Force Majeure and the Release from the Correlative Obligation

Under article 1693 of the Code, when the debtor cannot perform an obligation due to force majeure, he is released from his obligation.

Force majeure is, as defined in article 1470 of the Code, an unforeseeable and irresistible event (meaning that it cannot be prevented). Even if each case depends on its own circumstances, we can reasonably imagine that a landlord who is following the last governmental measures, is no longer able to provide the enjoyment of the leased premises because of force majeure.

However, article 1694 of the Code, as well as case law to this effect, states that if the debtor (in this case the landlord) is released from the performance of his obligation due to force majeure, he cannot exact the performance of the correlative obligation (in this case payment of the rent) of his creditor:

1694. A debtor released by impossibility of performance may not exact performance of the correlative obligation of the creditor; if the performance has already been rendered, restitution is owed.

Where the debtor has performed part of his obligation, the creditor remains bound to perform his own obligation to the extent of his enrichment.

Force majeure and Resiliation of the Lease

The tenant could even have a commercial lease terminated if he cannot use the leased premises for the intended purpose, for example because of a governmental order prohibiting him from using the leased premises. However, such termination can only be judicial, meaning it must be pronounced by a court, and with proof of a serious prejudice.

Considering that this kind of request will not be processed urgently for the time being, a tenant who seeks to obtain the termination of his lease may not be able to submit his request until after the current situation.

Lease

Before determining whether you can invoke the release of your correlative obligation, it will be necessary to check whether you have derogated, in your lease, from the general principles of civil law set out above.

In fact, you may have a stipulation in your lease stating that no force majeure can release you from your obligation to pay rent. In such a case, this clause would prevail over civil law unless, depending on the circumstances, it is invalid. This would be the case, for example, with an unfair clause in a contract that was imposed on you “pre-formulated standard contract”.

In addition, your lease may contain other clauses that are relevant to your current situation (e.g., a renegotiation of rent, release of certain obligations, termination of the lease, etc.).

Conclusion

The COVID-19 pandemic recently prompted government action to close certain businesses. In our opinion, this situation is one of force majeure.

Therefore, it releases the landlords affected by this action from their obligation to provide peaceful enjoyment of the places they rent. Consequently, tenants could refuse, to a certain extent, to perform any related obligation, that is, to pay the rent.

Finally, it is crucial to examine your commercial lease before taking any action, in order to verify if you have not contractually derogated from the law in force.

We are here for you to assist you in your efforts:

1. Reviewing your commercial lease: We will make sure to do a full legal analysis of your lease.

2. Making a report on the situation surrounding your rights and obligations: We will provide you with a clear statement of the legal situation surrounding your lease within 48 business hours of receiving your request.

3. If applicable, notifying your landlord of all your rights: If this applies to your situation, we will send a letter to your landlord to assert your rights within 48 business hours of receiving your request.

En savoir plus

Me Patricia Chamoun

Lawyer, Associate Director

Contact Me Patricia Chamoun

Contact Me Patricia Chamoun

Lawyer, Associate Director
Email: patricia@chamounlegal.com
Phone: (514) 360-6225 Poste 201
Fax: (514) 360-4776

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