Buying a store, an office, an industrial unit or a rental building is a different exercise from buying a house. There are fewer consumer protections, more searches, and more that depends on what the agreement says. A commercial real estate lawyer in Ontario at Law Wise acts for buyers and sellers of commercial property from the Mississauga office, serving the entire GTA and Ontario.
Why a commercial purchase needs more planning
In a residential deal much of the process is standard. In a commercial deal the buyer is expected to investigate the property and to protect itself in the contract. Poor planning shows up later as unexpected costs, financing that falls short, or a problem with zoning, the building, the tenants or the soil that the searches would have found. The agreement of purchase and sale should give you enough time to investigate and a clear right to walk away if the results are not satisfactory.
Due diligence on a commercial property
Due diligence is the investigation a buyer carries out between signing and the date the deal becomes firm. For commercial property it usually covers:
- Title. Mortgages, liens, easements, rights of way, restrictive covenants, registered leases, and site plan, subdivision and development agreements with the municipality.
- Off-title searches. Zoning and permitted use, open building permits and work orders, fire department records, conservation authority limits, property taxes and utility arrears.
- Planning Act compliance. Whether the land can legally be transferred as described, which involves looking at neighbouring parcels.
- The seller. If the seller is a corporation, its status, its authority to sell and any bankruptcy or security registrations against it.
- Leases and contracts. Every existing lease, the rent actually being paid, deposits held, and service or employment contracts that come with the building.
- Environmental condition. Past uses of the site and any report from an environmental consultant.
- Financing. The lender’s conditions, which often include its own appraisal and environmental requirements.
We compare what the searches show with what the seller has promised in the agreement, and report to you before your condition expires, while you can still ask for a price change, a repair, an extension or your deposit back.
Income properties and existing tenants
When a building is sold, its leases generally continue and the buyer steps into the landlord’s place. The value of an income property is therefore in its leases. We read each lease for the rent, the term, renewal and termination rights, who pays for repairs and taxes, and any right the tenant has to buy the building or to be the only business of its kind on the site. Buyers commonly ask each tenant to confirm in writing that the lease is in good standing, and rents and deposits are adjusted on closing.
If you are the one renting space, see commercial lease agreements.
Taxes on a commercial purchase
- Ontario land transfer tax is 0.5% of the price up to $55,000, 1% from there to $250,000, 1.5% from there to $400,000 and 2% above $400,000. On a $1,500,000 commercial property that comes to $26,475. The extra 0.5% on amounts over $2,000,000 applies only to land with one or two single family residences.
- Toronto charges its own land transfer tax on property in the city, in addition to the Ontario tax.
- HST generally applies to the sale of commercial property, new or used. A buyer who is registered for HST usually reports the tax to the Canada Revenue Agency directly, not to the seller, and may be able to claim a credit for it. Confirm the treatment with your accountant before you sign.
Sources: Land Transfer Tax Act, RSO 1990, c L.6, s 2(1), as it read on 10 October 2026; Canada Revenue Agency, GST/HST Memorandum 19.4.1.
How to hold the property
Whether to buy in your own name, through a corporation or with partners affects tax, liability and financing, and it is far easier to settle before the agreement is signed than after. Changing the buyer late can have land transfer tax and lender consequences. Law Wise also incorporates companies and prepares shareholder and partnership agreements: see corporate and commercial law.
Selling a commercial property
For a seller the work is to deliver what the agreement promises and to be paid. We advise on the agreement, answer the buyer’s title questions, prepare the transfer, the statement of adjustments and any assignment of leases and service contracts, confirm how HST is to be handled, and deal with the discharge of your mortgage and any security registered against equipment. If you agree to lend part of the price back to the buyer, known as a vendor take-back mortgage, we register your security so that it is protected.
How Law Wise helps
- reviews or drafts the agreement of purchase and sale, including the due diligence and financing conditions
- carries out title, off-title and corporate searches and reports before your deadline
- reviews existing leases and prepares the lease assignments
- acts on the mortgage and works with your lender, accountant and environmental consultant
- closes the transaction and registers the transfer and security
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 real estate
How is buying commercial property different from buying a house?
The buyer carries more of the risk. There is more to search, the agreement is less standard, tenants and environmental condition come into it, HST usually applies, and lenders ask for more. The agreement should be reviewed before it is signed.
How long does a commercial closing take?
The agreement sets the timetable. It has to leave room for the due diligence period, the lender’s approval and any reports the lender needs, so commercial deals are usually given longer than residential ones.
Should I buy the property through a corporation?
It depends on your tax position, the liability you want to limit and what your lender will accept. Speak with your accountant and lawyer before you sign, because the buyer named in the agreement is the one expected to close.
Is HST payable on commercial property?
Generally yes, on both new and used commercial property. A buyer registered for HST usually reports the tax directly to the Canada Revenue Agency and may be entitled to a credit. The agreement should say clearly whether the price includes HST.
What happens to the tenants when a building is sold?
Their leases generally continue with the buyer as the new landlord. The buyer should read every lease during due diligence and have rents and deposits adjusted on closing.
Do I need an environmental report?
Many lenders require one for commercial property, and contamination can be costly for whoever owns the land. An environmental consultant can review the site’s history first and recommend testing if there are signs of a problem.
Buying or selling commercial property?
Call before you sign the offer, or send us the draft agreement. 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.