One of the toughest parts of launching a business is finding the right space. If you’re leasing, it’s important to understand that your setup may not be permanent. For better or for worse, lease agreements can end, and sometimes when you’re not ready.
Commercial real estate regulations are complicated, especially in Ontario. If you’re a restaurant owner facing difficulty renewing your lease or potential eviction, it’s important to understand your options and take action as soon as possible.
In some cases, you may be able to prevent or delay eviction. Alternatively, you may be able to move your business to a new space that suits your goals.
Keep reading to learn more about commercial real estate leases, rules around eviction, and everything else you should know as a restaurant or small business owner.
Can a Commercial Landlord Evict a Business?
Yes, your landlord can kick you out of your restaurant space, as long as it is within the framework of Ontario’s Commercial Tenancies Act and, most importantly, your unique lease agreement.
Remember, the terms of your commercial lease can override provincial regulations in some circumstances. That’s why it’s so important to work with a commercial or restaurant real estate broker when signing a lease. Only they have the professional insights to ensure your interests and investments are adequately protected.
Want to know more about commercial real estate in Canada? Read these blog posts next!
- What’s the Difference Between Residential and Commercial Real Estate Transactions?
- Commercial Tenant Rights in Ontario: A Beginner’s Guide
- How to Negotiate a Commercial Lease
When Can a Business Be Evicted?
In very general terms, there are two main circumstances in which a commercial landlord can evict their tenant: Unpaid or severely delayed rent payments and a breach of contract (aka breaking specific rules outlined in the lease). Let’s break it down.
1. You’re Late on Rent
One of the most common reasons for eviction is delinquency. In Ontario, commercial tenants only have a 16 day grace period for delays on rental payments. After that, your landlord can legally evict you and change the locks.
In more extreme circumstances, your landlord may be able to invoke a distress scenario. When this happens, they have the right to seize and sell certain business assets (as long as they’re located on the property) to recuperate lost funds.
Most landlords can be lenient, especially if you’ve been a good tenant otherwise. If you have concerns about missing or being late on rent, it’s a good idea to communicate with your landlord in advance to work out a solution.
2. You Broke the Rules
Business owners can also be evicted for breach of contract. This is a fancy way of saying you broke one or more rules outlined in your lease agreement. If this happens, your landlord must provide you with written notice and allow you to attempt to remedy the situation before they formally initiate eviction proceedings.
If Your Landlord Doesn’t Renew Your Lease
When your agreement expires, your landlord is not legally obligated to extend it. While this isn’t technically an eviction, it can have similar repercussions. Suddenly, you’re rushing to find a new location, exploring alternative options for your business, or deciding whether to close up shop for good.
The silver lining to these scenarios is that your landlord must provide adequate notice if they don’t intend to renew your lease. This gives you a small but helpful runway to manage your transition, whatever the next chapter looks like for you.
In need of a new space for your restaurant? Explore these blogs for helpful advice.
- Buying a Restaurant? Here Are 5 Questions to Ask
- How to Keep Customers In the Loop When Moving Your Business
- What to Look For When Choosing a Restaurant Space
Can I Stop a Business Eviction?
One of the main differences between residential and commercial real estate is tenant rights. While you do receive certain graces as a commercial leaseholder, contesting an eviction isn’t easy. However, there are some options.
If you have been locked out by your landlord, you can apply for relief from forfeiture. This may sound like a foolproof solution on paper, but there’s a catch.
If the court decides to reinstate your lease, you could be on the hook for paying your landlord’s legal fees (on top of your own).
Protect Your Business
About to sign a commercial lease or need to find a new business space on short notice? You’ll want an expert in your corner. Like us, Carve Real Estate.
As professional restaurant real estate agents, we’re uniquely knowledgeable about commercial properties, market trends, the needs of business owners as tenants, and more. On top of helping you track down the best commercial property to bring your business to life, we can also assist in negotiating your lease agreement. Reach out today.
Searching for the right place to bring your business goals to life? We can help! Reach us by email at ryan@carverealestate.com or by phone at 416-618-0054.
