Basics Of A Commercial Lease | Nava Wilson LLP

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What is a commercial lease?

A commercial lease is: A contract between a landlord and a business tenant that gives a tenant the right to use the landlord’s property for a business/commercial activity for a period of time in exchange for money paid to the landlord. 

What makes a commercial property lease different from a residential property lease?

A commercial lease is to rent space for a business, and follows the law outlined in Commercial Tenancies Act. 

A residential lease is to rent a home or space to personally reside in, and follows the law outlined in Residential Tenancies Act.

What about an oral lease agreement?

They are tough to enforce, since it’s a he-said she-said type of situation, and the costs of court to decide whose version of the story to accept can get very expensive. 

What are provisions commonly dealt with in a commercial lease?

A commercial lease typically deals with the following:

  1. who are the parties (landlord/lessor)(tenant/lessee)
  2. description of the property being rented (size, lot #);
  3. address of the property being rented;
  4. length of the term (fixed for a year, or month-to-month);
  5. when, how much, and how often to pay rent;
  6. type of business that may be conducted on the premises;
  7. type of insurance required;
  8. who is responsible for repairs and maintenance
  9. when can the tenant assign or sublet the property:
  10. when can the landlord end the lease early.

What are the types of Rent:

Base rent – refers to the minimum or base amount of rent as set out in the lease.

Additional rent/TMI (Taxes, Maintenance, Insurance) – refers to all other expenses associated with operating and maintaining the property, which include Operating expenses may include insurance, utilities, maintenance expenses and property taxes.

Percentage rent – usually in large properties like shopping malls. The tenant pays a percentage of gross income in addition to Base rent.

What is a fixture vs chattel vs leasehold improvement?

Chattelsa piece of property that can be moved from one location to another. e.g microwaves, refrigerators, desks and personal computers.

Fixture – a piece of property that is sufficiently attached to the Premises so that to move or remove it would damage the property. If the attached part of the property can be removed without significant damage to the property then it is usually not considered a fixture. Examples of fixtures may include sinks or toilets.

Leasehold Improvementan expense incurred to do renovations for the permanent improvement to the property. 

Why do I need to give a security deposit?

A security deposit is a sum of money the tenant pays to the landlord to guarantee that the tenant will fulfill all obligations under the lease. The landlord holds the security deposit for the term of the lease to ensure that the tenant does not default on the terms of the lease agreement or otherwise damage the property.


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