Commercial Real Estate: Leases for Landlords and Tenants
Howard Nightingale Professional Corporation specializes in Commercial Real Estate, from purchases and sales to leases; we are well versed and experienced in leasing requirements whether representing the interest of the lessor (landlord) or the lessee (tenant). A legally sound lease protects both parties, enabling them to pursue their individual business interests in the best example of contractual law.
Point of Reference: A note to first time commercial lessors and lessees:
Legislated by the Ontario Commercial Tenancies Act, 1990, commercial matters are substantially different than their residential counterpart. Of significance for both landlord and tenant, there is no commercial equivalent of the Landlord Tenant Board, resulting in a more streamlined process. An illustration are the procedures with regards to non-payment of rent. Whereas it is long and unwieldly for the residential landlord, the commercial lessor can padlock the property sixteen days after the tenant fails to pay the rent. Since this is critical for both parties, Howard Nightingale will ensure that they are aware of this and other rights and obligations under the Commercial Tenancies Act, 1990.
When examining an occupancy contract on behalf of leasing clients,
Howard Nightingale Professional Corp will:
- Review the lease for clauses that might extend beyond the provisions of the Commercial Tenancies Act (CTA). Should tenants sign such a lease, it can take precedence over the legislation, binding them to the terms of the signed lease. While tenants might find a specific clause acceptable and agree to its inclusion, they might also negotiate that others be removed, or refuse to sign the lease until amended.
- Guide prospective lessees who wish to amend the lease in order to negotiate with the landlord. HNPC has the experience to suggest reasonable approaches.
- Examine the offered lease carefully for its rent provisions. This is extremely important for the tenant because the CTA does not regulate or set out commercial rent guidelines. The government states, “most commercial tenancy agreements outline in detail issues such as the amount of rent charged and frequency of rental fee increases.” Due diligence, therefore, requires that the lease includes such provisions; prospective tenants can then examine the financial terms to ensure they are reasonable and that they can commit to them. These rental terms can also be negotiated.
- Caution that if no formal lease is signed, landlords can increase the rent as much as, and as frequently as, they wish. The key here is a formal lease: a legally valid, duly signed contract, not a promise and a handshake.
- Advise and provide assistance for tenants with contractual difficulties. Although the intent of a well-executed contract for tenants is to protect them from monetary and legal aggravation, should tenants find themselves in an unresolved dispute concerning money or personal property, Howard Nightingale can advise, coach or fully act on their behalf to file a claim against the landlord in Small Claims Court, up to the allowable limit of $25,000.00, or make application to the Superior Court of Justice.
- Advise tenants about their rights to request relief from forfeiture.
When drawing up commercial leases or resolving contractual difficulties for the lessor Howard Nightingale Professional Corp will:
- Ensure that the lease is in compliance with the legal requirements of the CTA. Also, Howard Nightingale Professional Corporation will evaluate the inclusion of specific instructions from the lessor with regards to additional clauses in the lease (as permitted by the legislation) which might be necessitated due to circumstances specific to the landlord’s situation.
- Review any tenant modifications to the lease and advise the landlord.
- Advise as to the inclusion of a security deposit request in the lease and stipulate the lessor’s right to apply to Small Claims Court or the Superior Court of Justice in order to seek reparation for damages from the tenant and for any loss of rental income owing for the balance of the term of the lease.
- Guide the landlord in case of a dispute with the tenant. For example, although the landlord can padlock the premises after sixteen days for non-payment of rent, landlords (tenants also, for that matter) should not force their way into the premises. When the issue has been satisfactorily resolved and the locks changed, Howard Nightingale Professional Corporation will advise landlords to permit tenants reasonable access to the rental unit to remove their property.
- Take further action for the landlord if the issue has not been resolved: landlords can distrain (seize and hold) the tenant’s property once determined that they have forfeited their goods. Landlords should be aware, however, that tenants have the right to ask for relief from forfeiture. Howard Nightingale Professional Corporation will ensure that there is no such tenant request before advising the landlord to sell and to otherwise dispose of the tenant’s property.
- Ensure that there are two separate appraisals, and that the proceeds are applied to the rental arrears, with any excess returned to the tenant as indicated by law. Howard Nightingale Professional Corporation will also check for leased or co-owned tenant property, and advise that this cannot be seized.
- Ensure that the lease termination clauses protect the lessor, requiring tenants to submit written notice one month in advance of termination and stipulating that tenants who fail to vacate after the stipulated date can be penalized with up to two month’s rent for each month they remain on the premises.
- Apply to the Ontario Superior Court of Justice on behalf of the landlord to obtain an eviction order, if necessary.
For additional information of benefit to both landlord and tenant with regards to commercial leases, and several helpful government websites, please see my blog at https://www.howardnightingale.com/signing-commercial-lease-well-know-rights-responsibilities/