Commercial Lease
Lawyer Toronto.
Offer to lease and lease review, drafting, negotiation, and lease disputes for Toronto tenants and landlords. Get the terms right before you're bound by them for years.
· Reviewed by Jonathan Kleiman, J.D.
Ontario Bar
250+ reviews
consultation
Why a commercial lease needs a lawyer
A commercial lease isn't a consumer contract. It's usually drafted by the landlord's lawyers, it runs for five or ten years, and the Residential Tenancies Act doesn't apply to it. There's no Landlord and Tenant Board for business premises. The lease, the Commercial Tenancies Act, and the common law decide almost everything.
That means the terms of the lease are the law of your tenancy. A commercial lease lawyer reads the offer and the lease, explains what you're actually agreeing to, and negotiates the terms that matter while you still have leverage. Jonathan acts for both tenants and landlords (never both sides of the same lease), so he knows which asks are routine and which ones the other side will refuse.
Four lease terms tenants most often regret
When a tenant brings me a lease that's gone wrong, the problem is almost never the rent. The rent was the one number everyone negotiated. The trouble is usually in a clause nobody pushed back on, because it read like boilerplate when the business was new and everyone was optimistic. These are the four I see most.
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The personal guarantee with no limit and no end
How it bitesThe business closes or sells, and the owner is still personally on the hook for rent through the end of a ten-year term, sometimes even after the lease was assigned to someone else, and into renewals the new tenant chose to exercise.
What to negotiateA cap (often a set number of months' rent), a release after a period without default, and a release when the lease is assigned to a qualified buyer.
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An assignment clause that blocks selling the business
How it bitesThe owner finds a buyer, and the landlord's consent is needed. The lease lets the landlord refuse, take the space back, or claim any profit on the transfer, and a change in who owns the tenant's shares counts as an assignment too.
What to negotiateConsent not to be unreasonably withheld, no recapture on a sale of the business, and permitted transfers to affiliates or a buyer of the whole business.
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Additional rent with no cap and no audit
How it bitesBase rent is fixed, but taxes, maintenance and insurance (TMI) keep climbing. Management fees, capital repairs and the landlord's own overhead can end up in the tenant's share.
What to negotiateA list of excluded costs, a cap on controllable increases, and the right to see the landlord's numbers and dispute them.
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The demolition or relocation clause
How it bitesIn a redeveloping city like Toronto, the landlord can end the lease or move the tenant on notice, often before the tenant has earned back what it spent building out the space.
What to negotiateNo termination in the early years, a long notice period, and compensation for the unamortized cost of the tenant's improvements.
Landlords have regrets too. The common one is leasing to a newly formed numbered company with no deposit and no guarantee, then finding there's nothing to collect when the business fails. A landlord's lease review is mostly about the covenant behind the tenant: who's actually standing behind the rent.
Who Jonathan acts for
Tenants
- Offer to lease and letter of intent review, before you sign
- Lease review with a plain-language summary of the risks
- Negotiation with the landlord or its lawyers: rent-free periods, improvement allowances, renewal options, and the guarantee
- Renewals and renegotiation as the term ends
- Assignments and subleases, including on the sale of your business
- Disputes with the landlord over deposits, repairs, and charges
Landlords
- Offers to lease, leases, renewals, and amendments for landlords and property managers
- Deposits, guarantees, and indemnities that make the tenant's covenant worth something
- Consent to assignment or sublease, and the conditions to attach to it
- Default notices and advice on enforcement options
- Collecting rent arrears and damages through demand letters and Small Claims Court
Signing or negotiating a commercial lease?
Free 30-minute consultation. No fee, no obligation.
The offer to lease is where the deal gets made
Most tenants think the real negotiation happens at the lease. It usually happens earlier. An offer to lease that's signed and settles the essential terms can be binding on its own, and many offers say the tenant will sign the landlord's standard form of lease. Once that's agreed, the landlord can treat almost every later request as a renegotiation.
