Drafting a Binding Commercial Lease: The Basics

  • December 02, 2022
  • Vanessa Carment, real estate lawyer at Soloway Wright LLP

Unlike residential tenancies, the terms and conditions of commercial leases are almost entirely negotiable between the parties. As such, the customizable nature of commercial leases presents an interesting challenge when it comes to both interpretation and drafting since no two are exactly the same. However, this flexibility can also be intimidating for a recent call who, at the very least, wants to ensure that the agreement is binding. Fortunately, the Court has established the below guidance with respect to the handful of provisions that must be included in a commercial lease for it to be enforceable.

  1. In Writing Requirement

Under the Statute of Frauds, any agreement that creates an interest in land must be in writing and signed by the parties in order to be enforceable. A commercial lease is deemed to have created an interest in land where the term of the lease is more than three years in length. It is standard for commercial leases to be at least five years in length, and, as such, many commercial leases will be subject to the Statute of Frauds. in accordance with Electronic Commerce Act, 2000, the in-writing requirement can be satisfied where an agreement is in electronic form as long as the agreement remains accessible so as to be usable for subsequent reference. Further, the Court has found that typed names and/or email signature blocks may even be adequate evidence of execution by the parties in fulfillment of the signing requirement of Statute of Frauds.

  1. Defined Premises

In order to be an enforceable, a commercial lease must define the premises that form the subject of the agreement in such a way that they are clearly ascertainable. Essentially, it must be clear as to which premises the tenant is leasing from the landlord and that the landlord is leasing to the tenant. The Court will typically look at the specific words in the alleged lease and use common sense when determining whether this requirement is met.