Ontario Commercial Lease Guide (Canada)

Commercial Lease Guide for Ontario

A practical, tenant-focused guide to Ontario commercial leases — not legal advice.

Not legal advice. Use this as a checklist and discuss with a qualified professional.

What to know before you sign

Ontario commercial leases often price the real deal through “additional rent” (taxes, insurance, operating costs) rather than the base rent headline.

The safest approach is to treat occupancy cost like a spreadsheet: define what gets passed through, cap what’s controllable, and make the landlord prove charges with statements and audit rights.

Major markets

Where leasing norms concentrate.

Toronto
Mississauga
Ottawa
Hamilton
London
Kitchener–Waterloo

Common lease types

Typical structures and what to watch.

Retail: net lease with “additional rent” (operating costs + property taxes)
Office: gross or modified gross (expense escalations and exclusions)
Industrial: net lease (roof/HVAC/paving language matters)

Cost drivers

Items that often create surprise bills.

“Additional rent” definitions (what’s included vs. excluded)
HST treatment on rent and recoveries (confirm what is “plus HST”)
Property tax reassessments and special assessments
Capital items passed through via CAM (replacement vs. amortization)
Insurance deductibles and risk-shifting (water, fire, interruption)

Key things to watch in Ontario

Leasing norms and pass-through structures vary by province/territory. Here are top issues we see for tenants in Ontario:

HST on Commercial Rent

Commercial rent is generally taxable in Canada. Confirm whether HST applies and budget for it (and clarify whether amounts are 'plus HST').

Additional Rent / Net Lease Terms

Ontario leases often pass through taxes, insurance, utilities, and operating expenses as 'additional rent'. Require clear definitions, exclusions for capital items, and audit rights.

Negotiation checklist

Define “additional rent” like a contract, not a concept

Require clear definitions, itemized budgets, annual reconciliation, and audit rights. Exclude landlord overhead, legal fees, and capital replacements (or require amortization).

Cap controllable operating costs

Negotiate caps on management/admin fees and controllable CAM. If caps aren’t possible, insist on strong exclusions and audit rights.

Repairs vs. replacement clarity

Separate routine maintenance from major replacements (roof, HVAC, structural, parking). Ask for caps or landlord responsibility for capital replacements.

Rent start tied to opening readiness

If you need permits/buildout/inspections, keep rent from starting until the premises are usable and required approvals are obtained.

Insurance and deductible reality check

Confirm required coverages and who pays deductibles. Avoid open-ended “any insurance landlord deems necessary” clauses.

Exit and assignment flexibility

Negotiate reasonable assignment/sublease rights with clear consent standards so you can sell the business or restructure without being trapped.

Common landlord traps

Uncapped pass-throughs: Operating costs, taxes, and insurance can rise year-to-year without a cap.
Capital replacements billed to tenant: Avoid language that makes you pay for roof/HVAC replacement.
Short notice deadlines: Renewal and termination rights can depend on strict written notice windows.

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Official resources

Ontario Business Registry Canada Revenue Agency (CRA)Canada Business Network

Other tools

Frequently asked questions

What does “additional rent” mean in Ontario commercial leases?

In many Ontario net leases, “additional rent” is the bucket for pass-through costs like property taxes, insurance, and operating expenses (CAM). The risk is vague definitions—ask for budgets, reconciliation, and audit rights.

Is HST charged on commercial rent in Ontario?

Often yes. Many commercial rents are stated “plus HST”. Confirm whether HST applies to base rent and additional rent/recoveries so your budget is accurate.

How do I compare two Ontario lease options fairly?

Compare total occupancy cost: base rent + estimated additional rent + utilities + insurance + any one-time buildout costs. Also compare your exposure to major replacements (roof/HVAC/paving) and default penalties.

Does BizLeaseCheck provide legal advice?

No. It helps you spot common risks and compare leases quickly, but it’s not legal advice. Use it alongside qualified professional review for your situation.