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Negotiating A Commercial Lease in Alberta: Legal Issues

Commercial Leases can be among the most complicated commercial contracts. These leases are not "boilerplate", and are often custom drafted for landlords. it is beyond the scope of this article to talk about all of the potential issues, but below are some common issues that arise.


Personal Liability


Most commercial leases will be signed in the name of a corporation. It is common for landlords to seek personal guarantees (or in other cases indemnities, although the law of this is unclear in Alberta). If you are a tenant, this is an important part of the agreement to negotiate out.


Use


Often you promise that you will use the premises for a specific use (i.e. office space, daycare etc.). If you do not, that can be a breach of the lease.


Operating Costs/Additional Rent


When entering into a lease you need to understand the base rent, and then figure out the additional operating costs/additional rent. This will give you a true idea as to the costs of occupying the premises.


Repairs


Responsibility for repairs can be extremely important, as capital repairs to things like HVAC can be extremely expensive.


Assignment


Landlords often require that they give consent to any other potential tenants. If you are planning on renting, you should always consider the worst case scenario of having to assign the lease.


Force Majeure


Prior to Covid, Force Majeure (acts of god) clauses were very inconsistent as to whether or not epidemics were covered. In the future, much consideration will likely be given to Force Majeure, and epidemics will likely be included.


There are many other issues to consider in negotiating a commercial lease. If you require legal advice in this area, please feel free to contact us.

The information contained in this article is not legal advice. No solicitor client relationship is formed through this article. The reader is encouraged to retain counsel for advice in these matters.






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