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The Lay of the Land DEVELOPMENTS IN CANADIAN REAL PROPERTY LAW

Tag Archives: lease

Be Careful What You Sign — It May Come Back to Haunt You: Estoppel Certificates and their Effect

Posted in Policy

Tenants are routinely requested by landlords to execute estoppel certificates in favour of purchasers or lenders as to the status of their leases. Most tenants ensure there are no ongoing performance defaults (such as a failure to repair) or monies owing by the landlord (such as for year-end adjustments).  How many tenants review their lease carefully before signing?… Continue Reading

Does a Lease Created From an Option to Lease Enjoy the Same Priority as the Option?

Posted in Land Use

In large infrastructure projects where multiple parcels of land are required to build the project, project developers will often enter into options to lease with land owners rather than entering into leases in order to enjoy flexibility and to permit time to engage in suitability studies. The developers are frequently advised to register the option to lease on title so as to give notice of its right to the land.  However, the period between the registration of the option and the ultimate execution of the lease (if a developer decides to exercise the option) could last years, and it is … Continue Reading

Operating Cost Statements – How Much Information is Enough?

Posted in Commercial, Litigation

Operating Costs – they are discussed endlessly during the lease negotiations and then often become the most contentious ongoing issue between landlord and tenant.

The almost universal practice is that at the beginning of each year landlord estimates operating costs and tenant pays in instalments based on that estimate.  Shortly after the end of the year the landlord delivers a statement of operating costs for the past year which may be certified or audited depending on the provisions of the lease. … Continue Reading

Landlord ignored and on the line: Clients inclined to buy online

Posted in Commercial, Policy, Technology

Building owners that lease their property using a turnover rent (or “percentage rent”) structure to retailers are facing an important challenge relative to capturing revenue from online sales.

Turnover rent lease arrangements entail a base rent payment to which is added a percentage of a tenant’s sales, or the higher amount between a base rent and a sales percentage. This structure allows landlords and tenants to share in a business’ risks and rewards. In Canada, there is no legislation or formal guidelines regarding the calculation or inclusion of online sales with regards to the computation of a turnover rent structure.… Continue Reading

Dirty Estoppel Martinis

Posted in Commercial

A dirty estoppel is much like a Dirty Martini, except it packs a much bigger hangover if not properly digested.

On almost all major commercial real estate transactions today, a buyer will get few if any representations on the leases other than a statement that all of them have been delivered as well as a rent roll.

Instead the buyer will seek comfort on the estoppels to be delivered by the tenants (the figurative horse’s mouth) who in theory are making representations directly to the buyer and their lender and implicitly releasing vendor from past claims (enhanced by having the … Continue Reading

Can you put lipstick on a pig and call it rent?

Posted in Commercial, Litigation

Until recently, there has been some confusion over the limitation period in respect of rent. This is largely due to the fact that there are two references to the term “rent” in the Real Property Limitations Act (with one section referring to a ten-year limitation period[1] and the other section referring to a six year limitation period[2]), which governs claims for rent. This differs from the Limitations Act which governs damages claims (and has a limitation period of two years).… Continue Reading

Commercial Availability Rates in Montreal: Figures have never been this high in the past 10 years

Posted in Commercial, Municipal

On May 28, 2015, Newmark Knight Frank Devencore published its Real Estate Market Study for Spring/Summer 2015 and essentially noted that vacancy rates in downtown Montreal’s Class “A” and “B” office buildings continued to increase over the second half of 2014, establishing themselves at 8,6%, up from 8% at the beginning of 2014. Overall, Newmark Knight Frank Devencore has indicated that overall availability rates, which take into consideration the office space that may currently be occupied but is available for lease or sublet, have increased to 16%. … Continue Reading

Charlie and the Foosball Table: A Lesson in Good Faith and ROFR

Posted in Litigation, Policy, Residential

On a recent hot summer-like day, my neighbours’ pre-school boy, Charlie (pseudonym), sauntered over the front lawn in his pajamas to peek into my garage. Charlie had his gaze fixed on the foosball table, once a crown jewel of my college days and now just collecting dust in a corner. Charlie asked in the sweetest manner “can I play with that”? Normally, this would not be an issue. However, in an attempt to preserve all of Charlie’s limbs until at least adolescence, I replied that he could play only after I had vacated the menacing and precariously-balanced machines surrounding the … Continue Reading

