A clause-by-clause walkthrough so you know what you're agreeing to — before you're locked in for years.
Who this is for: Ontario business owners about to lease retail, office, industrial, or restaurant space. What you'll get: 25 checkable lease terms with plain-language explanations and "watch out" notes, so you can spot the costly clauses and negotiate before signing rather than discover them later.
⚖️ This is a general guide, not legal advice. It can't account for your specific situation. Use it to get oriented, then confirm the details with a licensed Ontario lawyer.
A commercial lease is one of the largest, longest commitments a small business makes — and unlike a residential lease, the Residential Tenancies Act, 2006 does not protect you. The Commercial Tenancies Act applies instead, but it sets only a thin floor — mostly rules about landlord remedies and a tenant's right to ask the Superior Court for relief from forfeiture. Commercial tenants in Ontario are largely on their own; the deal is whatever the lease says. Landlords draft these documents to favour themselves, and almost everything is negotiable before you sign and almost nothing after.
Work through the groups below. Check each term once you understand it and are comfortable with it. Items marked ⚠️ are where tenants most often get hurt.
Group 1 — Term, renewal, and rent
1. The term (length)
- I know the start and end dates and the total length
💡 Longer terms give stability but reduce flexibility if your business changes. Shorter terms with renewal options are often safer for a young business.
2. Renewal options
- The lease grants a right to renew (an option), and I know how and when to exercise it
⚠️ Watch out: A renewal option is only useful if you can actually trigger it. Note the notice window (e.g., a set number of months before expiry) and put it in your calendar — miss it and the option can vanish. Also check how the renewal rent is set: "at market rate" can mean a steep, undefined increase.
3. Base rent
- I know the base rent, how it's calculated (often per square foot per year), and exactly how the area was measured
⚠️ Watch out: "Rentable" area can be larger than the space you actually use because it adds a share of common areas. Confirm what you're paying for.
4. Additional rent (TMI / CAM)
- I understand additional rent — Taxes, Maintenance, and Insurance (TMI), also called Common Area Maintenance (CAM)
⚠️ Watch out: This is the clause that surprises people most. On top of base rent, you typically pay a proportionate share of the building's property taxes, operating costs, insurance, and common-area upkeep. Ask for the current estimate and recent actuals, whether there's a cap on annual increases, and whether big-ticket capital costs (a new roof, HVAC replacement) can be passed to you.
5. Net vs. gross lease
- I know whether this is a net lease (base rent plus additional rent) or a gross lease (one inclusive figure)
💡 Most commercial leases in Ontario are net leases. "Triple net" means you carry taxes, insurance, and maintenance on top of base rent. Compare offers on the all-in cost, not just base rent.
6. Rent escalation
- I know how and when rent increases over the term (fixed steps, a percentage, or tied to an index)
⚠️ Watch out: Escalation clauses compound. A modest-sounding annual bump adds up significantly over a multi-year term. Model the rent for every year, not just year one.
7. Deposit and prepaid rent
- I know the deposit amount, what it covers (last month's rent? security? both?), and the conditions for getting it back
💡 Unlike residential deposits, commercial deposits aren't tightly regulated. Confirm in writing whether it earns interest and exactly when and how it's returned.
Group 2 — How you can use the space
8. Permitted use
- The lease permits exactly the business I intend to run, described broadly enough to allow it to evolve
⚠️ Watch out: A narrow "permitted use" clause can trap you. If it says "sale of coffee" and you later want to sell food too, you may need the landlord's consent. Negotiate language that covers your plans and reasonable future changes.
9. Exclusivity
- If competing businesses nearby would hurt me, the lease gives me exclusivity (the landlord can't lease to a direct competitor in the same complex)
💡 Exclusivity matters most in malls and plazas. It's a negotiated perk — ask for it if a competitor next door would damage you.
10. Permitted hours and operating covenants
- I know any required operating hours or continuous-operation obligations
⚠️ Watch out: Some leases (especially in malls) require you to stay open during set hours and keep operating for the whole term. That can prevent you from quietly winding down a failing location.
Group 3 — Flexibility and getting out
11. Assignment and subletting
- I understand whether and how I can assign the lease (transfer it) or sublet part of the space
⚠️ Watch out: This is your exit ramp if you sell the business or need to leave early. Landlords often require consent. Push for language that consent "will not be unreasonably withheld," and check whether you stay on the hook for the rent even after assigning (you often do).
12. Repair and maintenance obligations
- I know who repairs and maintains what — structure, roof, HVAC, plumbing, storefront, interior
⚠️ Watch out: Net leases often push substantial maintenance onto the tenant. Clarify whether you are responsible for the HVAC unit (replacing one is expensive) and the structure. Get a clear split, and consider a cap on your share or a warranty on aging equipment.
13. Demolition clause
- I've checked for a demolition clause and understand the notice and compensation if it's triggered
⚠️ Watch out: A demolition clause lets the landlord end your lease early to redevelop the property, usually on notice. If present, negotiate a longer notice period and compensation for your fixturing costs — and weigh whether the space is worth heavy investment.
