A commercial lease dispute in Ontario occurs when a landlord and business tenant disagree about their rights or obligations under a lease. Common issues include unpaid rent, unexpected operating costs, repairs, property use, lease renewals, and termination.
Unlike residential tenancies, commercial leases are largely governed by the agreement between the parties and Ontario’s Commercial Tenancies Act. This makes the specific wording of the lease especially important.
A dispute can affect more than the monthly rent. For a business, losing access to its premises may interrupt operations, affect customers, and put equipment or inventory at risk. For landlords, unresolved defaults can create financial losses and uncertainty about the property.
The best first step is to review the lease, identify the specific disagreement, preserve relevant records, and understand the available options before taking action.
What Are Commercial Lease Disputes in Ontario?
Commercial lease disputes are disagreements involving property rented for business purposes, such as retail stores, offices, restaurants, warehouses, or industrial facilities. Ontario’s Commercial Tenancies Act establishes certain rights and remedies for commercial landlords and tenants. However, many day-to-day obligations are determined by the lease itself.
For example, a commercial lease may specify:
- The amount of rent and when it can increase
- Who pays property taxes, insurance, and operating expenses
- Responsibility for repairs and maintenance
- Permitted uses of the property
- Requirements for alterations or improvements
- Renewal, assignment, and termination rights
- What happens if either party breaches the agreement
There is no single standard commercial lease that applies to every business. Two tenants occupying similar properties may have very different rights because they negotiated different terms.
Are Commercial and Residential Tenancy Disputes Handled Differently?
Yes. Ontario’s residential tenancy rules generally do not apply to commercial properties. For example, the residential rent increase guideline does not govern commercial rent. Commercial landlords and tenants also do not ordinarily resolve their disputes through the Landlord and Tenant Board.
Instead, commercial disputes are generally addressed through negotiation, legal proceedings, or other dispute resolution methods, depending on the lease and the issue involved. This distinction matters because using residential tenancy rules to assess a commercial lease can lead to incorrect assumptions about rent increases, eviction, and notice requirements.
What Are the Most Common Causes of Commercial Lease Disputes?
Most commercial property lease disputes arise because one party believes the other has failed to meet an obligation or has interpreted the agreement incorrectly.
| Common dispute | What is usually being questioned |
| Unpaid rent | Whether rent is overdue, how much is owing, and what remedies are available |
| Additional rent and operating expenses | Whether taxes, maintenance, insurance, or other charges are permitted under the lease |
| Repairs and maintenance | Who is responsible for repairs, their cost, and the impact on business operations |
| Property use and alterations | Whether the tenant can use or modify the premises in a particular way |
| Renewal or early termination | Whether a lease can be extended, ended, or transferred |
| Lease defaults and lockouts | Whether a breach occurred and whether enforcement steps are legally available |
Understanding the type of dispute helps determine what documents to review and whether an early negotiated resolution is possible.
1. Unpaid Rent and Additional Charges
Rent disputes are among the most common sources of conflict between commercial landlords and tenants. Sometimes the issue is straightforward where a tenant has missed a payment. Other times, the parties disagree about what is actually owed.
For example, some commercial leases include additional rent beyond the base monthly amount. Depending on the agreement, this may cover property taxes, building insurance, maintenance, utilities, or shared operating costs. These expenses are sometimes described as TMI (taxes, maintenance, and insurance) or common area maintenance charges.
Disagreements can arise when:
- The tenant receives an unexpected annual expense adjustment.
- The landlord includes a cost the tenant believes is excluded.
- The parties calculate the tenant’s share of operating expenses differently.
- The tenant questions whether a repair or capital expense can be passed through.
- Payments, credits, or deposits have not been accounted for correctly.
Consider a tenant who receives a substantial additional rent adjustment at year end. Before assuming the charge is incorrect, the tenant should review the lease’s expense definitions, allocation formula, supporting statements, and any applicable audit provisions.
Similarly, a landlord should be able to explain how the disputed amount was calculated and why it is payable under the agreement. The amount on an invoice is not necessarily the end of the analysis. The lease determines which charges are recoverable and how they should be calculated.
