COVID 19 – A Quick Guide on Rent Assistance for Dentists
Dentists who have been forced to close their practices for all non-emergency services due to COVID 19 may qualify for the Ontario- Canada Emergency Commercial Rent Assistance Program (OCECRA). The intent of this program is to deliver urgent relief to small businesses and commercial property owners. It is expected to be operational by mid- May 2020. The program is designed to share the rent cost between the landlord and the tenant: the landlord forgoes 25 per cent of the rent, the tenant pays 25 of the before profit costs of the rent, and the provincial and federal government share the cost of the remaining 50 per cent.
For tenants to qualify, they must (1) be paying monthly rent not exceeding $50,000 in gross payments; and (2) be experiencing a 70 per cent drop in pre- COVID 19 revenues. This should include most Ontario dentists who are leasing their office premises.
For landlords to qualify, they must be the registered property owner. Mixed- use residential and commercial properties with a 30% commercial component are eligible with respect to commercial tenants only. Keep in mind that your landlord must agree to apply to the program.
If you are eligible, then the tenant and landlord must sign a rent forgiveness agreement prepared by the landlord. This would include a moratorium on eviction for three months. There have been no details released as of yet on how or when landlords can apply. However, eligible landlords who qualify for the program will have until September 30, 2020 to apply.
Impact of OCECRA on existing rent deferral agreements? Many landlords and tenants have already negotiated rent deferral agreements as a result of Covid-19. That is, the landlord agrees to defer payment of all or part of the rent during the practice closure on the understanding that the deferred rent will eventually be paid at a later point in time. The landlord is not reducing the rent; it is simply deferring the payments to assist the dentist to weather the storm. OCECRA has no impact on rent deferral agreements. A landlord may decide that OCECRA is a better option than the rent deferral agreement, in which case they may decide to terminate the rent deferral agreement and apply for OCECRA. Alternatively, landlords may prefer the rent deferral arrangements as they would eventually be made whole and not have to forgo 25% of the rent. For must tenants (including dentists), the OCECRA is obviously the preferred route as they would see an actual reduction in their rent. Dentists are well advised to raise this with their landlords if they have not already done so.
Cappellacci DaRoza LLP is available to assist dentists through these uncertain times. For more information, we welcome you to contact a member of our team.