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Breach of Commercial Lease Contracts in Ontario

In a perfect world, rent payments for your commercial lease property would arrive on time at the start of the month and tenant calls would primarily be about extending the term of the lease or renting additional space.

But in the real world tenant calls are more likely to be complaints about various maintenance issues, their inability to pay their rent on time, or their desire to terminate the commercial lease contract. It is important for commercial landlords to take steps to protect their interests.

How Commercial Lease Lawyers Can Help

Commercial leases can be tricky to navigate. There are several ways a commercial business lawyer can help protect your rights as the landlord:

  • Negotiate favorable commercial lease terms
  • Write a solid commercial lease agreement
  • Fully explain a commercial lease agreement before you sign
  • Draft a commercial lease termination letter
  • Help with proper assignment of commercial lease
  • Review a commercial lease application
  • Write a commercial lease letter of intent

Commercial Lease Breach Examples

Some of the most common causes of commercial lease breach of contracts include:

  • Non-payment of rent
  • Moving out before the lease expires
  • Failure to fulfill obligations as outlined in the contract, such as maintaining insurance
  • Any activity prohibited by the commercial lease or by law

Protection against Breach of Commercial Lease Agreements

A landlord can protect itself against a commercial tenant’s non-payment of rent in several ways. Initially, before the lease commences, it is advisable for a landlord to:

  1. Run a credit check on the prospective tenant and to otherwise conduct your due diligence;
  2. Utilize a professionally prepared lease (i.e. have the lease prepared or at least looked over by a commercial lawyer before signing); and
  3. If possible, obtain a personal guarantee (i.e. when renting to a corporation).

Landlord’s Options Upon Breach of Commercial Lease

Where a tenant has defaulted upon the lease, failed to pay rent, or moved out in the middle of the night, the landlord’s legal options, include:

  1. Do nothing and insist on performance and sue for rent or damages on the basis that the lease remained in force;
  2. Terminate the lease and sue for rent accrued or damages to the date of termination;
  3. Advise the tenant that he intended to re-let the premise on the tenant’s account; or
  4. Terminate the lease agreement and give notice to the tenant that damages would be claimed for losing the benefit of the lease for the unexpired term. One element of such damages would involve the present value of the unpaid future rent for the unexpired period less the actual rent for this period. Another element would be the loss resulting from the repudiation of the term of the lease[1].

Call Our Toronto and Hamilton Business Lawyers Today

If your tenant has failed to pay rent and left you high and dry, call today to speak with our Toronto and Hamilton lawyers at 1-647-495-8995. We will gladly provide a confidential assessment of your breach of commercial lease case.

Alternatively, fill out the Case Form on the left of this page. With offices in Toronto and Hamilton and a legal practice that spans the GTA, we’ll meet you where it’s convenient.

While this is intended to be a general statement as to a landlord’s legal options in Ontario, it is not legal advice for your specific situation.

[1]Highway Properties Ltd. v. Kelly, Douglas and Co., 1971 CanLII 123 (SCC), [1971] S.C.R. 562 at pg. 570

Frequently Asked Questions About Breach of Commercial Lease Contracts

If your commercial landlord (or tenant) breaches the commercial lease agreement, you should first review the lease terms to understand your rights and the breach’s implications. It’s important to document the breach in detail, including dates, times, and any communication between landlord and tenant. Next, you might consider contacting the landlord/tenant to discuss the breach and seek a resolution. If the issue isn’t resolved through direct communication, seeking legal advice is a wise step. A commercial business lawyer can guide you through your options, which may include negotiating a settlement or taking legal action for damages or to enforce the lease terms.
As a tenant accused of breaching a commercial lease, your rights and options largely depend on the lease agreement’s specifics and the nature of the alleged breach. You have the right to be informed of the specific breach and may have an opportunity to rectify it within a set period, often outlined in the lease. Review the lease agreement to understand your obligations and the procedures for handling disputes. Communicating with your landlord to understand the issue and seek a resolution can be beneficial. If an agreement can’t be reached, consulting with a commercial lease legal professional can help you explore your options, which may include negotiating, mediation, or defending your position in court if necessary.
The potential damages you can claim for a breach of a commercial lease agreement depend on the lease’s terms and the breach’s nature. Generally, damages may include lost rent, costs associated with finding a new tenant, and expenses for repairing any damages to the property beyond normal wear and tear. In some cases, you might also claim legal fees involved in resolving the breach. If you’re the tenant and the breach is on the landlord’s part, potential claims could include costs related to business interruption, moving expenses, and the difference in lease costs if you must relocate to a more expensive property. Consulting with a legal professional can provide guidance tailored to your specific situation and help you understand the full scope of damages you may be entitled to claim.
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