What should a daycare buyer check in the premises lease?

A daycare cannot move easily. The premises were built or adapted for children, and the licence is tied to them. That makes the lease one of the most important documents in the purchase. The lender’s view of term length is covered in why a buyer’s lender cares about the lease term. This page is the buyer’s read of the lease for a child-care use.

Permitted use

Check that the lease names child care, or something broad enough to include it, as the permitted use. Ask whether there are limits on hours, group size or noise. A lease written for an office or shop may not allow what you intend. If anything is unclear, ask your lawyer to raise it with the landlord, and ask the licensing office whether the premises meet its requirements.

Outdoor play area and parking

Many centres rely on a fenced yard or shared outdoor space, and on drop-off parking at the busiest times. Confirm that the lease gives the tenant the right to use them, who maintains them, and whether the landlord can change them. Ask your lawyer whether shared areas can be reduced or reassigned if the lease is silent. Walk the site at pick-up time to see how it works.

Landlord consent to assignment

Many leases need the landlord’s consent before a tenant transfers them, so check yours. Ask what the landlord will want to see about you, whether there is a fee, and whether the seller stays responsible afterwards. Start this early because it can take time. Your lawyer can tell you how to make the sale conditional on obtaining that consent.

Renewal options and the end of the lease

Look at how long the lease runs, whether you can renew and on what terms, and what you must restore at the end. A play area, special flooring or built-in features may need to be removed. Ask who owns leasehold improvements. A short remaining term can make lenders cautious, so ask your lender what it will want to see.