So the time to deal with the guarantee, the improvement allowance, the renewal option and the assignment terms is before the offer is signed. Use the free Ontario offer-to-lease negotiation brief to organize the rent, guarantee, renewal and exit points you want to raise. It has tenant and landlord paths, a live preview, and PDF or text downloads. Send the brief with the actual offer for a review.
Key commercial lease terms to understand
- Base rent and additional rent. Base rent is the fixed amount. Additional rent (TMI) is your share of the property's taxes, maintenance, and insurance. Together they're your real occupancy cost, and HST is charged on top.
- Net lease vs. gross lease. A net lease passes operating costs to the tenant; a gross lease builds them into the rent. Most Toronto commercial leases are net leases.
- Permitted use and exclusivity. A narrow use clause can stop your business from adapting. An exclusivity clause can stop the landlord from leasing next door to a direct competitor.
- Assignment and subletting. Controls whether you can transfer the lease or sublet part of the space. Watch for change-of-control, recapture, and profit-sharing terms.
- Personal guarantee. Makes the owner personally liable for the lease, which sidesteps the limited liability your corporation would otherwise give you for that debt.
- Demolition and relocation. Lets the landlord end the lease or move you if it redevelops. Common in Toronto.
- Renewal options. Without one, the landlord can refuse to renew or demand much higher rent. With one, how the renewal rent gets set matters as much as the option itself.
- Improvements and restoration. Who pays for the build-out, who owns it at the end, and whether you must restore the space to its original condition when you leave.
- Registration on title. Under the Land Titles Act, a lease with three years or less left to run is protected if you're in occupation. For a longer remaining term, registering notice of the lease on title protects it if the building is sold or refinanced.
For a clause-by-clause pass before you sign, see the commercial lease review checklist.
Can a commercial landlord change the locks?
Sometimes, and without going to court first. That's one of the biggest differences from a residential tenancy. The rules come from the lease and the Commercial Tenancies Act:
- Unpaid rent. Unless the lease says otherwise, the Act treats every lease as allowing the landlord to re-enter if rent is unpaid for 15 days after it was due, even without a formal demand. Many leases change that period or add their own default terms.
- Other breaches. For a breach other than non-payment of rent, the landlord can't enforce a right of re-entry or forfeiture until it serves a written notice specifying the breach, requiring it to be fixed if it can be, and asking for compensation, and the tenant has had a reasonable time to respond.
- Seizing goods instead. A landlord can sometimes seize and sell the tenant's goods for rent arrears (called distress) instead of ending the lease. It generally can't do both, so choosing one route has consequences for the other.
- Relief from forfeiture. A tenant facing re-entry or forfeiture can ask the Superior Court of Justice for relief, and the court can restore the lease on terms. If the landlord sues to forfeit for unpaid rent and the tenant pays the arrears and costs into court before judgment, the proceeding is stayed. There are exceptions, including breaches of a covenant against assigning or subletting.
If you've been locked out, or you're a landlord about to act, get advice the same day. Timing matters on both sides, and a mistake in the notice or the re-entry can be costly.
Commercial lease disputes: which court, and who handles it
Many commercial lease disputes are about money, and money claims up to $50,000 belong in Small Claims Court. Jonathan handles those from the first demand letter through to a Small Claims trial. Disputes about possession of the premises, and claims above the limit, go to the Superior Court of Justice, where he refers you to trusted litigation counsel.
| The dispute | Where it's decided | Who acts for you |
|---|---|---|
| Unpaid rent or additional rent, up to $50,000 | Negotiation, then Small Claims Court | Jonathan |
| A security deposit or prepaid rent that wasn't returned | Negotiation, then Small Claims Court | Jonathan |
| Damages for breach of the lease, such as repairs, overcharged TMI, or a guarantee claim, up to $50,000 | Negotiation, then Small Claims Court | Jonathan |
| A landlord refusing consent to an assignment or sublease | Negotiation first; a court application if that fails | Jonathan negotiates; the application is referred |
| A tenant locked out who wants back in (relief from forfeiture) | Superior Court of Justice | Trusted litigation counsel, on referral |
| A tenant who won't leave after the lease ends | Superior Court of Justice | Trusted litigation counsel, on referral |
| Any claim above $50,000 | Superior Court of Justice | Trusted litigation counsel, on referral |
A claim slightly over $50,000 can sometimes be brought in Small Claims if you give up the excess, which can be worth it for the speed and lower cost. Limitation periods apply to lease claims, so don't wait to get advice.
