You are opening a store, a clinic, an office, a bay in an industrial park. The landlord’s agent sends you a lease. It is forty pages. The rent number matches what you discussed, so you sign. Three years later you owe an extra $32,000 in operating costs you did not budget for, you cannot sell your business without the landlord’s consent, and if the landlord decides to redevelop in year four you are out on twenty-four months’ notice with nothing paid for your build-out.
None of that is unusual. All of it is in the lease you signed.
The rent number is what people focus on. The other clauses are where landlords make their real money. Most commercial leases in Alberta are landlord-favourable templates with terms that surprise tenants in year two through year five. The fee to review the document before you sign is almost always smaller than the cost of the first surprise.
This Is a Mostly Unregulated Area
Alberta does not have a general commercial tenancy statute. There is no equivalent to the Residential Tenancies Act, RSA 2000, c R-17.1, setting minimum standards, capping deposits, or regulating how a commercial lease ends. The Commercial Tenancies Protection Act, RSA 2000, c C-19, is a narrow piece of legislation dealing mainly with distress. It does not create anything like the framework the RTA gives residential tenants. Distress itself, the landlord’s self-help remedy of seizing a tenant’s goods for unpaid rent, is also governed by the Civil Enforcement Act, RSA 2000, c C-15.
What governs your lease is the lease itself, plus general contract and property law. If a right is in the document, it binds you. If a right is not, the common law fills the gap, and the common law defaults often favour the landlord. Commercial tenants and commercial landlords are treated by the courts as sophisticated parties who can look after themselves. You get exactly what you negotiate. That is the single most important thing to understand before you read the document.
8 Clauses to Review Before You Sign
The rent clause is not on this list. You already read the rent clause. Here are the eight that do most of the damage.
Additional Rent and Operating Costs. Almost every commercial lease in Alberta is some form of net lease. You pay base rent plus a proportionate share of property taxes, building insurance, utilities, and common area maintenance, often with a management fee on top. A triple-net lease pushes essentially all building expenses to the tenant. The amounts given at signing are estimates. What you want in the lease is a clear definition of what is included, an annual audit right, an exclusion for capital expenditures on base building systems, and a cap on controllable operating costs year over year. Without those protections, a $25 per square foot deal can quietly become $42 per square foot by year three.
Personal Guarantee. If a numbered company is signing the lease, the landlord almost always wants a personal guarantee from the principal. The template version is unlimited in amount, lasts the full term including renewals and holdover, and survives assignment. That collapses the whole reason you incorporated. Push for a cap, either in dollars or in months of rent. Push for a sunset after a stated period of good payment history. Push for release on a permitted assignment to a financially equivalent buyer. Do not offer a spousal guarantee unless there is a specific reason. A guarantee you signed in year one can otherwise bind you fifteen years later, long after you sold the business.
Assignment and Subletting. If you sell your business, the buyer usually needs your lease. The landlord’s consent clause is the most valuable exit provision in the document. A bare “consent required” clause, without more, gives the landlord broad discretion to refuse. You want “such consent not to be unreasonably withheld, conditioned, or delayed” written in expressly. Canadian case law is clear that once those words are in, the landlord cannot use a consent request to extract a fee, upgrade the lease, insert a demolition clause, or block a sale so it can re-lease at market. Add a response deadline, a deemed-consent provision, and a release of the personal guarantor on an arm’s length assignment.
Relocation Clause. In shopping centres and multi-tenant office buildings, landlords often reserve the right to move you to a different unit on notice. The template says the landlord will pay reasonable moving costs. It rarely says who pays to rebuild your leasehold improvements, reprint signage, or cover the business interruption while you are closed. If you cannot strike the clause, negotiate minimum size, visibility, and frontage for any replacement space, full reimbursement of fit-out and business interruption, and a tenant termination right as an alternative to the move. A relocation in year three can destroy a retail business whose customers know it by its address.
Demolition and Redevelopment. A demolition clause lets the landlord end your lease early if it decides to knock the building down or substantially redevelop. Twenty-four months’ notice with no compensation is common in Canadian commercial leases. If your business is tied to a specific location, or if you just invested hundreds of thousands of dollars in fit-out, the clause destroys the commercial value of the lease the moment notice lands. Push back on whether it belongs in the deal at all. If it stays, negotiate a longer notice period, a bona fide intention test tied to permits or a demolition contract, a no-demolition period for the first several years, and reimbursement of unamortized leasehold improvements.
Permitted Use and Exclusivity. The permitted use clause defines what you are allowed to do in the premises. Landlord templates draft it narrowly to protect tenant mix. “Operation of a bakery” will not cover you when you later want to add a coffee counter or open for dinner service, and the landlord can condition consent on a rent increase. Broaden the language, or at minimum add “and any related or ancillary use.” On the other side, exclusivity stops the landlord from leasing to a direct competitor in the same property. Exclusivity is rare in Alberta retail leasing unless you negotiate for it, but for a destination tenant in a shopping centre, it is often worth more than a base rent concession.
Renewal Mechanism. A renewal option is only as good as its mechanism. “Tenant shall have the option to renew at the then-prevailing market rent” is a fight waiting to happen. What is the market? Who decides? On what comparables? Without a defined formula or a binding arbitration or appraisal fallback, the landlord can quote you out of the building. Other common traps: a narrow exercise window twelve to eighteen months before expiry that forfeits the option if missed, and a no-default condition that includes minor, long-cured breaches. Ask for a capped escalation or defined formula, a realistic exercise window, and a default standard that requires something material and uncured.
Surrender Condition. At the end of the term you hand the premises back. The surrender clause describes the condition. A common template requires restoration to “base building” or “original shell” condition, meaning you strip out everything you built, patch, repaint, and sometimes replace mechanical systems. On a built-out restaurant, dental office, or medical clinic, a surrender bill easily runs into six figures. The time to negotiate is at signing. Ask for a right to leave improvements in place at the landlord’s option, a cap on restoration cost, or a carve-out for non-structural tenant improvements. Asking for relief on move-out, when you are already packing, is a very different conversation.
When a Quick Review Pays for Itself Many Times Over
A commercial lease review in Alberta is a few hours of legal work producing a written markup and a list of issues to raise with the landlord. Compared to the size of the commitment you are about to sign, it is one of the highest-return pieces of legal work a small business will ever buy. Five years of uncapped additional rent, one demolition clause, one unlimited personal guarantee, one surrender bill: any one of these can exceed a year of net profit. The time to find them is before you sign.
If you have been handed a commercial lease, or have questions about one already signed, reach out through the contact page or read about my business and commercial services.