What if a commercial tenant is holding over after the lease expires?

Commercial tenancy law is provincial, and the Government of Ontario notes that a signed commercial lease may take precedence over the Commercial Tenancies Act. So the first question is what the lease says about the end of the term. Ontario and British Columbia each have a statute that deals with a tenant who stays on, and the two are not identical. For a buyer, a holdover matters because the business may be operating on premises it has no secure right to occupy.

What Ontario’s Act provides

Section 58 of Ontario’s Commercial Tenancies Act applies where a tenant wilfully holds over after the term has ended, and after written notice to deliver up possession has been given by the landlord, the person to whom the remainder or reversion of the land belongs, or that person’s lawfully authorized agent. The tenant then pays double the yearly value of the land for as long as it is detained, recoverable by action. Separately, section 74 lets a landlord apply on affidavit to a judge of the Superior Court of Justice where a tenant wrongfully refuses or neglects to go out of possession after the tenancy has ended, and under section 76 the judge may order a writ of possession if it appears that the tenant wrongfully holds against the right of the landlord.

What British Columbia’s Act provides

British Columbia’s Commercial Tenancy Act has a double-yearly-value rule of its own for a tenant who wilfully holds over after demand and written notice to deliver possession. It also lets a landlord apply to the Supreme Court where a tenant wrongfully refuses, on written demand, to go out of possession after the lease has expired or been ended. Other provinces run their own regimes, so do not assume either Act applies to premises elsewhere.

What a buyer can check

A holdover is a fact to run down, not a verdict. Both Acts tie the double-yearly-value rule to written notice for delivering possession, given by the landlord or another person the Act names, so the paper trail matters. Ask for the following before you rely on the premises:

• The lease, every amendment and any renewal notice, and whether an option to renew was exercised in the way and by the date the lease requires.
• Any written notice or demand for possession the landlord has sent.
• What rent has been paid since the term ended, and whether the landlord has said in writing that the tenant may stay.
• Whether the purchase agreement can make a signed extension or new lease a condition of closing.

If the term is only ending soon rather than already over, see what if the lease expires soon after closing. The lease review checklist lists the clauses worth reading first.