April 1st - Practical Thoughts from Gordon Greenwood - ABA Canada Legal Counsel

salon rent is due

Gordon B. Greenwood
Maclaren Corlett
ABA Canada Legal Counsel

April 1st, Rent Day

This is not legal advice, but some practical thoughts and considerations:

1. You are not alone. Nothing is so bad that it cannot be made tolerable. Depression cannot win.

2. The following is meant to assist you in gathering your thoughts before speaking with your landlord. Yes, communication is key but you need to be prepared as well.

3. Reread your lease, and all its schedules. Also, of course, any renewals or extensions.
4. You probably had your lawyer review the lease before you signed it. Contact your lawyer again so you know where you stand.

5. Your landlord will/should be as up-to-date on the news as you are.

6. This is NOT a residential lease. For commercial leases, rights and remedies are different.

7. Have you, or has anyone else personally guaranteed the lease. If so, make sure you ask your lawyer what this means in real terms for your personal assets.

8. Commercial leases often have rights of distraint. This gives the landlord the right to seize and sell equipment, furniture, inventory, computers etc. Leasehold improvements usually revert to the landlord at the end of a lease. Before choosing not to pay rent, ask your lawyer about this too. Making a bald statement that you cannot and will not pay your rent may have the effect of you breaching you lease (“anticipatory breach”). Talk with your lawyer. If you need time to do that, don’t put off talking to your landlord, but fix a time to talk and keep that appointment.

9. Your lawyer may also advise you on force majeure rights, if any, in your lease and ask your lawyer to explain about frustration of contract and whether there is any possibility that it might apply.

10. If you have operating lines or bank loans, whether or not personally guaranteed, speak with your banker because they may defer payments to allow more latitude for discussion with the landlord.

11. If you have colour commitment contracts (they are called many things) with a manufacturer where you commit to their colour line in exchange for loans, salon upgrades etc., speak with them. If anyone understands what you are going through right now it is your industry suppliers. Again, getting relief from them may give you a bit more leeway to deal with your landlord.

12. These are just a few basic thoughts but the key recommendation is to communicate with your landlord today and on a continuing basis.