What You Need to Know About Commercial Lease Agreements in Toronto

For businesses looking to lease commercial space in Toronto, a commercial lease agreement is one of the most critical legal documents to review before committing to a property. Whether you’re opening a retail store, office, restaurant, or warehouse, the terms of your lease can significantly impact your financial stability and operational flexibility.

At Mayfair Law Group, our Toronto real estate lawyers help business owners navigate the complexities of commercial leasing to ensure their interests are protected. Here’s what you need to know before signing a commercial lease agreement in Toronto.

Why Commercial Lease Agreements Are Different from Residential Leases

Unlike residential leases, which offer tenant-friendly protections under Ontario’s Residential Tenancies Act, commercial leases are largely negotiable and depend on the contract agreed upon by both parties. This means that business owners must carefully review and negotiate lease terms before signing, as they will be legally bound to the agreement.

A well-drafted commercial lease defines the rights and responsibilities of both the landlord and tenant, covering critical areas such as rent, maintenance, renewal terms, and dispute resolution.

Key Elements of a Commercial Lease Agreement

1. Rent Structure and Additional Costs

   The base rent is only one part of your total leasing expenses. Many commercial leases in Toronto include additional costs, such as:

   • TMI (Taxes, Maintenance, and Insurance): Tenants are often responsible for covering property taxes, maintenance fees, and insurance costs in addition to base rent.
   • Percentage Rent: Some retail leases include a percentage-based rent, where the landlord takes a share of the business’s revenue.
   • Utility Payments: Confirm whether you’ll be responsible for electricity, heating, and water costs separately.

   💡 Tip: Carefully review how rent and extra charges are calculated to avoid unexpected expenses. A Toronto real estate lawyer can help ensure transparency in the agreement.

2. Lease Term and Renewal Options

   Most commercial leases have multi-year terms, typically ranging from 3 to 10 years. Before signing, consider:

   • Is the lease term flexible enough to accommodate business growth or relocation?
   • Does the lease include a renewal clause with fair rent adjustments?
   • Are there penalties for early termination?

   If your business is new, negotiating a shorter lease term with renewal options can provide greater flexibility while minimizing long-term financial risks.

3. Permitted Use and Exclusive Rights

   Before leasing a commercial space, ensure that the property is zoned appropriately for your business type. Some leases may also include exclusive use clauses, which prevent the landlord from renting other spaces in the same building to direct competitors.

   • Example: If you’re opening a coffee shop in a plaza, an exclusive use clause could prevent another coffee shop from moving in next door

   💡 Tip: A Toronto real estate lawyer can help you secure favorable use and exclusivity terms.

4. Responsibilities for Repairs and Maintenance

   Commercial lease agreements outline who is responsible for:

   • Repairs to the building (roof, HVAC systems, plumbing, electrical, etc.)
   • Ongoing maintenance and cleaning of shared spaces
   • Upgrades or renovations needed to operate the business

   Some landlords pass these expenses on to tenants, so it's important to clarify who is responsible for what before signing the lease.

5. Lease Termination and Exit Strategies

   A lease should include clear terms regarding:

   • Early termination clauses and whether penalties apply
   • Assignment or subleasing rights (allowing you to transfer your lease to another tenant if needed)
   • Default and eviction procedures if rent is unpaid

   💡 Tip: Without an exit strategy, breaking a commercial lease early can be costly. A Toronto real estate lawyer can negotiate fair termination terms.

Why You Need a Toronto Real Estate Lawyer for Your Commercial Lease

Signing a commercial lease agreement without legal guidance can lead to hidden costs, restrictive clauses, and long-term financial risks. At Mayfair Law Group, our experienced Toronto real estate lawyers help business owners:

• Review and negotiate lease terms to ensure fair conditions
• Identify hidden fees and unfair clauses that could impact cash flow
• Ensure compliance with zoning and business regulations
• Protect their interests in case of disputes or early lease termination

Before committing to a commercial lease, consult a Toronto real estate lawyer to ensure your business is set up for success.

Contact Mayfair Law Group Today

Whether you’re leasing your first commercial space or renegotiating an existing lease, the team at Mayfair Law Group is here to help.

We assist businesses across the Greater Toronto Area — including Toronto, North York, Etobicoke, Scarborough, Mississauga, Brampton, Vaughan, Markham, and Richmond Hill. Ensure your commercial lease agreement aligns with your business goals. Let Mayfair Law Group protect your investment and guide you through the leasing process with confidence.

CONTACT US or call (416) 546-1581