Ending a Commercial Lease

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A commercial lease is a contract. It ends on the date agreed upon by the tenant and the landlord. In some cases, the landlord or the tenant can end the lease early. In other cases, the lease can continue after the agreed date.

The tenant wants to leave before the end of the lease

The tenant may assign their lease, sublet their premises, or agree with the landlord to end the lease early.

  • Sublet or assign the lease. The lease may provide a specific procedure for doing so. Generally, the tenant must notify the landlord that they want to assign or sublet the premises. The notice must contain information such as the name and address of the person to whom the tenant wants to sublet or assign their lease.

Be careful! The lease may prohibit the tenant from subletting or assigning their lease. It can also allow the landlord to refuse the assignment or sub-lease for any reason, at their option.

  • Agree with the landlord to end the lease. The tenant can discuss this with the landlord. The landlord can agree or refuse to end the lease before the agreed date.

A tenant who cannot sublet or assign their lease, or who is unable to agree with the landlord, must continue to honour their lease. They must pay the rent and services until the end of the lease.

The landlord can sue a tenant who leaves the premises before the end of the lease and stops paying the  rent. The landlord can ask for damages such as unpaid rent until they find a new tenant. They could also ask to be repaid for the cost of restoring the premises.

The landlord can force a tenant to leave before the end of the lease

In some situations, the landlord may decide to end the lease before the agreed date.

The tenant does not fulfil their obligations

The landlord can ask the court to end the lease if the tenant does not fulfil their obligations and that causes the landlord serious harm. For example, if the tenant is late on rent or does not maintain their premises properly.

The lease may also provide for situations in which the landlord can automatically end the lease if the tenant does not fulfil their obligations.

The property is sold

If the landlord sells the property in which the premises are located, the new landlord generally has the right to end the lease.

He does not need to have any specific reason. The new landlord must only respect certain time limits. They must end the lease within 12 months of the property being purchased. They must also send the tenant a notice 6 months before the end of the lease.

However, the new landlord cannot end the lease early if:

  • 12 months or less remain on the lease when the property is purchased.
  • The lease ends in more than 12 months and it is registered at the land registry. The tenant can publish (“register”) their lease at the land registry to protect their rights.

Be careful! If the lease is for an indefinite term, meaning that it has no end date, publication at the registry office does not prevent a buyer from being able to end it.

  • The new landlord agreed with the former landlord (the vendor) not to end the lease. This type of agreement is generally found in the deed of sale.
  • They are outside the time limit for ending the lease. Calculating time limits can be complicated. It is better to consult a lawyer or notary to find out whether the new landlord followed the procedure.

The tenant continued to occupy the premises at the end of the lease

The landlord can force a tenant to leave the premises at the end of the lease if the tenant continues to occupy them. The lease can also provide that the tenant must pay a significant penalty for every day they occupy the premises after the lease has ended.

In certain cases, the lease can be renewed rather than ending on the agreed date. Here are two cases.

The lease includes an “option to renew” clause

This clause allows the tenant to easily renew their lease when it ends. This avoids having to renegotiate all or part of the lease. This clause may provide for a rent increase.

The lease has ended but the tenant and the landlord have not discussed the lease

The lease can say what happens in this type of situation. If your lease does not say anything, the law provides that the lease is automatically renewed if:

  • 10 days have gone by since the end of the lease, and
  • the landlord has not asked the tenant to leave the premises.

If the initial lease was for one year or more, it is renewed for one year. If your initial lease was for less than one year, it is renewed for the same term.

To learn how artists’ studios fit into the rules on commercial leases, see the videos and guide on the website of the Conseil des arts de Montréal (in French only). These resources were developed by the Conseil des arts de Montréal, the City of Montreal and Éducaloi.