Does a Commercial Tenant have the Right to Assign the Lease?

Most people seem to know that commercial landlords are tougher and often don’t want to agree.

The right to assign a lease is provided to residential tenants under the Residential Tenancies Act.

But, what about commercial tenants? Do they have similar rights?

Actually, they do! Have a look at s.23 of the Commercial Tenancies Act:

Licence to assign not to be unreasonably withheld

23. (1) In every lease made after the 1st day of September, 1911, containing a covenant, condition or agreement against assigning, underletting, or parting with the possession, or disposing of the land or property leased without licence or consent, such covenant, condition or agreement shall, unless the lease contains an express provision to the contrary, be deemed to be subject to a proviso to the effect that such licence or consent is not to be unreasonably withheld.

Application to court where consent to assignment or subletting withheld

(2)  Where the landlord refuses or neglects to give a licence or consent to an assignment or sub-lease, a judge of the Superior Court of Justice, upon the application of the tenant or of the assignee or sub-tenant, made according to the rules of court, may make an order determining whether or not the licence or consent is unreasonably withheld and, where the judge is of opinion that the licence or consent is unreasonably withheld, permitting the assignment or sub-lease to be made, and such order is the equivalent of the licence or consent of the landlord within the meaning of any covenant or condition requiring the same and such assignment or sub-lease is not a breach thereof.

COMMENT

So, for a substantial period of time, commercial tenants have had this same right. However, there is a difference. For residential tenants, the right cannot be taken away. However, for commercial tenants, the agreement could state otherwise.

In more sophisticated leases, there will usually be a specific provision dealing with sub-letting.

In cases where the documentation is not drawn upon the Landlord’s 50 page form, then you will often find that the documentation is nothing more than the “Offer to Lease” or the “Agreement to Lease”. In those situations, the Commercial Tenancies Act prevails, and the right to assignment is included.

Brian Madigan LL.B., Broker
www.OntarioRealEstateSource.com

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