A commercial lease can run for ten years or more and is often the largest commitment a small business makes. Unlike a residential tenancy, almost everything in it is open to negotiation, and the law fills few gaps in the tenant’s favour. Law Wise negotiates, drafts and reviews commercial lease agreements for landlords and tenants across the entire GTA and Ontario, from its office in Mississauga.
How a commercial lease agreement in Ontario is made
The landlord and tenant usually begin with an offer to lease or a letter of intent. It sets out the main business terms: the space, the rent, the term, renewal rights and whether the lease will be gross or net. An offer to lease often says that the tenant will sign the landlord’s standard form of lease. Those forms are drafted to protect the landlord, so the time to negotiate is before the offer is signed, not when the long lease arrives.
- Offer to leaseWe review or draft the offer and negotiate the business terms, because a signed offer is usually meant to bind both sides.
- Draft leaseWe read the landlord’s draft line by line, or prepare the lease if you are the landlord, and give you written comments on the points that matter.
- NegotiationWe work with the other side’s lawyer to settle wording both parties can accept.
- Signing and afterWe arrange signing, deal with any guarantee, and can register notice of the lease on title where that is appropriate.
Gross lease or net lease
In a gross lease the tenant pays one rent and the landlord pays the building’s operating costs out of it. In a net lease the tenant pays a base rent and, on top, a share of property taxes, maintenance and insurance, often shortened to TMI and described in the lease as additional rent. Most retail and industrial leases are net. The base rent is fixed. The additional rent is an estimate that is adjusted each year, so a tenant should know what is included in it, whether there is a cap, and what right there is to see the landlord’s figures.
Clauses a tenant should look at
A landlord’s form is written with the landlord’s risks in mind. These are the clauses that most often decide how the lease feels five years in.
- Use and exclusivity. What you may do in the space, and whether the landlord can lease to a competitor in the same property.
- Term and renewal. How long the lease runs, how and when you must give notice to renew, and how the renewal rent is set.
- Assignment and subletting. Whether you can transfer the lease if you sell the business, and on what conditions.
- Personal guarantee. Whether you are personally liable for a corporate tenant’s obligations, for how much and for how long.
- Repairs. Who pays to repair or replace the heating and cooling equipment, the roof and the structure.
- Relocation and demolition. Whether the landlord can move you or end the lease early to redevelop.
- Leasehold improvements. Who owns what you build and whether you must remove it at the end.
If you are a landlord
A landlord needs a lease that can be enforced and that suits the property. We take instructions on your plans for the building, draft a lease to match them, and negotiate with the tenant’s lawyer. The points that matter most to a landlord are usually the security for rent, including deposits and guarantees, control over who occupies the space, clear recovery of operating costs, and default clauses that follow the Commercial Tenancies Act.
What the Commercial Tenancies Act says
- Unpaid rent. Unless the lease says otherwise, a landlord may re-enter and take back the premises once rent has been unpaid for 15 days, without a formal demand.
- Other breaches. Before ending the lease for another kind of breach, the landlord must give written notice describing the breach and allow a reasonable time to fix it.
- Relief from forfeiture. A tenant facing termination can ask the Superior Court of Justice for relief, and the court may grant it on terms.
- Consent to assign or sublet. Where a lease requires the landlord’s consent, consent cannot be unreasonably withheld unless the lease expressly says otherwise.
Sources: Commercial Tenancies Act, RSO 1990, c L.7, ss 18(1), 19(2), 20(1) and 23(1), as they read on 10 October 2026. The lease itself usually changes or adds to these rules.
Residential lease agreements
Residential tenancies are governed by a different statute, the Residential Tenancies Act, 2006, which protects tenants in ways a lease cannot take away. Ontario’s standard lease form is required for most residential tenancy agreements signed on or after 30 April 2018, including houses, apartments, basement units and rented condominiums. It does not apply to care homes, sites in mobile home parks and land lease communities, most social and supportive housing, or co-operative housing.
If a landlord does not use the standard lease, the tenant may ask for it in writing once. If it is not provided within 21 days, the tenant may withhold up to one month’s rent, and in some cases may end a fixed-term or yearly tenancy early on 60 days’ notice. Law Wise prepares and reviews residential leases and advises landlords and tenants on how the Act applies.
How Law Wise helps
- reviews offers to lease and landlord’s forms for tenants, with written comments
- drafts commercial leases, renewals, assignments and subleases for landlords
- advises on personal guarantees before they are signed
- advises when rent is in arrears or a lease is being ended
- acts on the purchase or sale of a business where the lease has to be transferred
Your file is handled by a Law Wise lawyer licensed by the Law Society of Ontario. Service is available in English, Urdu, Punjabi and Hindi, and, if you retain the firm, fees are explained and confirmed in writing before work starts.
Common questions about commercial leases
Is an offer to lease binding before the full lease is signed?
Usually, yes. A signed offer to lease that contains the main terms is generally intended to bind both sides, and it often commits the tenant to sign the landlord’s form. Have it reviewed before you sign it.
What is the difference between a gross lease and a net lease?
Under a gross lease the rent covers the landlord’s operating costs. Under a net lease the tenant pays base rent plus a share of taxes, maintenance and insurance as additional rent, and that share can change from year to year.
My landlord has changed the locks over unpaid rent. Is that allowed?
It can be. Unless the lease says otherwise, the Commercial Tenancies Act allows a landlord to re-enter once rent has been unpaid for 15 days. A tenant can ask the court for relief, but time matters, so get advice immediately.
Can I transfer my lease if I sell my business?
Only as the lease allows. Most leases require the landlord’s consent. Unless the lease says otherwise, consent cannot be unreasonably withheld, but many leases add conditions, fees or a right for the landlord to take the space back.
Am I personally liable if my company is the tenant?
Not unless you signed the lease in your own name or gave a personal guarantee or indemnity. If you did, read how long it lasts. Some guarantees continue through renewals and after the lease is assigned.
Does the Residential Tenancies Act apply to a commercial lease?
No. Commercial tenancies fall under the Commercial Tenancies Act and the terms of the lease. There is no rent control and the Landlord and Tenant Board does not hear commercial disputes.
About to sign a lease?
Send us the offer to lease or the draft lease before you sign. The first consultation is free for 15 minutes, by appointment.
This page is general legal information for Ontario, current as of 10 October 2026. It is not legal advice and does not create a lawyer-client relationship. For advice about your situation, please speak with a lawyer.