Commercial Lease Agreement Template Canada [Free Download]

Commercial Tenancies Act

Ontario’s Commercial Tenancies Act, R.S.O. 1990 governs commercial landlord-tenant relationships. Unlike the Residential Tenancies Act, it provides minimal tenant protection — no standard form lease, no rent control, no automatic renewal rights. The Act primarily addresses landlord remedies (distress, re-entry) and sets out procedures for lease enforcement. This means nearly everything depends on what you negotiate in the written lease.

Key Ontario Considerations

No prescribed form: Landlords draft the lease — heavily favouring their interests. Have a lawyer review before signing.

Distress rights: Landlords can seize tenant property for unpaid rent without a court order — a powerful remedy unique to commercial leases.

HST applies: Commercial rent in Ontario is subject to 13% HST (unlike residential rent, which is exempt).

Start with a letter of intent (LOI). Before negotiating the full lease, agree on key business terms — rent, term, tenant improvement allowance, exclusivity, and renewal options — in a non-binding LOI. This prevents wasting time and legal fees on a lease that falls apart over basic commercial terms.

Negotiate rent-free periods. Most landlords will offer 1–3 months of free rent (sometimes called “fixturing periods”) for new tenants to set up the space. In the current market (2025–2026), with rising vacancy rates, tenants have more leverage to request longer rent-free periods — push for it.

Cap your additional rent. In NNN leases, operating costs can escalate dramatically. Negotiate a cap on annual CAM increases (e.g., 5% per year) and the right to audit the landlord’s expense calculations. Ask for a detailed breakdown of current operating costs and projected increases before signing.

Request an exclusivity clause. Particularly important for retail tenants — an exclusivity clause prevents the landlord from leasing space in the same building or complex to a competing business. For example, a café tenant can negotiate that no other coffee shop may operate within the property.

Include a non-disturbance clause. This protects your tenancy if the landlord defaults on their mortgage and the property goes into foreclosure. Without a non-disturbance agreement from the landlord’s lender, you could lose your lease if the building is sold in a power of sale.

Get everything in writing before the lease. Renovation agreements (“work letters”) specifying who pays for improvements, what standard of finish is expected, and who owns the improvements should be documented and attached to the lease as a schedule — not left to verbal promises.

Signing the landlord’s lease without review. The landlord drafted the lease to protect their interests — not yours. Every standard-form lease heavily favours the landlord. Have a commercial lease lawyer review and negotiate the lease before you sign. The cost of legal review ($1,000–$3,000) is a fraction of the exposure from a poorly negotiated 5-year lease.

Not understanding “additional rent.” Your base rent might be $25/sq ft, but after CAM charges, property taxes, insurance, and management fees, your actual cost could be $40–$50/sq ft. Always ask for the total occupancy cost — base rent plus all additional rent — before budgeting.

Ignoring the demolition clause. Some leases contain a clause allowing the landlord to terminate the lease if they decide to demolish or substantially renovate the building — sometimes with as little as 6 months’ notice. Negotiate this out, or at minimum, require adequate compensation (moving costs, lease buyout) if triggered.

Signing personally instead of through a corporation. Always sign the lease through your incorporated business entity. If you sign as an individual, you are personally liable for the entire lease obligation. Incorporate first — see our articles of incorporation guide — then sign the lease in the corporation’s name.

No exit strategy. Business needs change. Without assignment/subletting rights, early termination options, or a break clause, you could be locked into paying rent on a space you no longer need for years. Negotiate flexibility upfront — it is nearly impossible to add later.

Letter of Intent — Non-binding agreement on key lease terms before full negotiation.

Non-Disclosure Agreement — Protects sensitive financials shared during lease negotiations.

General Security Agreement — May be required if security is pledged for lease obligations.

Partnership Agreement — When partners share responsibility for the lease.

Service Agreement — Contracts with maintenance, cleaning, or property management providers.

Privacy Policy — Required for any retail or customer-facing business operating from the leased premises.

Zoning verification: Confirm the property is zoned for your intended use. Municipal zoning bylaws dictate what activities are permitted — a space zoned for office use may not allow retail sales or food preparation. Check with the local planning department before signing.

Building condition: Inspect the HVAC, electrical, plumbing, roof condition, and elevator systems. In a NNN lease where you pay for maintenance, the building’s condition directly impacts your costs. Request maintenance records and capital expenditure history.

Operating cost history: Request 3 years of actual operating expense statements. Compare the landlord’s estimated CAM charges against historical actuals. Significant gaps may indicate costs are being understated to attract tenants.

Landlord financial health: A landlord in financial distress may defer maintenance, lose the building to foreclosure, or fail to return your security deposit. Check the building’s mortgage status and the landlord’s track record with other tenants.

Environmental assessment: For industrial or former industrial properties, review Phase I and Phase II environmental site assessments. As a tenant in a NNN lease, you may share exposure to environmental remediation costs — ensure the lease clearly allocates pre-existing contamination to the landlord.