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Organizational Effectiveness

Landlord and tenant issues

Published on November 8, 2012

Navigating your way through a lease negotiation isn’t easy. Often a review of lengthy and complex documents is required in order to get from the offer to lease to the standard form commercial lease. Once you have the executed lease in place, there are a whole host of issues that can arise between landlord and tenants. Everything from how to interpret the payment of operating costs or the determination of rent free periods to relocation rights or when a tenant has the right to assign or sublet its premises. In this session we started with the basics of what makes a valid and binding lease and then moved on to discuss specific clauses in the lease agreement where interpretation issues often arise after the lease has been signed.

Five Good Ideas

  1. A commercial lease governs a long-term relationship. Be good to one another.
  2. Funding may impact a non-profit tenant’s ability to meet its obligations under the lease. What protections can a tenant negotiate that a landlord might be willing to include in a commercial lease?
  3. Insurance provisions in a commercial lease should be reviewed by an insurance provider.
  4. While we can’t predict the future, we should always consider the possibilities. Corporations, including non-profit organizations, are dynamic, and a well-thought out assignment clause can assist with the ebbs and flows in a corporation’s life cycle.
  5. Even though the lease provides that it is a “net lease,” landlords and tenants often agree to certain deductions and exclusions from operating costs payable by the tenant.

Five Good Resources

  1. The Commercial Lease, A Practical Guide, Fourth Edition, 2004, by Harvey Haber, Canada Law Book Inc.
  2. Leasing to Charities and Non-Profit Organizations (February 2011), The Six-Minute Commercial Leasing Lawyer, presented by John R. Dow.
  3. Requirements for a Binding Agreement to Lease (2006), William Rowlands, McMillan LLP (available at www.mcmillan.ca).
  4. Subleases: Seeking the Landlord’s Consent (2010), William Rowlands, McMillan LLP (available at www.mcmillan.ca).
  5. Commercial Real Estate Lease Agreements (February 2008), Negotiating and Drafting Major Business Agreements, presented by Monty Warsh.

A cautionary note

The foregoing text is provided for general information purposes only. It is neither intended as, nor should be considered, legal advice and readers are cautioned against making any decisions based on this material alone. Rather, a qualified lawyer should be consulted.
© McMillan LLP 2012.

This event is made possible by the generous support of McMillan LLP.