Tips for leasing commercial property

A commercial lease is a legal document that typically runs from 3 to 10 years. It covers most aspects of doing business on a plot of land or in a particular building or unit. Under provincial law, a commercial lease does not offer the same protections as a residential lease.  Here are some items of which you should be aware and ask about.

  • LENGTH: How long are you assured control of the premises if you sign?
  • COSTS: What are the general costs associated with the lease? Hint: Whenever you see unfamiliar terms or clauses, usually extra costs are involved. Look for "net costs/net net costs/ triple net costs" and know what they mean.
  • RESPONSIBILITIES (More costs): What is covered and who pays for insurance to protect your business from fire, slip and fall or structural damage? What about shared costs for hallways and heating? Does the lease include the costs of the night watchman? Are taxes included?
  • PENALTIES (More costs, again): Unexpected circumstances could force you to cancel your lease. If so, would there be a penalty? In some cases you would be required to pay all costs that would have been incurred as if you had completed the term of the lease.

While every province has legislation that covers commercial leases, little protection is offered beyond what is covered in the lease itself.  Ask your lawyer what protections are afforded by such legislation should you ever need to rely on its provisions.

Why use a lawyer?  A lawyer can help you understand the terms, implications and potential liabilities contained in the lease.  Even more important is that the advice given by a lawyer is supported by the provincial law society and its insurance policy: were you to be given bad commercial lease advice and act on it to your harm, you could ask the law society for a possible remedy.  Without a lawyer, you are on your own.

More questions? CFIB members can speak with a Business Counsellor at 1-888-234-2232 free of charge.