Do a commercial lease review before you sign so you can protect your business and avoid costly surprises.
Signing a commercial lease is one of the biggest commitments many Ontario businesses make. It affects your monthly costs, your ability to grow, and how much control you have over your space. The tough part is that a lease can look “standard” and still include terms that create expensive surprises later.
This quick look at a commercial lease review is meant to help business owners and managers understand what to look for before signing. A good lease should match how your business actually operates.
This is general information, not legal advice.
Why a Lease Review Matters
Unlike many service contracts, leases are hard to unwind. If your plans change, you may still be on the hook for rent, operating costs, and repair obligations. A proper review helps you spot risk early, negotiate practical fixes, and avoid signing into a problem you cannot afford.
The Most Important Clauses to Review
Here are the areas that deserve extra attention.
1. Total cost not just the base rent
Ask what you will pay each month in real terms. Many tenants focus on base rent and miss:
- Additional rent such as operating costs and common area maintenance
- Property taxes and insurance allocations
- Utilities and metering rules
- Annual escalations and how increases are calculated
2. Repairs maintenance and who pays for what
This is a common surprise. Some leases shift major repair costs to the tenant, including items you might assume are the landlord’s responsibility. Clarify who pays for:
- HVAC and major building systems
- Roof and structural elements
- Plumbing and electrical beyond your unit
- Scheduled maintenance and emergency repairs
3. Use clause and restrictions
Make sure your lease allows what you actually do and what you may do in the future. Watch for restrictions on:
- Types of services or products
- Hours of operation
- Noise, smells, equipment, or storage
- Changes to your business model
4. Term renewal options and exit flexibility
A longer term can provide stability, but it can also trap you if the location stops working.
Review:
- Lease length and renewal options
- Notice deadlines for renewals
- Early termination rights if any
- Penalties for breaking the lease
5. Assignment and subletting
If you need to relocate, downsize, or sell the business, your lease can either help or block you. Check:
- Whether assignment or subletting is allowed
- What landlord consent requires
- Fees or conditions tied to consent
- Whether the landlord can terminate instead of approving
6. Personal guarantees
Many small business leases include a personal guarantee. That can put your personal assets at risk if the business cannot meet the lease obligations. If a guarantee is required, it is worth discussing ways to limit it, such as time limits or caps where appropriate.
7. Build-outs renovations and what happens at the end
If you are improving the space, confirm:
- Whether you need landlord approval and the process
- Who owns the improvements
- Whether you must restore the unit at the end of the lease
- Any rules about signage and exterior changes
8. Default clauses and remedies
Default provisions explain what happens if rent is late or a term is breached. Look for:
- Short cure periods
- Landlord rights to lock you out
- Interest and legal cost clauses
- Broad definitions of default
A Practical Way to Approach Negotiation
Focus on the terms that could hurt you most. For many businesses, that is repair obligations, total monthly costs, assignment rights, and guarantees. Even small edits can make a big difference over a multi-year lease.
FAQs
What should I look for in a commercial lease review in Ontario?
Focus on the true monthly cost (base rent plus additional rent), repair and maintenance responsibilities, renewal/termination terms, assignment/sublet rights, and any personal guarantee.
Can a landlord in Ontario require a personal guarantee on a commercial lease?
Yes. Many small businesses are asked for a personal guarantee. It’s important to understand the risk and, where possible, negotiate limits like a cap or time limit.
Do I need a lawyer to review a commercial lease in Ontario?
It’s not legally required, but a lawyer can flag high-risk clauses, explain your obligations in plain language, and help negotiate terms before you sign.
Need a Lease Review?
If you are signing a lease or renewing one and want a clear, practical commercial lease review business owners can rely on, we can help you understand the risks and negotiate terms that fit your goals. Contact Boardwalk Law to book a consultation – I’m happy to help. Contact Pavel Malysheuski at [email protected]
