A property leasing lawyer’s work is generally understood to incorporate the provision of advice in all aspects of leasing transactions and commercial leasing disputes to property owners, developers, tenants or property managers in the shopping centre, retail, office, mixed-use and industrial space leasing sectors.
This can include: drafting or adapting standard form leasing documentation and related agreements such as tri-party agreements, renewal agreements, air-space subleases and lease-leaseback arrangements in respect of newly constructed or existing buildings; property management; lease enforcement, insolvency, lease renegotiation, lease portfolio restructuring as well as lease takeover and sublease transactions; tax aspects of leasing transactions; environmental compliance aspects of leasing transactions; and the negotiation and drafting of ground leases for financing, joint-venture or long-term capital appreciation purposes.
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Generally, a lease is a contract between a lessor (the owner who leases out their property; also called a landlord) and a lessee (the one who leases or rents; also called a tenant) where the latter pays the former a sum for the use of the property, for a determinable period of time.
In this contract, various considerations are agreed upon, such as:
As a lease contract may either pertain to a real property (also known as immovable property) or a personal property (also known as movable property), property leasing usually refers to the lease of a real property, such as land or building. When parties enter in a property lease contract, especially for large transactions involving huge amounts of financial obligations, a property leasing lawyer may represent either party, starting from its negotiation and crafting until its perfection and consummation.
There are two types of property leasing contracts based on the nature of the real property being leased – residential or commercial. The difference between these two is that while residential leasing contracts are hardly regulated, commercial leasing contracts are mostly regulated by provincial laws because of its public nature. Nevertheless, both kinds of property lease contracts, just like any other contract, are governed by the general principles of contract laws.
Currently, there is no federal law which governs leases in general, or leases of commercial property. Thus, Canadian common law is the first set of law which would apply, in addition to the general principles of contracts and some federal laws which may affect leases in some other way.
However, some provinces have enacted statutes that may cover property leasing contracts. As to specific applications, a property leasing lawyer can determine which law would govern the parties’ lease contract, depending on the jurisdiction and its contents.
In most provinces and territories of Canada, the principles of contract law are found in common law or case law, except for Quebec, whose contract law is governed by its Civil Code. Although, these principles and the Quebec Civil Code provisions may be similar with each other, or there would be counterpart provisions of these principles in the Quebec Civil Code. A property leasing lawyer can explain these principles further, but the most common ones are the following.
The common and the most important rule in contract law states that a contract is the law or the legal bond between the parties. This means that any stipulation included in the contract will bind the parties once it has been agreed upon or has been consented to. As such, legal interpretations (sometimes called “statutory construction”) of contracts are important to understand what a party consents or agrees to, and a property leasing lawyer may be consulted with before entering a lease agreement for this purpose.
In addition, this rule carries with it the sanctions and legal consequences when a contract has been breached by any of the parties, according to their contract’s penal or sanction clauses.
Parties are free to stipulate or agree on the terms and conditions of their contract, and when a party does not agree with a term or condition, they can reject said contract or push for further negotiations. As a presumption, what has been included in the contract are consented by the parties without undue influence, fraud, intimidation, or any other gross infirmities.
The only limitation to this rule is that parties may not agree on an illegal stipulation, or those which are in contrary to Canada’s Criminal Code, generally accepted ethics, civil law, and public order. When such prohibited stipulations are included in a contract, these are rendered null and void and may not be invoked by any party of the contract.
In coming up with the terms and conditions of a contract, or commercial lease contract for this matter, parties are expected to negotiate in good faith. This means that there should be willingness to discuss and even concede with the other party’s terms, whenever necessary. Usually, negotiations are handled by the party’s property leasing lawyer to effectively secure their rights and ensure success in the negotiations.
When a contract has been agreed already, parties are expected to faithfully and honestly comply with its terms. This means that, in a commercial lease contract for example, the lessee should promptly remit the agreed terms on payments, while at the same time the lessor should also respect any prohibitions imposed on them or do any added responsibility stipulated in contract (e.g., payment of taxes, clauses on repairs, etc.).
As a rule, when the lessor pays property and business taxes directly to the concerned municipality, these will not be subject to the Goods and Services Tax/Harmonized Sales Tax (GST/HST). However, percentage rents of commercial property leases, such as those in retail, which are usually paid by the lessee, are usually taxed in the same manner as the basic rent. For other taxation concerns, a property leasing lawyer can lead parties to the other specific taxation regimes that may apply to them.
The first consideration to legally get out (or “rescission” in legal terms) from a commercial lease contract would depend on the stipulations of the contract itself. Thus, it is important that rescission clauses in the contract are clear between the parties. Any ambiguity on the clause must be interpreted thereon with the assistance of a property leasing lawyer and must be resolved before the perfection of the commercial lease contract.
However, it would also depend on the type of commercial lease that parties entered. For example, for a fixed-term lease, a lessee may only rescind such contract after payment of the future payments due for the remaining term of the lease contract.
Interested in entering a property lease contract? Be assured of your rights by contacting the best property leasing lawyers in Canada by scrolling down below to our Lexpert Ranked list.