Does the Residential Tenancies Act apply to commercial leases in Canada?

No. The Residential Tenancies Act, 2006, S.O. 2006, c. 17 (and equivalents in other provinces) applies only to residential tenancies. Commercial leases are governed by the applicable commercial tenancy statute and by the common law of contract.

Can a commercial landlord lock out a tenant for non-payment of rent?

In most provinces a landlord may re-enter and change the locks for non-payment under the commercial tenancy statute, subject to the lease and any grace period. Tenants may apply for relief from forfeiture if they can pay the arrears and remedy the breach.

Does the tenant need insurance?

Yes. Commercial leases almost always require the tenant to carry commercial general liability insurance (typically $2M to $5M per occurrence), all-risk property insurance on its fixtures and inventory, and tenant’s legal liability coverage, naming the landlord as an additional insured.

Can the tenant assign or sublet the lease?

Only with the landlord’s consent, which (in Ontario under section 23 of the Commercial Tenancies Act) may not be unreasonably withheld unless the lease expressly allows the landlord to withhold consent in its sole discretion. Change-of-control provisions are typically negotiated separately.

How long are commercial leases typically?

Retail and office leases typically run five to ten years with one or more renewal options. Short-term pop-up or flex leases can be six to twelve months. Leases of more than three years should generally be registered on title, whether by the full lease or by a short form notice of lease.

Are verbal commercial leases enforceable in Canada?

Short commercial leases can be oral, but leases exceeding three years generally must be in writing to be enforceable under the Statute of Frauds, R.S.O. 1990, c. S.19 (or equivalent in other Canadian provinces). Even short Canadian commercial leases should always be documented to avoid disputes about rent and use.

Does this template work for Quebec?

No. Quebec commercial leases are governed by the Civil Code of Quebec, articles 1851 and following, and require a distinct drafting approach. This template should not be used for premises located in Quebec without review by a Quebec lawyer.

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Commercial Lease Agreement Template

A commercial lease agreement governs the rental of office, retail or industrial space in Canada. Our free template is drafted for provincial commercial tenancy legislation — which is very different from residential tenancy law — and covers rent structure, common area maintenance, guarantees, assignment and landlord remedies.

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COMMERCIAL LEASE AGREEMENT

Gross Lease · Province Of Ontario, Canada

LANDLORD

Brookfield Property Partners Ltd.

100 Wellington Street W, Suite 300, Toronto, ON M5K 1B7 · Contact: Margaret Chen · +1 (416) 555-0100 · leasing@brookfield.ca

TENANT

Northern Tech Solutions Inc.

456 Bay Street, Suite 1200, Toronto, ON M5H 2Y4 · By: David K. Nguyen, Chief Executive Officer · +1 (416) 555-0200 · david@northerntech.ca

200 King Street W, Toronto, ON M5H 3T4, Suite 500

2500 sq ft · Gross Lease

PREMISES

The Landlord hereby leases to the Tenant the commercial premises located at 200 King Street W, Toronto, ON M5H 3T4, Suite 500, Province of Ontario, Canada, consisting of approximately 2500 square feet of leasable area (the "Premises"). This is a Gross Lease. Commercial tenancies are not subject to provincial residential tenancy legislation; rights and obligations are governed by common law and the applicable provincial commercial tenancy or landlord and tenant Act.

PERMITTED USE

The Tenant shall use and occupy the Premises solely for the following purpose(s): General office use, software development, and client meetings. The Tenant shall not use the Premises for any other purpose without the prior written consent of the Landlord. The Tenant shall comply with all applicable federal, provincial, and municipal laws, regulations, by-laws, and codes in the conduct of its business on the Premises. Any zoning or licensing requirements applicable to the Tenant's business are the Tenant's sole responsibility.

TERM

The lease term shall commence on July 1, 2026 and expire on June 30, 2031 (the "Term"), unless earlier terminated in accordance with this Agreement. Upon expiry of the Term, unless renewed or extended by mutual written agreement, the Tenant shall vacate the Premises and surrender possession to the Landlord.

RENT

The Tenant shall pay to the Landlord a monthly base rent of 6,250.00 CAD, plus applicable GST/HST, payable in advance on the first day of each calendar month. This is a Gross Lease. The base rent is all-inclusive: the Landlord bears all operating costs, including property taxes, building insurance, and common area maintenance (CAM). The Tenant pays base rent only.

