A commercial lease is not a residential one. There is no Landlord and Tenant Board, no rent control and no security of tenure. The Commercial Tenancies Act mostly sets out the landlord's remedies. Nearly everything that protects you has to be written into the lease before you sign it.
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The Commercial Tenancies Act is largely a code of landlord remedies. If rent goes unpaid for fifteen days, the Act deems every lease to include a right for the landlord to re-enter and repossess the premises, unless the lease agrees otherwise — and no formal demand is needed first. There is no tribunal, no hearing and no automatic grace period. Disputes go to the Superior Court of Justice.
The landlord can also distrain: seize goods on the premises and, after the statutory steps, sell them against the arrears. Distress and termination are alternatives rather than a package — a landlord who seizes goods for arrears is generally treating the lease as continuing. Knowing which remedy the landlord has actually chosen changes what you should do that same day.
For breaches other than rent, the Act requires notice specifying the breach and a reasonable opportunity to remedy it before forfeiture, and a tenant may apply to the Superior Court for relief from forfeiture. Relief is discretionary and speed matters enormously. Holding over after the term ends carries statutory penalties measured against the rent.
Most commercial leases are net. Base rent is one line; additional rent is the other and often the larger one — realty taxes, building insurance, common area maintenance, utilities and the landlord's management fee. Ask for the last two years of actual reconciliations, not the leasing agent's estimate, before you commit to anything.
Watch for a gross-up clause that recalculates operating costs as though the building were fully occupied, a management fee expressed as a percentage of everything including taxes, and capital replacements recovered as an operating cost rather than amortised over their useful life. Negotiate a cap on controllable costs, express exclusions for structural and capital work, and an audit right with a workable deadline.
Then add HST, the deposit and any percentage rent, and confirm what happens on renewal. "Rent to be the then market rent" with no mechanism for determining it is an agreement to agree, which is not an option at all.
Demolition, redevelopment and relocation clauses let a landlord end or move your tenancy on notice. Termination-on-sale clauses do the same thing. If you are spending real money on leasehold improvements, either strike these or attach a compensation formula tied to the unamortised cost of your build-out.
The Act deems a covenant against assignment to include a proviso that consent will not be unreasonably withheld — unless the lease expressly provides otherwise, and a great many commercial leases do exactly that. Without the proviso you cannot reliably sell your business later, because the buyer needs the premises. Fix it at signing, not at closing.
Also check the exclusive use and radius clauses, the permitted use against actual zoning and Building Code compliance, continuous operation and hours covenants, the repair standard and who owns the HVAC, restoration and removal obligations at the end of the term, insurance and mutual waivers, and whether a subordination clause leaves you with no non-disturbance agreement from the mortgagee.
A numbered company with no assets means the landlord will want the principals on the hook. Guarantees are more negotiable than people test: cap the dollar amount, limit it to a set number of years, let it fall away after a period with no defaults, exclude renewal and expansion terms, and confirm it ends on an assignment the landlord has consented to.
Know which document you are being handed. An indemnity agreement is usually broader than a guarantee and is drafted to survive events that would discharge a guarantor, including a disclaimer of the lease in the tenant's bankruptcy. A larger deposit or a letter of credit is sometimes accepted instead — but only if you ask before the offer to lease is signed.
Often yes, and without a court order, where rent is in arrears and the lease permits re-entry. That is the sharpest difference from residential tenancy in Ontario. If it happens, move immediately: relief from forfeiture is available from the Superior Court of Justice, but it is discretionary and the longer the premises sit closed the harder the application becomes.
Additional rent. Taxes, insurance, common area maintenance, utilities and management fees are billed monthly on estimate and reconciled once a year, so a year-end true-up can land as a single large invoice. Ask for the reconciliation backup; the audit right in your lease is the mechanism that forces the landlord to produce it, and it usually has a short deadline.
Not always, and rarely on the terms first offered. A dollar cap, a time limit, a burn-off after two or three clean years, or a larger deposit in exchange are all common outcomes. The leverage exists while the landlord still wants the deal and disappears the moment the offer to lease is executed.
Only if it sets the renewal rent or a real mechanism for determining it, and only if you exercise it inside the window, in the form the lease specifies. Missing a renewal notice date by a week is one of the most common and most expensive tenant mistakes there is. Diarise it the day you sign, with a reminder several months ahead.
Not unilaterally. The realistic routes are an assignment or sublet with the landlord's consent, a negotiated surrender that usually costs money, or producing a replacement tenant the landlord will accept. All three are far easier if the assignment clause was negotiated properly at the start.
Open your file tonight — a licensed Ontario lawyer will confirm everything with you by tomorrow.