While choosing the location to operate a business can have a huge impact on its performance and the revenues, it is therefore important to consult and get all the information before making that decision that could affect the sustainability of your business.
In Quebec, commercial leases are not subject to most of the regulation provided by the Civil code of Québec. In most case, subject to exceptions, the Civil code of Québec provides supplementary provisions. In other words, parties are capable of agreeing on a provision that will be different from the Civil Code of Quebec if they include that provision in a contract.
For the duration of lease, it is generally concluded for a fixed period that varies between three and ten years, commercial leases automatically cease at the expiration of the term when no renewal option is mentioned in the contract. Its express or tacit renewal is nevertheless possible. In fact, the occupation of the premises by the tenant for more than ten days without opposition from the landlord leads to the tacit renewal of the lease for a period of one year, under article 1877 of the Civil code of Québec, unless the parties have waived this article by agreement. Unlike residential leases in which laws generally favor the tenants, commercial lessor has no obligation to renew their lease. As a matter of fact, commercial leases are not subject to an automatic renewal and the tenant doesn’t have any right to maintain occupancy.
Thus, commercial lease agreements usually contain renewal provisions allowing tenants to extend an already lengthy lease for another term. This type of clause can take many forms and involves several interpretation difficulties which give rise to possible disputes. To be valid and enforceable, the essential terms for renewal must be specified, determined or determinable by a clause stipulated in the lease. For example, it may be difficult to avail yourself of a renewal option which grants the tenant the right to renew their lease only if they are not in default. If too vague and ambiguous, this clause risks causing harm to the tenant. On the other hand, it is possible to specify in the lease the cases where the lessor will be justified in refusing to renew the lease. In addition, it is important that the renewal option specify and indicates clearly how the price of the rent will be calculated in the future. The clause of renewal of commercial lease with rent to be negotiated often gives rise to dead ends and conflicts which will force the parties to end their relationship often to the detriment of both parties. In order to avoid any future problem, it is necessary to provide the calculation method for the increase in rent and provide for example that it will be increased according to the Consumer Price Index for a given period and region.
In order to avoid any undesirable surprises, you may contact Sébastien Dubé Avocat for any advice regarding your commercial lease negotiation.
This text is not to be read as a legal opinion and is deemed for information only.
Facts may vary from one case to another: those facts when applied to the law in force can only be carried by a serious legal analysis.
