The following scenario is a familiar one: A tenant falls into arrears of rent under a commercial lease. The landlord decides not to terminate the lease but rather to exercise its right to distrain (which allows the landlord to seize and sell the tenant's property (excluding its trade fixtures) in the premises). Before distraining, the landlord conducts a search against the tenant and determines that it has no outstanding executions and that its property is not subject to any security interest. The landlord sells the tenant's property and the sale proceeds are applied to the tenant's arrears of rent. Several months later, Canada Revenue Agency (CRA) contacts the landlord to advise that the tenant failed to remit amounts withheld from employees for income tax, employment insurance, and Canada pension plan contributions, as well as sales taxes collected from customers. CRA demands that the landlord remit the proceeds from the sale of the tenant's property to the CRA on account of the amounts owing by the tenant. Does the landlord have to comply? Likely yes, but if the steps described below are taken, and the CRA does not respond to them, there is a reasonable chance that the proceeds from the sale can be retained by the landlord despite CRA's claim.
Read the full article here: I've Distrained Against my Tenant's Property. Did I Just do the Canada Revenue Agency A Favour? - January 25-2013
The information contained in this article is provided for general informational purposes only and does not constitute legal advice. No recipient of this content should act, or refrain from acting, based on any information included without seeking appropriate legal or other professional advice on the particular facts and circumstances at issue.
