Difference between revisions of "Commercial Tenancies (19:XIV)"

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{{REVIEWED LSLAP | date= August 2, 2023}}
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As  contracts, tenancy  agreements  constitute  commercial relations. The ''Commercial Tenancy Act'', RSBC 1996, c 57, governs that aspect of tenancy. Special laws, rules, and procedures have been established for premises and tenancy agreements  characterized  as  residential.  Landlord  and tenant  matters  not  subject  to the  RTA,  or exempted from particular provisions, are covered by the ''Commercial Tenancy Act''. See RTB Policy Guideline 14: Type of Tenancy: Commercial or Residential.  
The ''RTA'' does not cover tenancies that are made for a commercial purpose (i.e., Renting a space to open a store). These tenancies would be covered by the ''Commercial Tenancy Act'', RSBC 1996, c 57. Commercial tenancy law is much more complex than residential tenancy law, and individuals who believe they may have a legal issue related to a commercial tenancy are strongly encouraged to seek legal advice relevant to their individual situation.


== A. Relationship of Landlord and Tenant ==
=== '''A. Commercial or Residential Tenancy?''' ===


=== 1. In General ===
If you are unsure as to whether your tenancy is commercial or residential, and whether it falls within the ''Residential Tenancy Act'', you should seek legal advice. For assistance in determining whether your tenancy is commercial or residential, it may be helpful to refer to Residential Tenancy Branch Policy Guideline no. 14: Type of Tenancy: Commercial or Residential.


Before entering into an agreement, a tenant should find out who owns the property and who rents  the  property  to  ensure  that  the  new  tenant  is  not  leasing  from  a  current  tenant – see [[{{PAGENAME}}#2. Assignment and Subletting | Section XV.A.2: Assignment and Subletting]],  below.  A  tenant  should  ensure  that  he  or she  does  not  enter  into  an  agreement  with  a  company  that  is  not  yet  incorporated –  see [[{{PAGENAME}}#3. Pre-Incorporation Contracts | Section XV.A.3: Pre-Incorporation Contracts]], below.  A  prospective  tenant  should perform  a  company  search  in  order  to  determine  if  the  company  is  incorporated.  See [[Foreword to Small Claims (20:I) | Chapter 20 Small Claims  Procedure]]  for  more  information  on  how  to  do  a  company search.  A  prospective  tenant  may  also  want  to  do  a  title  search  at  the  Land  Title  Office  to determine  whether  he  or  she  is  dealing  with  the  registered  owner  or  a  tenant  looking  to sublease.  
=== '''B. Commercial Tenancy Resources''' ===


A  new  tenant  should  find  out  how  the  property  is  zoned  to ensure  lawful  use  of the property. Also, using the property for a different purpose than that outlined in the lease is a breach of the agreement. To vary the lease, both parties must consent.  
If you encounter an issue related to a commercial tenancy, resources that may be of assistance are listed in the [[Governing Legislation and Resources for Landlord and Tenant Law (19:XIX)|“Resources”]] section at the end of this chapter.


=== 2. Assignment and Subletting ===


When  the  tenant’s  interest  is  conveyed  to  a  third  party  for  the  remainder  of  the  term,  the lease is said to have been assigned. The assignee becomes a tenant of the landlord.
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If  the  premises  are  to  revert  to  the  original  tenant  before  the  full  term  of  the  lease,  a  sub-lease is created. Note that a landlord-tenant relationship exists between the landlord and sub-tenant. If both parties live in the unit, payment of rent by a new tenant to the original tenant may also create a sub-tenancy.
 
Most  leases  require  the  landlord’s  consent  before  an  assignment  or  sublet  is  made.  Such clauses usually  specify  that  the  landlord’s  consent  will  not  be unreasonably  withheld.  If  the landlord  does  withhold  his  or  her  consent  unreasonably,  the  tenant  may  proceed  without consent, with litigation as the likely outcome. Tenants should decide if they want to deal with that  or  if  they want  to commence litigation  on  their  own  right  to  obtain  an  order  that  they can proceed. A landlord’s wish to charge higher rent or to prevent the tenant from receiving a premium by subletting are not reasonable grounds for withholding consent.
 
The  onus  is  on  the  tenant  to  show  that  the landlord’s  refusal is unreasonable. There  are  no fixed rules  governing  reasonable  or unreasonable withholding of consent.  The landlord  can charge  a fee for  the  tenant  to  sublet  or  assign  the  rental  property,  and  that  does  not  negate the landlord’s consent. The lease itself and all the circumstances must be considered.
 
=== 3. Pre-Incorporation Contracts ===
 
A  company  is  not  bound  by  contracts  it  enters  into  before  incorporation.  Where  a  person enters into  a contract in  the  name  of  a  company  before that company’s  incorporation,  that person may be liable for breach of warranty. To avoid difficulty, the lease should be entered into personally with the right to assign the lease to the company once incorporated.
 
=== 4. Partnerships ===
 
A  partner  enters  into  contracts  on  behalf  of  all  partners  for  any  transaction  that  is  in  the ordinary course  of  business. Thus,  a  lease entered into in  the firm’s  name  is  binding  on  the firm and its partners.
 
== B. The Agreement ==
 
=== 1. Distinction between Lease and License ===
 
A license is a purely contractual relationship. It gives the licensee no interest in the licensor’s real  property.  Restaurants  that  operate  in  department  stores  are  usually  run  as  a  licensee liquor arrangement, for example.
 
The  courts  distinguish  leases  from  licenses  by  examining  whether  the  parties  intended  to grant  exclusive  possession  to  the  occupants,  or  merely  permission  to  occupy  subject  to  the rights of the owner. It is important for a prospective tenant to read the contract to determine what  type  of  relationship  they  are entering  into.  Words in  the  agreement  such  as “lease”, “landlord” or “tenant” are, in the absence of a contrary statement, conclusive evidence of an intention  to  create  a  lease.  Exclusive  possession  of  the  tenant  does  not  require  absolute exclusion of the landlord. If the contract refers to a “joint venture,” then it is probably NOT a lease; a joint venture creates liabilities in the tenant and does not grant exclusive possession or an interest in the land.
 
=== 2. Distinction between Lease and Agreement to Lease ===
 
A lease is an immediate conveyance of land (though possession may be postponed) while an agreement for lease requires the parties to execute a lease at a later date. However, where the tenant is in possession, an agreement to lease may be construed as a lease.
 
=== 3. Requirements for a Valid Agreement ===

Latest revision as of 20:20, 8 August 2023

This information applies to British Columbia, Canada. Last reviewed for legal accuracy by the Law Students' Legal Advice Program on August 2, 2023.



The RTA does not cover tenancies that are made for a commercial purpose (i.e., Renting a space to open a store). These tenancies would be covered by the Commercial Tenancy Act, RSBC 1996, c 57. Commercial tenancy law is much more complex than residential tenancy law, and individuals who believe they may have a legal issue related to a commercial tenancy are strongly encouraged to seek legal advice relevant to their individual situation.

A. Commercial or Residential Tenancy?

If you are unsure as to whether your tenancy is commercial or residential, and whether it falls within the Residential Tenancy Act, you should seek legal advice. For assistance in determining whether your tenancy is commercial or residential, it may be helpful to refer to Residential Tenancy Branch Policy Guideline no. 14: Type of Tenancy: Commercial or Residential.

B. Commercial Tenancy Resources

If you encounter an issue related to a commercial tenancy, resources that may be of assistance are listed in the “Resources” section at the end of this chapter.


© Copyright 2023, The Greater Vancouver Law Students' Legal Advice Society.