To market, to market (rent), to renew a commercial lease

Posted in Commercial, Litigation

How can landlord and tenant successfully negotiate renewals of their lease at market rent? What happens when the landlord and tenant disagree about the appropriate rental rate for the renewal term? Many commercial leases provide that, on renewal, rent will be charged at “market rent”, being the rental rate prevailing in the local market at the time for similar properties in similar locations. But a market rent renewal provision can leave many questions unanswered and as “market rent” can mean different things to different people, this can lead to disagreements between landlord and tenant.… Continue Reading

Would You Like a Side of Fries With That Banking Services? Permitted Use Provision in Mall Leases

Posted in Commercial, Policy

One critical factor in the success of a multi-tenant retail centre is the ability to entice tenants occupying different niches in the consumer product market to foster an ecosystem of goods and services attractive to the target consumers.  The permitted use provision is a critical tool available to the landlords of multi-tenant retail centres in planning such an ecosystem and reserving certain uses for certain tenants.  A recent Ontario Court of Appeal decision reminds us the importance of including explicit exclusions in the permitted use provision of leases if the landlord intends for such uses to be excluded or reserved … Continue Reading

Municipal Taxes – Vacant Unit Rebate Applications (Ontario)

Posted in Commercial

What is the test to meet in Ontario when only a portion of a commercial building is vacant?  Does the space have to be separated by walls?  Does it have to be empty?  Not necessarily on both counts.  It all depends on the facts and, a word of advice, take photos to document the vacant state.

Vacant unit rebate applications for the 2013 tax year are due February 28, 2014.  The vacant unit rebate program is found under Section 364 of the Municipal Act, 2001, S.O. 2001, c.25 and Section 331 of the City of Toronto Act, … Continue Reading

Distressing Decision for Landlords

Posted in Commercial, Litigation

Landlords that exercise the remedy of distress rarely recover sufficient funds to satisfy the arrears of rent owing by the tenant.  A recent decision of the BC Supreme Court held that, in such a case, a landlord cannot immediately terminate the lease without first giving the tenant any required written notice of default and allowing the applicable cure period to expire.

In Delane Industry Co. Ltd. v. PCI Properties Corp., 2013 BCSC 1397, the tenant fell into arrears and, after giving a written demand letter specifying the amount owing and providing a five day cure period as required by … Continue Reading

Tax Recharge Provisions – The Devilish Details

Posted in Commercial

Landlords and tenants beware! If you are a landlord and you do not pay enough attention to the tax recharge provisions in your leases, you can end up out of pocket tens or even hundreds of thousands of dollars on the annual tax recharge balance sheet. As we all know, if you do not have a contractual ability to collect, you still have to pay.

Yes, sadly, for all involved, property taxes will always be a part of our reality. Similarly, if the devilish little details are not adequately addressed, a tenant can be surprised by receiving a bill for … Continue Reading

Managing Management Fees

Posted in Commercial

Landlords hold their management fees dear, and need to ensure they are fully recoverable.  Offers to lease routinely provide that the tenant will pay a management fee equal to a fixed percentage (say 5%) of the “Basic Rent” payable by the tenant.  Despite this clear contractual arrangement, landlords occasionally (and inadvertently) shortchange themselves when preparing the final form of lease.

Consider an offer to lease for a multi-tenant building.  The offer says that the lease will be a “net” lease and that the tenant will pay its “Proportionate Share” of “Operating Costs”.  The offer also says that the tenant will … Continue Reading

Commercial Landlord: Top 10 Tips to Avoid Lawsuits

Posted in Commercial, Litigation

No landlord wants to be sued. That said, lawsuits happen. Having acted for both commercial landlords and tenants, I have observed that several themes prevail when relationships go sour. The areas of disagreement can arise at the outset (e.g., how can you screen prospective tenants) and continue to the end of the relationship (e.g., what can you really do with the security deposit).

A general guideline for landlords as is follows: Just because the lease is not titled a “contract”, it is one. The lease is the document that governs the relationship between the parties, providing significant economic value to … Continue Reading