If you’re a business owner leasing commercial space in Ontario, it’s important to understand that your legal rights are significantly different from those of residential tenants. While the Commercial Tenancies Act (CTA) provides some basic protections, most of your rights as a commercial tenant come from your written lease agreement.
This means what’s in (or missing from) your lease can have lasting consequences—especially when problems arise. Below is an overview of key rights and realities every commercial tenant should be aware of.
1. Contractual Freedom (and Risk)
Commercial leases are treated as business contracts, and the courts will enforce the agreement as written. Unlike residential tenants, commercial tenants are expected to negotiate their own protections upfront. Once signed, the lease becomes legally binding, regardless of whether the terms later prove burdensome or unbalanced.
Never assume “standard protections” apply. If you want a right or remedy, it must be clearly spelled out in the lease.
2. Right to Quiet Enjoyment
All commercial tenants have an implied right to quiet enjoyment, which means the landlord cannot unreasonably disrupt your use of the space. This includes actions like changing the locks, blocking access, or interfering with your operations without legal justification.
However, unlike in residential tenancies, there is no tribunal like the Landlord and Tenant Board for commercial disputes. If this right is violated, your only recourse is to sue in court, typically for damages or injunctive relief.
3. Maintenance and Repairs
Unless your lease states otherwise, you are usually responsible for interior maintenance and minor repairs. Landlords generally take care of structural issues, roofing, and common areas.
In triple-net leases, Tenants often assume responsibility for virtually all property-related expenses, including building repairs. Don’t assume the Landlord will renovate or upgrade the space unless it’s promised in writing.
Review:
- Who is responsible for HVAC, plumbing, electrical, and roof repairs?
- Is there a landlord obligation to keep the space in good condition?
- What is included in “additional rent” or TMI charges?
4. Security Deposits and Interest
Commercial landlords typically require a security deposit, which may be held for the full term of the lease to cover damage or unpaid rent. Importantly, there is no legal obligation for the Landlord to pay interest on that deposit.
If the Landlord wrongfully retains your deposit at lease end, you would need to bring a claim in Court to recover it.
5. Rent Increases and Lease Expiry
Once your lease term ends, the landlord is free to increase the rent without restriction. Ontario’s Residential Tenancies Act does not apply to commercial leases, so there are no limits or guidelines for rent hikes.
It is common for commercial landlords to raise rent significantly upon renewal, especially if market demand has increased.
Preferred Solution:
Negotiate renewal options and rental terms in advance. Don’t leave it to chance at the end of the term.
6. Enforcement and Landlord Remedies
If a tenant fails to pay rent or breaches any material term of the lease, the Commercial Tenancies Act gives Landlords significant remedies. These include:
- Terminating the lease
- Re-entering the premises
- Seizing the tenant’s assets to cover arrears (known as distress)
Note: Even if the landlord fails to uphold repair obligations, you cannot withhold rent. Doing so, may expose you to eviction and damages.
Brian Madigan LL.B., Broker