Doing business in Canada such as the leasing of commercial spaces or properties comes with certain obligations as required by law. This is not only for the convenience of both the landlord and the tenant, but also to prevent any brushes against the law.
In this article, we’ll go over the duties of commercial lease landlords and what happens when they fail to meet these obligations. Lawyers can use this as a client education piece for both landlords and tenants when explaining tenancy laws.
What Canadian laws apply to commercial leases?
Commercial leasing in Canada is covered under:
- common law principles on leasing commercial properties
- common law on contracts
- provincial and territorial statutes regulating commercial leases
Commercial leasing is contractual in nature, so the lease agreement is the basis for the tenant-landlord relationship. This is also complemented by Canada’s common law principles on contracts.
In addition, parties must also take into consideration the provincial and territorial laws on commercial leasing. These laws will also apply, for instance, when conflicts arise between the landlord and the tenant (e.g. late rental payments).
Obligations of commercial lease landlords also follow these laws. Parties are free to agree on the specific obligations of the landlord and the tenant.
Here’s a video about the process of negotiating a commercial lease contract:
To know more about commercial leasing in relation to BC’s Commercial Tenancy Act, consult any of the best property leasing lawyers in British Columbia as ranked by Lexpert.
What are the obligations of a landlord in Canada?
The obligations of a commercial lease landlord can be summarized in two points:
- honor the lease agreement
- Follow the laws on commercial leasing
The obligations of a commercial lease landlord are dictated by the lease agreement with their tenant. Certain obligations are also outlined in the provincial and territorial laws on commercial leasing.
Here are some obligations of commercial lease landlords:
Ensure that the property is in good condition
The most important obligation of a commercial lease landlord is to “deliver” the leased property to the tenant. This involves freeing the property for the tenant’s use and giving them access to the property.
The property must be suitable for the intended use of the tenant as agreed in their lease contract.
Other clauses in the lease contract related to the delivery of the property must also be followed by the landlord. It may include, for example, the delivery of the property’s necessary accessories and other inclusions.
Ensure tenant’s peaceful enjoyment of the property
Making sure that the property is in good condition applies before the lease agreement is signed. However, the landlord’s obligation to ensure that the tenant can peacefully enjoy the property applies while the agreement is in effect.
The landlord must ensure that the tenant can use the property without any outside interference. It also includes ensuring the property’s minimum security.
While this obligation of a commercial lease landlord can be based on the lease agreement, it is also found in other provincial laws, such as in Québec’s Civil Code.
Address any concerns on repairs and maintenance
Repairs and maintenance can be the obligations of both landlord and tenant. This shared responsibility can be set out in the lease agreement.
The lease agreement can define who is responsible for what type of repair. For instance, major repairs can be the landlord’s obligation, while minor repairs and other maintenance work is the responsibility of the tenant.
Alternatively, it can be the sole obligation of either the landlord or the tenant. In this case, whoever is obliged must ensure that repairs are done whenever necessary.
Preserve the leased premises
Another obligation of a commercial lease landlord is to preserve the leased premises.
The landlord must not make drastic changes to the leased building or space without the consent of the tenant.
This is also related to the landlord’s obligation to ensure the tenant’s peaceful enjoyment of the property, since it may disrupt the operations of the tenant’s business.
Parties may agree on any improvements and maintenance work that the landlord can do during the contract.
Renew the lease when required
As with any other obligation of the commercial lease landlord, they are bound to comply with the lease agreement, as in the case of its renewal.
Since the conditions for the renewal are found in the lease contract itself, these must be clear as early as the negotiation stage.
If the lease agreement states that it will be automatically renewed, then the landlord is bound by this. Otherwise, the landlord can either evict the tenant or re-negotiate the lease agreement if the landlord wishes for same tenant occupy the property.
What happens when a landlord fails in their obligations?
There are some cases when these obligations are passed by the landlord to the tenant, but only when stated in the lease agreement.
If these obligations – either provided by the lease agreement or by law – remain with the landlord and are violated, there are legal remedies that the tenant can take.
Initially, the lease agreement may have clauses that state how a specific issue can be addressed by both parties. It may include negotiating with the other party. In other cases, tenants may sue the landlord for breach of contract (and vice versa). When caught up in such a situation, the help of a property leasing lawyer must be sought.
Meeting obligations is key to a good landlord-tenant relationship
While this article has outlined key landlord obligations, knowledge empowers both parties. Consulting a lawyer to clarify the specific terms of any lease agreement is crucial in a successful landlord-tenant relationship. An informed, responsible landlord is integral to a positive leasing experience.
Want to know more about the obligations of commercial lease landlords? Consult any of the Lexpert-Ranked best property leasing lawyers in Canada.
Related articles: Understanding commercial landlord obligations: a property owner’s guide