While a storefront, office or factory can be integral to brand recognition, having a commercial space can also represent your largest expense. Before you commit, there are many factors to consider.

Lease type
Your first consideration should be which lease type suits you.
•   Gross rent lease. You pay rent in a lump sum, and it includes your base rent as well as any incidental expenses like insurance, property tax, utilities, repairs, or maintenance.
•   Net rent lease. You pay base rent, plus any additional costs based on ownership or location, like property taxes, insurance or utilities. The landlord pays all other expenses.
•   Base/single net rent lease. You pay base rent and one incidental expense (often property tax). The landlord covers all other costs.
•   Double net rent lease. You pay base rent and two incidental expenses, while the landlord covers all other costs.
•   Triple net rent lease. You pay base rent, taxes, insurance, and maintenance costs. The landlord covers structural repairs. 

Always be sure the costs you’re signing up for are clear! Although there is no legal distinction between single, double, or triple net leases in Quebec, it is common practice to describe a tenant's degree of responsibility in these terms. To avoid issues, ensure the responsibilities of each party are outlined clearly.

Other important considerations
Local bylaws: Familiarize yourself with the bylaws in your area to ensure that your business type is permitted.

Terms and renewal: Know the terms! If written notice is required, when and how does it need to be delivered? Is there a security deposit? Do you need a guarantor? Are future rent increases likely? Can you renew?

Repairs and renovations: Be sure you know who is responsible for what. Who owns improvements? Do renovations require approval? Do specific contractors need to be hired?

A default or change of ownership: How does your lease define a default? How much time do you have to quit the lease? What about penalties? What happens if you sell your business? Can you sublet?

The landlord: Does your landlord have a good reputation? Either way, keep a lease log: date and detail any events related to payment, increases, renewals, etc. If something is agreed to via phone, follow up via email—always best to have a paper trail!

Bottom line: When it comes to signing a commercial lease, you’ll never regret taking the time to inform yourself.

YES will be hosting a workshop on commercial leases in March 2021. And in the meantime, our Coaches are always ready to help you decide which option works best for you. Find out more at yesmontreal.ca.