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Lease To Own Commercial Property Contract for Canada

Lease To Own Commercial Property Contract Template for Canada

This comprehensive legal agreement, governed by Canadian federal and provincial laws, combines elements of both a commercial lease and a purchase agreement. It enables a tenant to lease a commercial property while simultaneously securing the right to purchase it at a predetermined price within a specified timeframe. The document addresses crucial aspects such as lease terms, purchase option details, maintenance responsibilities, and financial arrangements, while ensuring compliance with Canadian commercial property regulations, tax laws, and provincial real estate requirements.

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Lease To Own Commercial Property Contract

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What is a Lease To Own Commercial Property Contract?

The Lease To Own Commercial Property Contract is a sophisticated legal instrument used in Canadian commercial real estate transactions where parties wish to combine a leasing arrangement with a future purchase option. This arrangement is particularly suitable for businesses that want to secure a property location while building up equity or improving their financial position before making a full purchase. The document typically includes detailed provisions for lease payments, maintenance obligations, option exercise procedures, and purchase price calculations, all while ensuring compliance with relevant federal and provincial legislation. It's commonly used in situations where immediate purchase isn't feasible or desired, but both parties want to establish a clear path to ownership transfer. The agreement provides protection for both the landlord's current ownership rights and the tenant's future purchase interests, while addressing tax implications, property maintenance, and regulatory requirements specific to Canadian jurisdictions.

What sections should be included in a Lease To Own Commercial Property Contract?

1. Parties: Identification of the landlord/seller and tenant/buyer, including full legal names, addresses, and registration details if corporate entities

2. Background: Context of the agreement, including property description and intent of parties to enter lease-to-own arrangement

3. Definitions: Key terms used throughout the agreement, including Property, Commencement Date, Option Period, Purchase Price, etc.

4. Lease Terms: Duration of lease, rent amount, payment schedule, and annual increases

5. Property Use and Maintenance: Permitted use of property, maintenance responsibilities, and property management obligations

6. Purchase Option Terms: Details of the option to purchase, including option price, exercise period, and credit of rent towards purchase

7. Exercise of Purchase Option: Process and requirements for exercising the purchase option, including notice requirements and closing procedures

8. Insurance and Liability: Required insurance coverage, liability allocation, and indemnification provisions

9. Default and Remedies: Events of default under both lease and purchase provisions, cure periods, and available remedies

10. Assignment and Subletting: Rights and restrictions regarding assignment of lease or purchase option

11. Representations and Warranties: Statements of fact and promises by both parties regarding the property and their capacity to enter the agreement

12. Taxes and Expenses: Allocation of property taxes, utilities, maintenance costs, and other expenses

13. Notices: Methods and addresses for formal communications between parties

14. General Provisions: Standard contract clauses including governing law, entire agreement, amendments, and severability

What sections are optional to include in a Lease To Own Commercial Property Contract?

1. Environmental Matters: Required when property has potential environmental concerns or specific environmental compliance requirements

2. Property Management: Include when specific property management services are part of the arrangement

3. Tenant Improvements: Required when tenant is permitted to make substantial improvements to the property

4. Common Areas: Necessary for multi-tenant properties or shared facilities

5. Operating Costs: Detailed section needed for triple net leases or specific operating cost arrangements

6. Security Deposit: Include when additional security beyond rent is required

7. Financing Provisions: Required when either party needs to secure financing for the eventual purchase

8. Property Development Rights: Include when tenant has rights to develop or significantly modify the property

What schedules should be included in a Lease To Own Commercial Property Contract?

1. Schedule A - Property Description: Legal description of the property, including boundaries, easements, and registered encumbrances

2. Schedule B - Rent Schedule: Detailed breakdown of rent payments, increases, and portion applied to purchase price

3. Schedule C - Purchase Price Calculation: Formula for determining final purchase price, including rent credits and adjustments

4. Schedule D - Permitted Uses: Detailed list of permitted and prohibited uses of the property

5. Schedule E - Condition Report: Initial condition of the property with photographs and descriptions

6. Schedule F - Insurance Requirements: Detailed insurance specifications required for both parties

7. Schedule G - Environmental Reports: Environmental assessment reports and related documentation

8. Schedule H - Operating Costs: Detailed breakdown of operating costs and allocation between parties

9. Appendix 1 - Form of Option Exercise Notice: Template notice for exercising purchase option

10. Appendix 2 - Required Maintenance Schedule: Detailed maintenance requirements and schedules

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Canada

Publisher

Genie AI

Cost

Free to use
Relevant legal definitions


















































Clauses










































Relevant Industries

Commercial Real Estate

Retail

Manufacturing

Hospitality

Healthcare

Professional Services

Warehouse and Distribution

Technology

Industrial

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Education

Relevant Teams

Legal

Finance

Real Estate

Operations

Facilities Management

Risk Management

Compliance

Treasury

Corporate Development

Property Management

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Real Estate Director

Property Manager

Corporate Counsel

Legal Counsel

Business Development Manager

Facilities Manager

Operations Director

Risk Manager

Commercial Property Agent

Finance Director

Asset Manager

Compliance Officer

Treasury Manager

Industries










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