Signing a commercial lease is an important step for many business owners. Whether you are opening your first office, expanding into a retail space or relocating your operations, the terms of your lease can have a significant impact on your business.
A commercial lease is more than an agreement to pay rent. It establishes important rights, responsibilities and financial commitments that may continue for several years.
Before signing a commercial lease in Manitoba, here are eight important areas to review.
- Understand the total cost of the lease
The monthly rent advertised for a commercial property may not represent the full cost of occupying the space.
Depending on the lease, you may also be responsible for property taxes, utilities, insurance, maintenance fees and common area expenses.
Review how additional charges are calculated, whether they may increase and what your total financial commitment could be.
- Review the lease term and renewal options
Consider how long you are committing to the property and whether the lease provides options to renew.
Review the start date, expiry date, rent increases and any deadlines for exercising a renewal option.
A lease that works for your business today should also be considered in light of your future plans.
- Understand maintenance and repair responsibilities
Commercial leases may place significant maintenance and repair obligations on tenants.
Check who is responsible for heating and cooling systems, plumbing, electrical systems, structural repairs, snow removal and general property maintenance.
Understanding these responsibilities before signing may help you avoid unexpected expenses later.
- Confirm the permitted use of the property
Make sure the lease allows you to operate your intended business from the premises.
Some agreements restrict the types of activities that may be carried out, while municipal zoning, permits or licensing requirements may also apply.
Before committing, confirm that the property is suitable for your business operations and that any necessary approvals can be obtained.
- Review personal guarantees and financial liability
A landlord may require a business owner to personally guarantee the obligations of the business under the lease.
This can create personal financial exposure if the business is unable to meet its commitments.
Before signing a personal guarantee, understand its scope, duration and the circumstances in which you could become personally responsible.
- Check your options for ending or transferring the lease
Business circumstances can change. You may need to relocate, downsize, expand or sell your business before the lease expires.
Review whether the lease permits early termination, assignment to another tenant or subleasing the premises.
Pay particular attention to any landlord consent requirements, financial penalties and continuing obligations after a transfer.
- Understand improvements and alterations
Many commercial spaces require renovations, equipment installations or other improvements before a business can begin operating.
Review who is responsible for paying for these improvements, whether the landlord’s approval is required and what happens to the improvements when the lease ends.
You should also understand whether you will be required to restore the premises to their original condition.
- Consider having the lease reviewed before signing
Commercial lease agreements can contain detailed provisions that are difficult to understand without legal experience.
Having a lawyer review the proposed agreement may help identify unclear obligations, potential risks and terms that could be negotiated before you commit.
Addressing concerns before signing is often easier than attempting to resolve a disagreement after the lease has taken effect.
Why a Commercial Lease Review Matters
A commercial lease may affect your business operations, cash flow and long-term flexibility.
Unlike a simple month-to-month arrangement, a commercial lease can create obligations that continue even if your business circumstances change.
Taking time to review the agreement can help you:
- Understand the full financial commitment.
- Identify maintenance and repair responsibilities.
- Confirm that the premises meet your business needs.
- Recognize personal liability risks.
- Understand your renewal and termination options.
- Make more informed decisions before signing.
Final Thoughts
Finding the right commercial space is exciting, but understanding the lease is just as important as choosing the location.
Before signing, take time to review the agreement carefully, ask questions about unclear provisions and consider obtaining legal advice.
A well-reviewed commercial lease can help protect your interests and provide a stronger foundation for your business.