2. Repairs, Maintenance, and Property Conditions
Disputes frequently arise when a property develops problems that affect its use. Examples include roof leaks, heating or cooling failures, plumbing problems, damaged common areas, or access restrictions.
Unlike residential tenancy legislation, Ontario’s Commercial Tenancies Act does not establish a general set of maintenance responsibilities for every commercial property. Instead, the lease usually identifies which party is responsible for particular repairs.
For example, a lease may place day-to-day interior maintenance on the tenant while assigning structural repairs to the landlord. Another agreement may allocate these responsibilities differently. The important questions are:
- What does the lease require each party to maintain?
- Has the issue been properly reported?
- Was the responsible party given the notice required by the agreement?
- Has the problem materially affected the use of the premises?
- What remedies are available under the lease and applicable law?
A tenant experiencing serious repair issues should not assume it can simply stop paying rent. Unilaterally withholding payment may create a separate default, particularly where the lease restricts deductions or set-offs.
Likewise, a landlord should not dismiss a repair complaint without first reviewing its contractual obligations. Early documentation, including photographs, service reports, correspondence, and repair estimates, can help establish what happened and how the issue affected the business.
3. Disagreements About How the Property Can Be Used
Commercial leases often contain a permitted-use clause describing the activities allowed on the premises.
For example, a unit leased for retail sales may have restrictions on operating a restaurant, manufacturing activity, outdoor storage, or other uses. Disputes can also involve renovations, signage, parking, shared areas, or alterations made without the required approval.
These matters become particularly important when a tenant’s business changes. A company may want to introduce a new product line, expand its operations, or renovate the space. Whether those changes are allowed depends on the lease and any applicable legal or municipal requirements.
Before making significant changes, the tenant should confirm whether written landlord consent or other approvals are required. For landlords, clearly documenting the permitted use and approval conditions can reduce disagreement later.
4. Lease Renewals, Assignments, and Early Termination
A commercial lease does not necessarily give a tenant an automatic right to remain in the property after its term expires. If the agreement includes a renewal option, the tenant may have to exercise it within a specified period and in a particular manner.
Missing the deadline or failing to follow the required procedure can put that option at risk. Disagreements may also occur when:
- A tenant wants to leave before the lease expires.
- The landlord refuses a proposed renewal.
- A business wants to assign its lease to a buyer.
- A tenant wants to sublet part of the premises.
- The parties disagree about restoration obligations or remaining rent.
Under section 23 of Ontario’s Commercial Tenancies Act, where a lease requires consent to assignment or subletting, consent generally cannot be unreasonably withheld unless the lease expressly provides otherwise. The wording and circumstances must therefore be reviewed.
Ending a commercial lease early is not the same as giving notice under a residential tenancy agreement. A tenant who leaves before the end of a fixed term may still face contractual liability, subject to the agreement and applicable law. Where a business needs to relocate, downsize, or close, negotiating an agreed termination or exploring a permitted assignment may be preferable to simply abandoning the premises.
Can a Commercial Landlord Change the Locks or Terminate a Lease in Ontario?
In certain circumstances, yes. Commercial landlords have enforcement remedies that differ significantly from those available in residential tenancies. Ontario’s commercial tenancy guidance explains that where rent remains unpaid, a landlord may have a right to terminate the tenancy and re-enter the premises after the applicable statutory period, subject to the lease and legal requirements.
The guidance describes re-entry for non-payment after rent has remained unpaid for 15 days. However, the agreement and surrounding circumstances must be reviewed before relying on that remedy. For certain other lease breaches, notice identifying the breach and an opportunity to remedy it may be required.
A landlord may also have a remedy known as distress, which can involve seizing certain tenant goods to recover unpaid rent while the tenancy continues. Termination and distress are legally distinct remedies. A landlord should not assume that it can terminate the lease and simultaneously seize the tenant’s goods through distress.
Improper enforcement can expose the landlord to legal claims. Tenants may also have access to court remedies, including an application for relief against forfeiture in appropriate circumstances.
What Should You Do If a Lockout Is Threatened?
For a commercial tenant, a threatened lockout deserves immediate attention. Review the notice and lease, identify the alleged default, and preserve all payment records and correspondence.
