Commercial lease disputes can arise from disagreements over rent, maintenance obligations, defaults, or differing interpretations of lease terms. Tenants and Landlords should be aware of the following important considerations:
1. Understand the Lease Agreement
Each commercial lease is a customized contract, and its terms can override the default provisions in Ontario’s Commercial Tenancies Act (CTA). Provisions such as rent adjustments, repair obligations, or default procedures may differ from statutory expectations. Do not assume that general legislation will override the specific terms of your lease.
2. Define the Permitted Use Clearly
The lease should explicitly state the business activities permitted on the premises. Disputes often arise when tenants engage in unauthorized uses, such as switching from a retail operation to a restaurant. If future flexibility is important, this should be negotiated and documented clearly in advance.
3. Engage in Good Faith Negotiations
If an issue arises, such as a delayed build-out or breach of a landlord promise, start by discussing it directly with the Landlord. While negotiation or informal mediation may resolve some disputes, it’s important to note that commercial tenancies do not have access to the Landlord and Tenant Board, and formal mediation is rare. Most unresolved matters proceed to litigation.
4. Prepare for Litigation When Necessary
Unlike residential tenants, commercial tenants cannot seek remedies through the Landlord and Tenant Board. Legal disputes, ranging from improper rent increases to wrongful eviction—must be pursued through Ontario’s civil court system. Claims under $35,000 may be brought in Small Claims Court, but the monetary limit is increasing to $50,000 on 1 October 2025. For more complex or higher-value disputes you may require action in the Superior Court.
5. Protect and Enforce Your Legal Rights
If a Landlord breaches the lease, for instance, by failing to maintain common areas or entering without notice, you may have a claim for breach of contract, nuisance, or trespass. Similarly, landlords can pursue rent arrears or eviction if a tenant defaults. In all cases, detailed documentation is essential: maintain records such as rent receipts, emails, notices, and photos of the premises.
6. Seek Legal Advice Promptly
Commercial leasing law is nuanced. Consulting a lawyer early can clarify your position, uncover potential legal defenses (such as failure to give proper notice), and guide you on whether any industry standards or case law may apply to your situation.
7. Understand Available Legal Remedies
Remedies for breach of a commercial lease include:
- Termination of the lease,
- Monetary damages for losses incurred, or
- Specific performance, compelling a party to fulfill its contractual obligation.
For example, a landlord may sue for lost rent if a tenant vacates early without consent. Conversely, a tenant who is wrongfully evicted may have grounds to claim damages for business interruption and loss of goodwill.
Comments
The best way to avoid costly disputes is through clear, thorough, and professionally drafted leases. However, when issues arise that cannot be resolved informally, landlords and tenants must be prepared to enforce their rights through Ontario’s civil courts.
Brian Madigan LL.B., Broker
www.OntarioRealEstateSource.com