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Tenant's Obligations

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Some of the common obligations of a tenant in a commercial lease are as follows:

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Rent and triple net charges

The primary obligation of the tenant is to pay the rent and triple net charges in full and on time as they become due. There usually a provision for interest for late payment.

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No assignment or subletting

The tenant usually cannot assign the lease or sublet the premises without first obtaining the consent of the landlord. The tenant should bargain for a clause saying that the consent with not be unreasonably withheld. That way, if the tenant wants to sell the business, but the landlord unreasonably withholds consent to the assignment of lease, the tenant may either take action to compel the landlord to agree, or it may be able to walk away from the lease.

As tenant, you should try to negotiate a term which relieves you of any further liability for default by the assignee. As the landlord, you will want to have the tenant (and guarantors) continue to be liable. Again, this is a matter of bargaining power.

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Leave premises in good repair

The tenant may be obligated to repair the interior of the premises except for reasonable wear and tear. This means that if there is damage to the inside of the premises, the tenant is usually required to repair it. Repairs to the outside or the structure of the building or mall are usually the responsibility of the landlord.

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Permitted use

The tenant must use the premises only for the permitted business purpose as stipulated in the lease. For example, your lease might state that you may only use your rented premises for a coffee shop. If your cafe doesn't succeed, you can't change your business to sell pet food, unless the landlord consents. This gives the landlord greater control over the tenant mix on the property. The tenant also cannot leave the premises empty. The tenant is usually required to open the business during the mall's normal operating hours.

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The tenant must usually indemnify the landlord from all legal actions which originate and involve the tenant's business. For example, if a customer slips on some hot coffee spilled on your floor, and the customer sues both you and the landlord, you must pay for the landlord's lawyer fees to defend the lawsuit and any judgement made against the landlord. You should ensure that your insurance covers this.

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Notices "for sale" or "for lease"

Most leases contain a provision which requires the tenant to permit the landlord to post "for sale" or "for lease" signs on the premises 90 days prior to the expiration of the lease. The tenant must allow prospective tenants to inspect the premises on a reasonable basis during this time period.

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More questions? Phone us at (604) HELP-LAW.

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Legal disclaimer:  The information provided on Lawyers-B.C..Com is not intended to be legal advice, but merely conveys general information related to legal issues commonly encountered. Your access to and use of this Web site is subject to additional terms and conditions.

This page last updated: November 20, 1999
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