GST / HST

All amounts payable by the Tenant under this Agreement are exclusive of Goods and Services Tax (GST), Harmonized Sales Tax (HST), and any applicable provincial sales tax. The Tenant shall pay all such taxes in addition to the base rent and any other charges. The Landlord shall provide the Tenant with a GST/HST-compliant invoice for all amounts charged. Commercial leases in Canada are generally subject to GST/HST under the Excise Tax Act, R.S.C. 1985, c. E-15.

RENT ESCALATION

The base rent shall increase by 3% per annum on each anniversary of the lease commencement date throughout the Term. The adjusted rent for each year shall be calculated based on the previous year's base rent. The Landlord shall provide the Tenant with written notice of the adjusted rent amount at least 30 days prior to each escalation date.

SECURITY DEPOSIT

Upon execution of this Agreement, the Tenant shall pay to the Landlord a security deposit of 12,500.00 CAD. The deposit shall be held by the Landlord as security for the faithful performance of the Tenant's obligations under this Agreement. The deposit, less any amounts lawfully deducted for damage or unpaid rent beyond normal wear and tear, shall be returned to the Tenant within 30 days of the expiry or earlier termination of this Agreement. Unlike residential tenancy deposits, commercial deposits are generally not subject to statutory trust account requirements.

MAINTENANCE AND REPAIRS

The Landlord shall maintain the structural elements of the building, including the roof, foundation, exterior walls, and common areas, in good repair. The Tenant shall maintain the interior of the Premises in good condition and repair, including all fixtures, equipment, and leasehold improvements installed by the Tenant. The Tenant shall promptly notify the Landlord in writing of any needed structural repairs or deficiencies. HVAC systems serving only the Premises shall be maintained by the Tenant at its expense, unless otherwise specified in this Agreement.

INSURANCE

The Tenant shall, at its own expense, maintain comprehensive general liability insurance with a minimum coverage of $2,000,000.00 CAD per occurrence, naming the Landlord as an additional insured. The Tenant shall also maintain property insurance on all of its contents, equipment, and leasehold improvements within the Premises. The Tenant shall provide the Landlord with certificates of insurance upon request and shall not cancel or materially alter any policy without providing the Landlord with at least 30 days' prior written notice. The Landlord shall maintain building insurance.

10.

ASSIGNMENT AND SUBLETTING

The Tenant shall not assign this lease or sublet the Premises, or any part thereof, without the prior written consent of the Landlord, which consent shall not be unreasonably withheld or delayed. Any assignment or sublease shall not release the Tenant from its obligations under this Agreement. The Landlord may condition consent on the financial capability of any proposed assignee or sublessee. A change of control of the Tenant corporation shall be deemed an assignment requiring landlord consent.

11.

DEFAULT AND REMEDIES

If the Tenant fails to pay rent within 15 days of the due date, or breaches any other material term of this Agreement and fails to cure such breach within 30 days of written notice from the Landlord (or such longer period as is reasonably required), the Landlord may terminate this lease, re-enter the Premises, and pursue all remedies available at law or in equity. The Tenant shall remain liable for all rent and other amounts owing to the end of the Term. The Landlord shall take reasonable steps to mitigate its damages. Note: Commercial distress for rent remedies vary by province; the Landlord should obtain legal advice regarding available remedies in the Province of Ontario.

12.

GOVERNING LAW

This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein. Any disputes arising under this Agreement shall be resolved in the courts of the Province of Ontario. Both parties irrevocably submit to the exclusive jurisdiction of such courts.

13.

GENERAL PROVISIONS

Entire Agreement: This Agreement constitutes the entire agreement between the parties regarding the Premises and supersedes all prior negotiations. Amendments: No amendment is valid unless in writing and signed by both parties. Severability: If any provision is found unenforceable, the remaining provisions remain in full force. Notices: All notices shall be in writing and delivered to the addresses set out above by personal delivery, courier, or email with acknowledgment of receipt. Counterparts: This Agreement may be executed in counterparts.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date first written above.

LANDLORD

Brookfield Property Partners Ltd.

Date: ____________________

TENANT

David K. Nguyen

Chief Executive Officer

Northern Tech Solutions Inc.

Date: ____________________

What Is a Commercial Lease Agreement?

A commercial lease agreement is a contract between a landlord and a business tenant for the rental of non-residential premises — offices, retail units, industrial space, warehouses or mixed-use facilities. It sets out the term, rent, use, repair and maintenance obligations, insurance, assignment rights and remedies on default.

In Canada, commercial leases are deliberately excluded from the protective residential tenancy statutes. In Ontario the Residential Tenancies Act, 2006, S.O. 2006, c. 17 does not apply and commercial tenancies are governed instead by the Commercial Tenancies Act, R.S.O. 1990, c. L.7. British Columbia uses the Commercial Tenancy Act, R.S.B.C. 1996, c. 57, and Alberta uses general contract law supplemented by the Commercial Tenancies Protection Act. As a result, commercial landlords have significantly broader remedies, and tenants have fewer default protections, than in the residential context.

