2015.02

Commercial Leasing Series - Use of Premises and Exclusivity

By: Laila Parvez

As a preliminary matter prior to signing any Lease, a tenant should ensure that the premises are appropriately zoned for its proposed use.  Landlords usually require tenants to satisfy themselves that their proposed use of the premises is in compliance with applicable zoning and municipal by-laws of the area in which the premises are located.   Unless the tenant can determine that its use complies with all municipal and zoning by-laws prior to signing a binding Offer to Lease, a condition should be inserted into the Offer to Lease to allow the tenant to terminate the leasing arrangements without penalty if its use is not allowed.  This will prevent the tenant from finding itself in a situation where it has entered into a binding contractual obligation to lease space for a number of years but cannot legally carry on its operations from such space.

The Tenant should clearly state its proposed use in the Offer to Lease with sufficient detail to ensure that there is no confusion later regarding the exact scope of the proposed use.  For example, if the tenant intends to operate a spa, the Offer to Lease should include details about the services that will be provided at the premises, such as manicures, facials, hair styling services and massages, if applicable.  This is important because the Landlord may have previously included  “exclusivity” uses in its leases with other tenants at the Complex which prevents it, for example, from allowing other tenants to use their premises for providing massages.  This issue shouldn’t generally be a concern for tenants leasing office space but is extremely important for all retail tenants. 

The retail tenant should consider requesting its own exclusivity from the landlord to ensure that no competitive business is able to operate next door.  In the example above, the tenant would ask the landlord to agree that during the term of the tenant’s lease, the landlord will not lease any space in the Complex to another tenant providing any of the same services as the tenant provides at its spa.

Many leases contain clauses requiring tenants to actively operate their business during certain defined hours.  If the tenant’s operations requires longer or shorter hours, then those hours should be set out in the Lease.  In addition, especially in the case of office leases, landlords may have the right to charge the tenant additional amounts for services like electricity, heating and ventilation outside the defined hours. 

For a discussion of additional items relating to commercial leasing from the tenant’s perspective, please click here.

 

For more information on commercial leasing matters, please contact Laila Parvez at (416) 368-0491 or by email at lparvez@businesslawyers.com.

© Morrison Brown Sosnovitch LLP, 2015.  All rights reserved.

Morrison Brown Sosnovitch LLP Logo