The cheapest commercial lease isn't the one with the lowest rent. It's the one with the fewest surprises.
How Jonathan helps: what's included and what's not
Lease reviews, drafting and negotiation are done on a flat fee, quoted before work begins.
Included
- Free 30-minute consultation
- Offer to lease and letter of intent review
- Lease review with a written summary of the risks and recommended changes
- Negotiating with the landlord, tenant, or their lawyers
- Drafting offers to lease, leases, amendments, renewals, assignments, and subleases
- Default notices, demand letters, and settlement negotiation
- Small Claims Court claims and defences up to $50,000
Not included
- Superior Court proceedings, including relief from forfeiture, possession applications, and court applications over consent to assign, which are referred to trusted litigation counsel
- Residential tenancies and the Landlord and Tenant Board
- Property tax appeals and zoning or building permit work
- Tax and accounting advice on how the lease is structured
See your personal guarantees together
Your lease may be only one of the guarantees you've signed. Use the free Ontario personal guarantee exposure tracker to log leases, loans and equipment financing, see signed amounts together, and keep proposed commitments separate. Download the inventory to bring to a review of the actual documents.
Call 416-554-1639 or book a free consultation.
FAQs.
Common questions about commercial leases in Ontario.
Should I have a lawyer review my commercial lease?
Yes, ideally at the offer to lease stage. Commercial leases are drafted by the landlord's side, they run for years, and there's no tribunal to fall back on if the terms turn out badly. A review identifies the terms worth negotiating while you still have leverage, which is before you sign.
Is an offer to lease binding in Ontario?
It can be. An offer to lease that's signed and settles the essential terms (the parties, the premises, the rent, and the term) can be a binding agreement even though a formal lease is meant to follow. Many offers also say the tenant will sign the landlord's standard lease, which can commit you to terms you haven't seen. Get it reviewed before you sign it, not after.
Can a commercial landlord change the locks in Ontario?
Yes, in some cases, and without a court order. Under the Commercial Tenancies Act, unless the lease says otherwise, a landlord may re-enter if rent is unpaid for 15 days after it was due. For other breaches, the landlord must first serve a written notice describing the breach and give the tenant a reasonable time to fix it. A locked-out tenant can apply to the Superior Court for relief from forfeiture, and should move quickly.
Can my landlord refuse to let me assign or sublet?
If the lease requires the landlord's consent, the Commercial Tenancies Act implies that consent can't be unreasonably withheld, unless the lease expressly says otherwise. Many leases do say otherwise, or add recapture rights and conditions, so the wording of your assignment clause matters most.
What happens to my lease if the building is sold?
A properly protected lease binds the new owner. Under the Land Titles Act, a lease with three years or less left to run is protected if you're in actual occupation. For a longer remaining term, registering notice of the lease on title is how you protect it against a buyer or lender.
Can I sue my landlord or tenant in Small Claims Court?
Yes, for money up to $50,000, such as unpaid rent, a deposit that wasn't returned, or damages for breach of the lease. Small Claims can't order a tenant out or grant relief from forfeiture. Those are Superior Court matters.
Does the Residential Tenancies Act apply to commercial leases?
No. The Residential Tenancies Act and the Landlord and Tenant Board deal with residential tenancies only. Commercial leases are governed by the lease itself, the Commercial Tenancies Act, and the common law, so commercial tenants have far fewer statutory protections and the lease terms matter more.
How much does a commercial lease lawyer cost?
It depends on the length of the lease and how much needs negotiating. Jonathan quotes a flat fee before work begins, and the initial 30-minute consultation is free.
Signing a commercial lease?
Have a lawyer review the terms before you're bound by them. Flat-fee lease review and negotiation. Free 30-minute consultation.