What You Need to Know About Breaking Your Commercial Lease
Disclaimer: This article on breaking your commercial lease is intended for the purpose of providing information only. It is to be used only for the purposes of guidance. This article is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.
Perhaps you are a business owner who has outgrown your current space. Or you are a landlord who has reached your limit with a difficult tenant. Regardless, one thing is clear: you need to break that commercial lease.
This article will explore the process and what you should consider before breaking your lease. We will discuss this question from the perspective of both tenants and landlords.
(Negotiating your commercial lease? Feel free to read this article on what you need to know.)
The Significance of Commercial Leases
Commercial leases are legally binding agreements. They outline the terms and conditions governing the use of commercial properties. These leases play a crucial role, defining the rights and obligations of the tenant and the landlord.
Lease agreements can be complex and specific to each situation. As such, the process of breaking a commercial lease may vary. The terms of your lease will dictate what you can do next. Below, we’ll explore some common strategies for both tenants and landlords:
Breaking a Commercial Lease as a Tenant
Breaking a commercial lease in Ontario as a tenant requires careful thought. You must adhere to the terms of your lease and to legal procedures. Here are several strategies tenants can consider:
Give Your Landlord Notice
When ending a lease that has a specific term, you can give your landlord notice. For monthly leases, one month’s written notice is typically required.
Landlord Breach of Lease
If your landlord does not follow the terms of the lease, you may have grounds for ending it. This can occur if the landlord impacts your business by altering access to the property. In such cases, you can consider the lease terminated and sue the landlord for damages.
Under certain situations and with landlord consent, you can sublease all or part of the rented property. This allows you to pass on the use of the property to another subtenant. Keep in mind that you remain financially responsible for the original lease.
Similar to subleasing, you can assign your lease to a new tenant. This means the new tenant takes over your tenancy and the terms of the lease. The landlord must agree to this arrangement.
Breaking a Commercial Lease as a Landlord
Landlords can also face situations where they may think they need to break a commercial lease. However, they do have other options.
Distraint is seizing someone’s assets to be paid for money owed. Landlords may be able to use this remedy to deal with outstanding rent. In that instance, they would enter the premises and seize goods with a value up to the amount of outstanding rent.
Landlords can sue tenants for monetary damages resulting from breaches of the lease terms. For example, if a tenant causes significant damage to the property beyond normal wear and tear, the landlord can seek compensation for repair costs
Seeking an injunction can stop a tenant from engaging in activities prohibited by the lease. For example, if a lease explicitly forbids using the rented space for specific activities, such as operating a noisy nightclub in a residential area, and the tenant violates these terms, the landlord can seek an injunction.
Landlords can seek an order of specific performance to force a tenant to fulfill lease obligations.
However, sometimes a landlord’s only option is to terminate the lease. Here are some common remedies that are available.
Landlords can terminate the lease by providing written notice to the tenant and preventing them from entering the premises.
Writ of Possession:
In some cases, physically excluding the tenant is impractical. In those cases, landlords can obtain a writ of possession to take possession of the property on their behalf.
Seek Professional Assistance to Break Your Commercial Lease
Whether you’re a tenant or a landlord, breaking a commercial lease in Ontario is no simple matter. It’s essential to consult an experienced business lawyer to ensure as smooth a process as possible.
If you find yourself in such a situation, don’t hesitate to reach out to legal experts like Beeksma Law. Our team of experienced lawyers has the expertise to guide you through the process and protect your interests. Book your complimentary consultation today!