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Difference between revisions of "Commercial Tenancies (19:XIV)"
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→3. Requirements for a Valid Agreement
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=== 3. Requirements for a Valid Agreement === | === 3. Requirements for a Valid Agreement === | ||
*a) A lease or agreement to lease greater than three years in length must be in writing to satisfy the ''Law and Equity Act'' s 59 3(a); | |||
*b) A lease over three years should be registered (but there is no legal obligation to do so); | |||
*c) While a seal is no longer required for Land Title Office registration, if one of the parties to a lease is a corporation, its seal should be affixed to ensure the agreement is binding on the corporation, and to avoid any argument that the agreement was made without consideration; and | |||
*d) The agreement must state the tenant’s right to exclusive possession as well as some indication of the premises being leased; the duration of the lease; the parties to the lease; the amount of rent; and covenants, conditions, exceptions or reservations. | |||
=== 4. Description of Premises === | |||
To avoid having the lease struck down for uncertainty, there must be a description of the property adequate to identify it. An ambiguous description may be supplemented by parole evidence. | |||
=== 5. Common Areas and Easements === | |||
Driveways, walkways, parking and delivery areas, lawns, lobbies, elevators, corridors, interior mall space, and common washrooms are normally common areas in which the tenant does not have exclusive possession. However, the tenant is often required to pay a share of the costs for the maintenance of these areas. The lease agreement may also provide the tenant with an easement, subject to restrictions on how and when the common areas may be used. | |||
=== 6. Fixtures === | |||
A fixture is annexed or fastened to the real property. They are either tenant’s fixtures, and therefore removable, or landlord’s fixtures, which are permanent. Tenant’s fixtures are annexed for the purposes of the tenant’s trade, ornamentation, or convenience. Landlord’s fixtures are installed by the landlord, previous tenants, or by the present tenant. They have become part of the realty and their removal would constitute waste: see ''Stack v Eaton'' (1902), 4 OLR 335 (Div Ct). | |||
== C. Rent and Security Deposit == | |||
=== 1. Security Deposits === | |||
In commercial leases, security deposits are intended to cover damages for breach of a covenant or condition or to ensure a tenant will go into possession. The landlord’s covenant to repay the deposit is collateral to the lease, and personal to the landlord. Thus, if the landlord sells, his or her successor is not bound to repay the deposit. | |||
=== 2. Rent === | |||
Technically, rent is a contractual payment for the use of property. Commercial leases often also include additional rents such as a percentage of the tenant’s sales or profits, and the tenant’s portion of common expenses. By defining additional rents as part of the rent, the landlord gains the right to end the lease for non-payment of these amounts. Unless otherwise provided for, it is the tenant’s duty to seek out and pay the landlord. The tenant also bears the risk of a late payment if he or she uses the mail. | |||
=== 3. Net Lease Concept === | |||
Most commercial leases operate on the net lease concept. This means that fixed rent (dollars-per-square foot or dollars-per-month) is to be net to the landlord, with the tenant paying for all costs in operating the leased premises as additional rent. Thus, substantial payments can be made as “additional rent” to cover the tenant’ s portion of the landlord’ s expenses. This concept is also known as “triple net”. 4.Taxes Unless the lease provides otherwise, the landlord is liable for all realty taxes. If the lease calls for the tenant to pay the taxes, the landlord may sue the tenant if taxes are in arrears. 5.Seizure of Personal Property for Non-Payment of Rent A commercial landlord may distrain (seize personal property for non-payment of rent), while a residential landlord may not (regardless of any rental arrears). The personal property being distrained must be located in the rented premises and the landlord must give notice before seizing the property. The tenant will suffer a penalty if he or she removes the goods to prevent distrainment. Distrainment keeps the tenancy alive. Usually the month after distrainment the tenant will be evicted if there remain rent arrears or if new rent arrears accrue. D.Occupier’s Liability NOTE: For specific details, see the Occupier’s Liability Act, RSBC 1996, c 337 [OLA]. The OLA, s 6 speaks to sub-tenancies. 1.Landlord’s Liability for Injuries in Demised Premises The landlord has no statutory or common law duty to maintain the demised premises unless provided for in the lease agreement. Contractual liability of the landlord is to the tenant alone, not to his or her family, guests, or customers. Moreover, as the landlord is not an occupier, he or she is not liable in tort. However, where the landlord is under a duty to maintain the premises, s 6 of the OLA puts the landlord in the same position as the occupier of the premises. Where the landlord fails to maintain the premises and an injury results, the landlord will be held liable. The landlord is considered an occupier with regards to common areas. His or her duties are set out in s 3 of the OLA. 2.Tenant’s Liability for Injuries in Demised Premises The tenant is considered an occupier, and inherits all duties that go along with that designation. A tenant should take reasonable care to inspect, notify the landlord, and give warning to an invitee of any unusual danger in the common areas. Where an occupier can foresee that a trespasser may enter the property, there is a duty to treat the trespasser with common humanity. | |||
