Commercial Lease Disputes in Ontario: Rent, Repairs, Default and Termination

Disputes over rent are among the most common issues in commercial leasing, and they take several forms. A tenant might dispute the calculation of additional rent under a net lease, questioning how operating costs or property tax were allocated. A landlord might claim a tenant has fallen behind on base rent. And in leases with a rent review or escalation mechanism, the two sides might simply disagree about what the correct new figure should be.

Because commercial leases are detailed, negotiated documents, resolving a rent dispute usually starts with a careful, line-by-line comparison between what the lease actually requires and what’s being charged or withheld. Many disputes turn out to be calculation or interpretation issues rather than genuine disagreements about the underlying obligation, and a clear written breakdown from both sides is often enough to identify exactly where the disagreement lies.

Rent disputes can also arise from a simple failure to communicate a change — a landlord increasing additional rent charges without adequate notice, or a tenant unilaterally deducting an amount it believes it’s owed without following the process the lease requires for such a deduction. Even where a party’s underlying position turns out to be correct, acting unilaterally rather than raising the issue formally first can itself create a default under the lease, which is worth avoiding wherever possible.

Disputes over who is responsible for a given repair are common, particularly where a lease’s maintenance clause is vague or where a problem doesn’t fit neatly into either party’s defined responsibilities. A leaking roof might clearly be the landlord’s responsibility, but a malfunctioning piece of tenant-installed equipment tied into the building’s systems can raise a genuinely harder question.

When these disputes arise, the lease’s specific language usually controls, so identifying exactly which clause governs the item in question is the first step. Where the lease is ambiguous, courts will generally look at the overall structure of the lease, industry practice, and what a reasonable interpretation of the parties’ intentions would have been at the time the lease was signed — which is one more reason vague repair clauses tend to cause more disputes than clear ones.

Where a repair genuinely falls into a grey area, some leases include a mechanism for resolving exactly this kind of disagreement, such as requiring a joint inspection or a neutral third-party opinion before either side incurs significant cost. Even without such a clause, proposing a joint inspection can be a practical, low-cost way to narrow the dispute before it escalates into a more formal disagreement.

A default occurs when either party fails to meet an obligation required under the lease — most commonly, a tenant failing to pay rent, but also including breaches like operating outside the permitted use, failing to maintain required insurance, or violating an exclusivity clause. Most commercial leases define specific default events and set out a cure period — a window of time during which the defaulting party can fix the problem before the other side can act on the default.

Cure periods and the notice required to trigger them are usually spelled out in detail, and following them precisely matters for both sides. A landlord who moves to terminate a lease without providing the required notice and cure period risks having that termination challenged as invalid, while a tenant who ignores a default notice, assuming it will be overlooked, risks losing rights they could otherwise have preserved simply by responding within the required window.

It’s also worth checking whether a lease imposes any limit on how many times a default can be cured before a landlord can treat further breaches more strictly, sometimes called a repeat default provision. A tenant with a pattern of late payments, for example, might find that a cure right which worked the first few times no longer applies in the same way after a defined number of prior defaults, which makes consistent, timely compliance worthwhile well beyond just avoiding the immediate default itself.

Where a tenant default isn’t cured within the applicable period, a commercial landlord generally has several potential remedies, depending on what the lease provides and the nature of the default. These can include terminating the lease and re-entering the premises, suing for unpaid rent and damages, and in some circumstances, exercising a remedy called distress — seizing certain tenant property on the premises as security for unpaid rent, a remedy that exists in commercial leasing but is subject to specific legal limits and procedures.

Because these remedies can be severe, and because a landlord who acts improperly (for example, changing locks without proper legal basis) can expose itself to liability, both sides generally benefit from confirming the correct process before acting. A tenant facing a default notice should treat it seriously and respond promptly, and a landlord considering enforcement action should confirm each procedural step has actually been satisfied before proceeding.

Tenants facing a default notice they believe is incorrect shouldn’t simply ignore it on the assumption that a court would eventually agree with them. Responding in writing, disputing the alleged default with supporting documentation, and seeking to resolve the disagreement while the lease remains in good standing is almost always a stronger position than allowing a landlord to proceed toward termination while the dispute goes unaddressed.

Many commercial leases require landlord consent before a tenant can assign the lease or sublease the space, often with language requiring that consent not be unreasonably withheld. Disputes arise when a landlord refuses consent and the tenant believes the refusal was unreasonable, or when a landlord claims a purported assignment or sublease didn’t follow the required process in the first place.

What counts as “reasonable” grounds for withholding consent depends on the specific lease language and the circumstances — concerns about a proposed assignee’s financial strength or business reputation are commonly treated as legitimate, while a blanket refusal with no stated reason is more likely to be challenged. Tenants planning a sale or restructuring that depends on transferring the lease should raise the assignment process with the landlord early, rather than assuming consent will be a formality.

Disputes also arise where a tenant proceeds with an assignment or sublease without seeking consent at all, sometimes assuming the landlord wouldn’t object in practice. This can constitute its own default under the lease, independent of whether the proposed new occupant would otherwise have been acceptable, which is why following the lease’s actual process matters even when a landlord’s objection seems unlikely.

Disputes about whether a lease was validly terminated — by either side — tend to be among the highest-stakes commercial lease disputes, because the outcome affects whether the tenant has any ongoing right to occupy the space at all. These disputes often turn on technical questions: whether required notice was given correctly, whether a cure period was properly honoured, or whether the party terminating actually had a valid basis to do so under the lease.

Given how much is often at stake, termination disputes are usually not something to resolve informally over email. Where a landlord is threatening termination, or a tenant is considering treating a landlord’s own breach as grounds to walk away from the lease, getting a clear-eyed, document-based assessment of the actual legal position — before taking an irreversible step — is generally worth the time it takes.

It’s also worth considering the practical consequences of a termination dispute beyond the legal question itself. A tenant forced to relocate on short notice faces real business disruption, while a landlord left with vacant space during a dispute faces its own carrying costs. These practical pressures often push both sides toward a negotiated resolution well before a termination dispute reaches a final legal determination.

Many commercial leases include a dispute resolution clause requiring mediation or arbitration before litigation, and it’s worth checking for this before assuming court is the only, or first, available path. Where no such clause exists, the general principles covered in our contract disputes hub apply: document the issue clearly, consider a formal written demand, and weigh the cost and complexity of the dispute against what’s actually at stake.

Because commercial leases are often long-term, high-value relationships, it’s also worth weighing the cost of a dispute against the value of preserving the relationship where that’s still realistic. Not every disagreement needs to end the tenancy or the relationship entirely — many are resolved through a negotiated adjustment once both sides have a clear, documented understanding of the issue and what the lease actually requires.

Whatever the specific dispute, the same fundamentals apply: read the lease carefully before forming a position, document everything in writing, and treat formal notice requirements as strict deadlines rather than suggestions. Commercial lease disputes are rarely resolved by whoever feels most strongly about being right — they’re resolved by whoever can point most clearly to what the lease actually says and show they followed its process.