14. Relocation clause
- I've checked whether the landlord can move me to different space in the building
⚠️ Watch out: Relocation clauses are common in malls and office buildings. Being moved can devastate a location-dependent business. Push to remove it, limit it, or require the landlord to cover all moving and re-fixturing costs.
15. Early termination / break rights
- I know whether either party can end the lease early, and on what terms
💡 A negotiated tenant break right (even with a penalty) is valuable insurance for an unproven business. Ask for one.
Group 4 — Money on the hook and risk
16. Personal guarantee / indemnity
- I know whether I'm being asked to personally guarantee the lease
⚠️ Watch out — this is critical. If your business is incorporated, the lease should be in the company's name to protect your personal assets. A personal guarantee or indemnity undoes that protection: if the business fails, the landlord can come after you personally for the remaining rent — often the full balance of the term. Try to remove it, cap it (e.g., limited to a set number of months), or have it burn off after you've paid on time for a period.
17. Fixturing period
- I have a fixturing period — rent-free (or reduced-rent) time to build out the space before opening
💡 Renovations take time and money before you earn a dollar. A fixturing/free-rent period is standard and negotiable, especially in a softer market. Get its length and the conditions in writing.
18. Tenant improvements / allowance
- I know who pays for the build-out, and whether the landlord offers a tenant improvement allowance
💡 If the landlord contributes to construction, pin down how much, when it's paid, and what work qualifies.
19. Restoration / make-good on exit
- I know what condition I must return the space in, and whether I must remove my improvements
⚠️ Watch out: A "restore to base building condition" clause can mean a large bill at the end of the lease to rip out everything you built. Clarify what stays, what goes, and try to limit your restoration obligation up front.
20. Insurance and indemnity
- I know the insurance I'm required to carry (liability, property, business interruption) and the indemnity I'm giving the landlord
💡 Commercial leases impose specific coverage minimums and often require you to name the landlord as an additional insured. Send the clause to your insurance broker before signing so you know the real cost.
21. Default and remedies
- I understand what counts as default (late rent, breach of a covenant) and what the landlord can do — including terminating and re-taking the premises
⚠️ Watch out: Landlord remedies for commercial default can be swift and harsh, including distress (seizing assets) and lock-out. Under the Commercial Tenancies Act a landlord generally cannot do both — distrain for rent and terminate the lease — and you can ask the Superior Court for relief from forfeiture. Know the cure period you get to fix a default before remedies kick in, and negotiate reasonable notice.
Group 5 — The fine print that still matters
22. Estoppel certificate
- I understand I may be required to sign an estoppel certificate on the landlord's request
💡 An estoppel certificate is a signed statement confirming the lease terms and that there are no disputes — usually needed when the landlord sells or refinances. It's routine, but read each one before signing because it can lock in admissions about the state of the lease.
23. HST
- I know that HST applies to commercial rent, and I've budgeted for it on top of base and additional rent
💡 Commercial rent is generally subject to HST under the federal Excise Tax Act. Confirm the current rate with the CRA, and remember a registered business can typically claim input tax credits — but the cash still flows out first.
24. Signage and alterations
- I know my signage rights and what alterations need landlord consent
💡 Signage drives walk-in business. Confirm what you can put up, where, and whether the landlord controls the design.
25. Holdover and end-of-term
- I know what happens if I stay past the end of the term without renewing
⚠️ Watch out: "Holdover" rent is often charged at a premium (sometimes one-and-a-half to two times) the base rent, and may convert to a month-to-month tenancy on the landlord's terms. Plan your exit or renewal well before the end date.
Mini-FAQ
Do I really need a lawyer for a lease — can't I just read it? You can read it, but the risk lives in how clauses interact and in what's missing (a break right, a cap on TMI, removal of the guarantee). A lawyer negotiates these before you're committed — and a lease is far too long and expensive a commitment to sign blind.
The landlord says the lease is "standard" and non-negotiable. Is that true? Rarely. "Standard form" usually means "the landlord's preferred starting point." Many terms — guarantees, escalations, renewal rent, restoration — move when a tenant (or their lawyer) asks. The worst that happens is they say no.
When should I bring in a lawyer? Before you sign anything, including a letter of intent or offer to lease — those can bind you to key terms. The earlier you involve counsel, the more leverage you have.
What's next
Use this checklist to mark up the lease and list your concerns, then bring both to a lawyer. The cost of a lease review is small against the cost of a personal guarantee you didn't notice, a TMI bill you didn't expect, or a demolition clause that ends your lease in year two. Get it reviewed before you sign.
How Treadstone Law can help
Treadstone Law reviews and negotiates commercial leases for Ontario businesses — flagging the guarantees, escalation traps, and exit clauses that matter, and pushing for terms in your favour. We work on flat, quoted fees so a lease review never becomes a surprise itself.
- Talk it through: call 1-844-900-1070 or start a file online.
- Learn more: see our corporate services and transparent pricing.
- Got a lease to review? Start a file online and send it over before you sign.
This is not legal advice
This guide is general information, not legal advice. Reading it does not create a lawyer-client relationship. Ontario laws, tax rates, and government programs change, and how the law applies depends on your specific facts. For advice about your situation, speak with a licensed Ontario lawyer. Treadstone Law is licensed by the Law Society of Ontario — reach us at 1-844-900-1070 or start a file online.