For a landlord, the safest course is to confirm the legal basis for re-entry and the correct procedure before changing locks or taking possession. Because access to the property, inventory, and equipment may be at risk, a commercial lease dispute lawyer should be consulted promptly rather than after enforcement has occurred.
What Should You Do When a Commercial Lease Dispute Begins?
Whether you are a landlord or tenant, the objective should be to understand the issue and preserve your options before the disagreement escalates.
1. Review the Complete Lease
Start with the signed lease and any amendments, extensions, guarantees, or related agreements. Identify the clauses dealing with the disputed issue, notice requirements, deadlines, and possible remedies. A single clause rarely tells the whole story. Several provisions may need to be read together.
2. Identify What Is Actually Disputed
Separate established facts from assumptions. For example, if the disagreement concerns unpaid rent, determine whether the parties dispute the amount, timing, calculation, or obligation to pay.
If the dispute concerns repairs, establish who was responsible, what notice was given, and how the problem affected the premises.
3. Preserve the Relevant Records
Keep the lease, rent statements, invoices, photographs, inspection reports, emails, notices, and other relevant correspondence.
A simple timeline can help clarify when the issue started, what each party knew, and how they responded.
4. Communicate Clearly and in Writing
Explain the concern, refer to the relevant lease terms, and identify the outcome being requested.
Depending on the dispute, the parties may be able to negotiate a payment schedule, clarify an operating cost calculation, arrange repairs, or agree on modified lease terms. Any agreed changes should be properly documented.
5. Avoid Unilateral Decisions Before Understanding the Risks
Withholding rent, changing locks, removing property, abandoning the premises, or ignoring a renewal deadline can have significant consequences.
Before taking one of these steps, obtain advice about the relevant lease terms and available legal remedies. Early action does not always prevent litigation, but it can help avoid making a difficult dispute more expensive.
How Are Commercial Lease Disputes Resolved in Ontario?
Not every commercial landlord-tenant dispute needs to end in court. The appropriate resolution process depends on the agreement, what each party wants, and whether urgent action is necessary.
Negotiation and Settlement
Many disputes begin with direct negotiations between the landlord and tenant or their legal representatives. A negotiated outcome may involve payment arrangements, revised lease terms, repairs, or an agreed termination. Where an arrangement changes existing obligations, the agreement should clearly record those changes.
Mediation
Mediation allows the parties to work toward a resolution with the assistance of a neutral third party. It can be useful where the parties want to preserve a business relationship or avoid the time and cost of prolonged litigation. A mediator does not normally impose a binding decision. The parties decide whether to settle.
Civil Litigation
If the parties cannot resolve the dispute, legal proceedings may become necessary. In Ontario, eligible monetary claims and claims for the return of personal property valued at $50,000 or less can generally be brought before the Small Claims Court.
Claims above that amount, as well as matters requiring certain remedies such as possession of commercial premises or injunctive relief, may require proceedings in the Superior Court of Justice. The correct process depends on both the monetary value and the remedy being requested.
Ontario’s basic limitation period for many civil claims is generally two years from when the claim was discovered, but exceptions and other legal deadlines may apply.
For a broader explanation of the court process, see our guide to what civil litigation is and when you may need a lawyer.
When Should You Contact a Commercial Lease Dispute Lawyer?
Legal advice can be particularly useful when the disagreement involves substantial money, threatens the continued operation of a business, or creates a risk of losing possession of the property.
You should consider speaking with a lawyer when:
- You receive a notice of default, termination, or threatened lockout.
- A landlord and tenant disagree about significant rent or operating expenses.
- A repair or access issue is materially affecting business operations.
- A renewal, assignment, or early termination is being disputed.
- One party is considering withholding rent or exercising an enforcement remedy.
- Negotiations have stalled or court proceedings are being considered.
A lawyer can assess the agreement, identify potential claims or defences, explain the available remedies, and help determine whether negotiation or litigation is appropriate.
Rogers & Company’s civil litigation services include advising businesses and individuals on commercial lease defaults, terminations, and disputes over lease terms in Oakville, Toronto, and the surrounding GTA.