Common commercial lease models include gross leases (rent includes operating costs), net leases (tenant pays rent plus a defined operating cost), double-net and triple-net leases (tenant pays rent, property taxes, insurance and common area maintenance). Our template supports each structure and includes standard retail and industrial clauses such as personal guarantees, percentage rent, exclusive use and CAM reconciliation.

What's Covered in This Template

Our Canadian commercial lease template captures every clause a competent commercial landlord or tenant expects.

Parties and Premises

Full legal names of landlord and tenant (including corporate numbers) and a precise description of the leased premises.

Term and Renewal

Commencement and expiry dates, options to extend or renew and fixturing periods for retail tenants.

Rent Structure

Base rent, additional rent (CAM, taxes, insurance, utilities) and, for retail, percentage rent based on gross sales.

Permitted Use

The specific business use permitted on the premises and any exclusive-use protections for retail tenants.

Repairs and Maintenance

Allocation of structural, HVAC, interior and common-area repair obligations between landlord and tenant.

Insurance and Liability

Mandatory commercial general liability, all-risk property and tenant’s legal liability coverages with waivers of subrogation.

Assignment and Subletting

Landlord consent rights (not to be unreasonably withheld) and change-of-control triggers for corporate tenants.

Default and Remedies

Events of default, grace periods, termination, re-entry and remedies including distress and damages.

Personal Guarantee

Optional guarantee from principals of a small-business tenant supporting the corporate covenant.

Surrender and Restoration

Condition in which the premises must be returned, removal of fixtures and tenant improvements at expiry.

How to Create a Commercial Lease

Follow these steps to produce a clean, enforceable Canadian commercial lease.

1
Identify the Parties and Premises
Confirm the legal names (and corporate numbers) of landlord and tenant and describe the rentable area precisely.
2
Choose the Rent Model
Select gross, net, double-net or triple-net and define base rent, additional rent components and any percentage rent.
3
Set Term, Renewal and Use
Decide the term, any renewal options, fixturing period and the specific permitted use of the premises.
4
Allocate Repair and Insurance Obligations
Agree who is responsible for structural, HVAC and interior maintenance and set the required insurance coverages.
5
Execute and Register (If Required)
Sign the lease, obtain personal guarantees if needed, and consider registering a notice of lease on title for leases over three years.

Legal Considerations

Commercial leases in Canada are governed by provincial commercial tenancy statutes and the common law of contract, and they give landlords remedies that do not exist in the residential context.

This template is for informational purposes only and does not constitute legal advice. Consult a qualified lawyer in your province for advice specific to your situation.

Reviewed for Canadian law

Provincial Commercial Tenancy Legislation

In Ontario the Commercial Tenancies Act, R.S.O. 1990, c. L.7 governs commercial leases and expressly permits landlord remedies such as distress (seizure of goods for arrears of rent) under section 30 and forfeiture of the lease on breach. British Columbia applies the Commercial Tenancy Act, R.S.B.C. 1996, c. 57, with its own distraint and forfeiture rules. Commercial tenants do not enjoy the protections of the residential tenancies regime and should negotiate protective terms into the lease itself.

Distress, Forfeiture and Relief

On non-payment of rent a commercial landlord may levy distress on the tenant’s chattels under the Commercial Tenancies Act (ON) s. 30 or the Commercial Tenancy Act (BC) s. 3. A landlord that re-enters the premises may also claim forfeiture of the lease. Tenants can apply to the court for relief from forfeiture under section 20 of the Ontario Act or under the Law and Equity Act, R.S.B.C. 1996, c. 253 in British Columbia, preserving the lease on payment of arrears and costs.

Assignment, Subletting and Change of Control

Most commercial leases prohibit assignment or subletting without the landlord’s consent. In Ontario section 23 of the Commercial Tenancies Act implies that consent may not be unreasonably withheld unless the lease says otherwise. The lease should expressly deal with corporate change-of-control transactions so that a share sale is not treated as a deemed assignment by the landlord.

Personal Guarantees and Indemnities

Corporate tenants are commonly asked to provide a personal guarantee from their principals. Guarantees must be in writing to satisfy the Statute of Frauds, R.S.O. 1990, c. S.19 (or equivalent) and should specify whether the guarantor is liable as a guarantor or as an indemnifier, since courts construe these differently, especially on rent relief or bankruptcy of the corporate tenant.

Frequently Asked Questions

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