Everything to check in the lease, ask the landlord and put in the purchase agreement before you take over an Ontario commercial lease.
⚖️ This is general information, 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.
For most small businesses the lease is the most valuable contract and the hardest to replace. Taking it over means the landlord's consent, an assignment and assumption agreement, usually a guarantee and, if you are careful, an estoppel certificate. Section 23 of the Commercial Tenancies Act says a landlord's consent to assign is not to be unreasonably withheld unless the lease says otherwise, but the lease sets the process and the landlord sets the pace. Use this checklist from the first week of diligence, not the last week before closing.
Read the lease
- Term and commencement date: how much is left, and whether it matches your loan term and your plans
- Renewal options: how many, on what notice, at what rent, and whether they survive an assignment
- Rent: base rent, additional rent, escalations, and whether there are arrears
- Assignment clause: the consent standard, the information the landlord may require, its costs, and any right to terminate instead of consenting
- Change-of-control clause: whether buying the shares of the tenant triggers the consent requirement
- Permitted use: whether it covers what you intend to do, including any expansion
- Guarantee and indemnifier provisions: who is bound today and for how long after assignment
- Relocation, demolition and redevelopment clauses: whether the landlord can move you or end the lease early
- Restoration obligations at the end of the term, which you inherit
- Insurance and indemnity requirements you must satisfy from the day you take over
Ask the landlord
- An estoppel certificate confirming the rent, the term, the deposit held and that there are no defaults; it is the only reliable check on arrears and disputes
- The consent application form and the information it requires; a complete package avoids a second round
- The landlord's timeline for a decision and the costs it will charge; both belong in your closing calendar
- Whether it will release the seller and its guarantors, and on what terms; a stalled release can stall consent
- Whether it will sign a waiver or acknowledgement for your lender; most lenders require one
- Any existing disputes, notices, planned building works or redevelopment that would affect the premises
Put in the purchase agreement
- Landlord consent as a condition of closing, with a date and a right to extend if the landlord is slow
- Who applies for consent and who pays the landlord's costs
- What happens if consent arrives with conditions you did not expect, such as a larger deposit or a personal guarantee
- The seller's obligation to clear arrears and deliver an estoppel certificate before closing
- Whether a new lease is acceptable instead of an assignment, and the minimum term and rent you would accept
- Adjustment of prepaid rent and transfer of the security deposit on closing
Franchise premises
Where a franchisor holds the head lease and sublets to the franchisee, or holds a conditional assignment of the lease so it can step in if the franchisee fails, the franchisor's consent is needed as well as the landlord's. Check that the sublease term matches the franchise term, whether the franchisor's rights over the premises survive the transfer, and who pays the landlord's costs. The two consents are usually processed together, and the closing cannot happen until both are signed.
On closing
- Assignment and assumption agreement signed by the seller, the buyer and the landlord
- Landlord consent letter in the form the lease requires, without conditions you have not accepted
- New guarantee or indemnity agreement, if the landlord required one
- Estoppel certificate dated within the last thirty days
- Written notice to the landlord of the new tenant's contact details, insurance certificate and banking for rent
- Keys, access codes, alarm codes and the security deposit transferred or adjusted
How Treadstone Law can help
A lease taken over well is invisible: the rent is paid, the term runs and nobody hears from the landlord. Most of the work is done before the application is sent, by reading the lease properly and asking for the estoppel certificate early.
Treadstone Law handles corporate matters on a transparent flat fee, with online intake and a real lawyer on your file, across Ontario.
- Start your file online at treadstonelaw.ca/start-file
- See flat-fee pricing at treadstonelaw.ca/pricing
- Learn more about our corporate services at treadstonelaw.ca/corporate
- Or call us: 1-844-900-1070
This is not legal advice
This guide is general information, not legal advice. Reading it does not create a lawyer-client relationship. Ontario laws 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.