At Roberts & Obradovic Law, we have a team of skilled commercial lease lawyers ready to assist you with any legal matters pertaining to commercial leases. Our lawyers are well-equipped to review and negotiate commercial leases on your behalf while keeping the protection of your business interests in mind. We strive to provide cost-effective and timely legal counsel to landlords and business owners who are considering entering into a commercial lease agreement in Ontario. Whether you need legal advice or representation, we are here to help.
What is a Commercial Lease?
A Commercial Lease is a contract between a landlord and a tenant whereby the landlord provides a commercial space for the tenant for use in the its business for a fixed period of time. The tenant of the commercial lease will undertake to pay a monthly rent to the landlord for consideration for the use of the leased property. Commercial leases are often lengthy and complicated contracts that require the legal counsel of a commercial lease lawyer. At Roberts & Obradovic, our experienced commercial lease lawyers can provide the following services:
- Draft a commercial lease for property owners
- Reviewing the terms and conditions of a proposed commercial lease agreement
- Advising you of your enforceable rights and obligations under the commercial lease agreement
- Negotiating a commercial lease, sublease or lease assignment on your behalf
- Assisting in mediation and alternative dispute resolution during commercial lease disputes
- Representing you during a commercial lease litigation before the courts
Types of Commercial Lease
There are typically five primary types of commercial leases in Ontario, which include:
- Gross Lease: the tenant is required to pay a fixed monthly amount, while the landlord is responsible for covering the building’s operational costs, real estate taxes, and insurance.
- Net Lease: the tenant is obligated to pay a base rent in addition to a portion of the real estate taxes for the property, while the landlord assumes responsibility for covering the building’s operational expenses and insurance
- Net-Net Lease: the tenant is required to pay a base rent, as well as taxes and insurance costs, while the landlord assumes responsibility for covering the building’s operational expenses.
- Triple Net Lease (Net-Net-Net): the tenant is responsible for paying the base rent, taxes, insurance, and all building operational costs, as the landlord has passed on all expenses to the tenant.
- Percentage Lease: a percentage lease agreement involves the tenant paying a fixed rate to the landlord, as well as a percentage of the tenant’s sales or revenue.
Important Commercial Lease Terms
When it comes to a Commercial Lease contract, it’s important to understand that the terms of the contract dictate the respective rights and obligations of each party involved. Commercial lease agreements are often complex and lengthy, which is why it’s highly recommended that you have an experienced business lawyer review the terms of your commercial lease. Doing so can provide you with an in-depth understanding of your obligations and help protect your interests.
The following are the most common terms that are included in a commercial lease:
- Lease Term—the period of the commercial lease agreement, which may be in a span of months or years, depending on the agreement between the landlord and the tenant;
- Mode of Payment—how the payment will be made by the tenant to the landlord. This may be made periodically through cash, post-dated checks, or bank deposits, depending on the agreement between the landlord and the tenant;
- Interest in Case of Delay—the percentage or the fixed rate that must be paid by the tenant to the landlord if the tenant was in delay in payment to the landlord. The percentage or the fixed rate of interest will depend on the number of days or months that the tenant was in delay of its payment to the landlord;
- Common Area Expenses—if the landlord has several commercial units for lease in a building, the landlord may require the tenant to pay a fixed amount of money in order to defray the common expenses of all the tenants in the building. This amount may go to the compensation for the shared security and janitorial services in the building, use of the elevator, and other amenities of the building that are available for use of all the tenants;
- Repairs and maintenance—the obligation of either party to keep the leased property in order and to conduct necessary repairs as needed;
- Assignability of Lease—the right of the tenant to assign the commercial lease contract to another person or entity, which may or may not be related to the original tenant, without the prior written consent of the landlord;
- Option to Purchase—the pre-emptive right of the tenant to purchase the leased property in case the landlord decides to sell the leased property;
- Monthly Lease Payment—the amount that must be paid by the tenant to the landlord as compensation for the tenant’s use of the leased property;
- Security Deposit—the amount of money deposited by the tenant and paid to the landlord at the start of the commercial lease agreement. The landlord may use this amount to compensate for damages caused by the landlord to the leased property or to settle any remaining unpaid utilities such as electricity, water, cable, and internet left by the tenant at the termination of the lease. The tenant can get the security deposit back as soon as he is cleared by the landlord of any other liability from the leased property;
- Turnover of the property—the time when the leased property will be free for use and occupation by the tenant;
- Improvements—the improvements that may be built by the tenant on the leased property pursuant to its business needs. The landlord and the tenant may agree if the tenant can make permanent improvements on the leased property and if the landlord can keep the permanent improvements on the leased property at the end of the commercial lease agreement;
- Extendibility of Lease—the right of the landlord the tenant, or both, to request for the extension of the lease contract;
- Subletting—the right of the tenant to further sub-lease the leased property without the prior written consent of the landlord;
- Termination—the right of either the landlord or the tenant to terminate the contract ahead of the agreed upon termination date of the lease agreement. This also includes the grounds by which either the landlord of the tenant may request for the termination of the lease agreement.
Commercial Lease Disputes
Commercial Lease disputes happen when the terms of the commercial lease contract are not complied with either by the tenant or the landlord. For example, if the tenant fails to pay on time, and the landlord has decided to evict the tenant, the landlord institutes ejectment proceedings to remove the tenant from the property and enforce its collection claim against the tenant.
At Roberts & Obradovic Law, we aim to resolve any commercial lease disputes through mediation and alternative dispute resolution, avoiding the need for litigation whenever possible. In cases where all parties cannot reach an agreement, our experienced commercial lease lawyers are well-versed in the courts of Ontario and will work diligently to advocate for your interests.
Contact a Commercial Lease Lawyer
Before entering into a commercial lease agreement, it’s important to consult with a commercial lease lawyer to ensure that your business interests are adequately protected. A commercial lease lawyer can help you understand the terms and conditions of the lease agreement and negotiate favorable terms. They can also review the contract and recommend revisions. With the help of a commercial lease lawyer, you can rest assured that your business interests are safeguarded. To learn more about how our law firm can help, contact us or call us at (647) 724-5179 today.