Area of Law: Landlord and Tenant
Answer # 451
Breaching a commercial leaseRegion: Ontario Answer # 451
Under the law, a lease may be considered breached if a landlord or tenant fails to live up to one or more of the lease obligations, or conversely, does something that is strictly prohibited in the lease or that is illegal.
Non-payment of rent: Failing to pay the rent is the most common material breach committed by tenants. In such cases, commercial landlords have the option to re-enter the premises and change the locks, sell the tenant’s property, sue the tenant for any rent that remains outstanding, and terminate the lease.
Moving out before lease expires: A tenant is commonly considered to have breached the lease if he or she moved out before the lease expired. Generally, if a commercial tenant wants to vacate the premises earlier than the lease allows, the tenant will have to get written agreement from the landlord or the tenant may be responsible to pay rent for the entire duration of the lease. Under the law, a landlord is required to seek a new tenant, but if the landlord cannot find one, or loses any money because the old tenant breached the lease, the landlord may be able to sue the tenant. If a tenant wants to vacate the premises early, a lawyer should be consulted about the possible consequences and options.
Failing to fulfill other obligations of lease: In addition to paying rent, tenants are usually responsible to fulfill obligations, such as maintaining insurance for their premises and its contents, and using the premises for only the purpose set out in the lease. If the tenant fails to do the things that they are responsible for under the lease, it is considered a breach. Whether the landlord can terminate the lease, sue the tenant, or take other legal action based on the breach will depend on the seriousness of the breach and how important the obligation is.
Does something prohibited by lease or the law: A tenant can also be considered in breach of a lease if they commit an act that is expressly prohibited by the lease, or if it is illegal. If the breach is considered a material breach, the landlord will be able to take legal action to remedy the problem or to terminate the lease. If the breach is considered to be illegal, the police may close down the operation and charge the tenants criminally.
Many commercial leases do not require the landlord to do much other than allow the tenant to use the premises. However, if the landlord does not meet certain obligations that are in the lease, such as providing utilities or maintenance services, he or she may have violated the lease.
Even if a landlord violates the lease terms in some way or interferes with the tenant’s business operations, the tenant normally does not have the right to stop paying rent. Instead, the tenant may apply to court to have a judge order the landlord to fulfill the obligations or sue for damages suffered.
For additional information on commercial tenancies, visit the Ministry of Municipal Affairs and Housing.
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If you are a commercial landlord or tenant who wants to break a lease or start legal action, you should consult a lawyer.
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