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COLUMN: A proper lease should be drafted ahead of time
Legal-Ease by Ian MacKinnon
If you are a landlord renting commercial premises to a tenant, the most important aspect of this relationship can be collecting the rent. How do you protect yourself with respect to ensuring the rent will be paid, and what are your options if it is not paid?
For commercial tenancies, as opposed to residential tenancies, it all starts and ends with the proper analysis and review of the commercial lease. As a landlord, if you run into problems with your tenant, whether for non-payment of expenses, non-payment of rent, or failure to repair damage, your remedies should be found within the lease document. It is therefore important for a landlord to initially negotiate, and have drafted, a proper lease document.
If you do not start out with a contract that properly protects the interest of the landlord, your options when problems arise can be limited. With a properly prepared lease, any landlord should have a comprehensive series of available remedies spelled out in black and white.
One of the most common remedies available to a landlord is right of “distraint.” Utilizing this concept, a landlord of commercial premises is entitled to seize goods belonging to the tenant found on the premises to satisfy unpaid rent. Second, if the tenant has failed to honour its contractual obligations to repair leased premises, a landlord usually has the right to complete the repair and then charge the tenant for those expenses.
Suing for rent in arrears is another useful remedy available to a landlord. Most leases, however, require a landlord to provide the tenant with written notice to pay the rent before any lawsuit can be commenced.
In certain circumstances, a landlord can have the right to terminate the tenancy when the tenant has breached the lease. Procedures for terminating a lease agreement are usually set out in the default provisions of the lease, and normally require the landlord to first issue a Notice of Default requiring the default to be corrected within a specified time, before issuing a Notice of Termination.
Terminating a lease can be a dangerous strategy if the breach is not a clear and substantial one, and a landlord can be held liable for damages if the lease is improperly terminated.
For all commercial landlords, it is important to enlist the services of a lawyer at the outset of any tenancy in order to put in place clear and properly drafted terms so as to protect your interests. As well, if or when a commercial landlord runs into problems with a tenant, it is again important to seek proper legal advice in order to properly choose and pursue the correct remedies.
If you are a landlord or a tenant of a commercial property, and feel you are being treated unfairly, contact a lawyer to find out what your rights and options are.
Ian MacKinnon is a partner with RDM Lawyers in Abbotsford and Mission. He practises in the areas of civil and commercial litigation. If you have questions or comments about this article, email email@example.com.