Ontario · Commercial leases

Commercial Leases in Ontario: A Guide for Landlords (2026)

Renting out a storefront, office or other business space in Ontario works differently from renting a home. The Residential Tenancies Act and the Landlord and Tenant Board don't decide commercial disputes; the Commercial Tenancies Act and your lease do. This guide covers unpaid rent, ending a tenancy, sales tax on rent and the lease clauses to get right.

Who hears commercial disputes

The courts, not the LTB

Small Claims Court for money or property under $50,000; otherwise the Superior Court of Justice.

Which law applies

Commercial tenancies in Ontario fall under the Commercial Tenancies Act (CTA) and the lease itself. A signed commercial lease may take precedence over the CTA, so the lease is the first thing to read.

The Landlord and Tenant Board doesn't hear commercial disputes, and the province doesn't get involved in them. Claims about money or personal property under $50,000 go to Small Claims Court; larger claims go to the Superior Court of Justice.
If it's unclear whether a tenancy is residential or commercial, the landlord or tenant can ask the LTB to decide whether the Residential Tenancies Act applies.
There is no rent control: the CTA doesn't regulate commercial rent increases. The lease should set the rent and how often it can increase.
There is no standard commercial lease, because businesses have different needs. What matters is what your own lease says.

When the rent is unpaid

Unless the lease says otherwise, a landlord may re-enter the premises (change the locks and end the tenancy) once rent has been unpaid for 15 days. For example, if rent was due January 1, the locks may be changed on January 17. The landlord doesn't have to notify the tenant that the locks will be changed.

Instead of ending the tenancy, the landlord may seize and sell the tenant's property on the premises to cover the unpaid rent. This is called distress. A landlord can't do both for the same unpaid rent.

Goods that are exempt from seizure under execution are also exempt from distress. For a monthly tenancy, that exemption only covers two months of arrears.
Only the goods of the tenant (or the person liable for the rent) can be seized, with limited exceptions in the Act; for example, property that is leased or co-owned can't be.
Before selling seized property, the landlord must notify the tenant, state the amount needed to pay off the arrears, and hold the property for five calendar days. If the tenant pays in full during those five days, the property can't be sold. Otherwise, it must be appraised by two appraisers before it is sold.
A tenant facing re-entry can apply to the Superior Court of Justice for relief from forfeiture. In a proceeding for unpaid rent, paying all the arrears and the costs into court before judgment stops it.

Other breaches of the lease

For a breach other than unpaid rent, the landlord must first give the tenant notice of the breach and a reasonable time to fix it before ending the tenancy.

Ending a commercial tenancy

Month-to-month tenancy: either side must give written notice at least one month in advance, ending on the last day of a month.
Holding over: a tenant who stays after the lease ends and after a written demand to leave owes double the yearly value of the premises for the time they stay. A tenant who gives notice and doesn't leave owes double rent.
The landlord can apply to a judge of the Superior Court of Justice for a writ of possession.

Sales tax (GST/HST) on commercial rent

Commercial rent is subject to GST/HST: in Ontario, 13% HST. What else the tenant pays you is often taxable too.

Property and business tax recovered from the tenant is taxed the same way as the base rent, unless the tenant is directly liable to the municipality.
TMI and CAM (operating and maintenance costs the tenant reimburses that would otherwise be part of the rent) are generally taxable, the same as the base rent. The CRA's principle is that these cost recoveries take on the rent's tax status, unless a specific charge is really a separate supply.
A security deposit isn't taxable when you receive it. Tax applies when it is applied to rent (for example, to the last month), and a forfeited deposit is treated as a tax-included payment.
A rent-free period has no GST/HST, because no rent is paid for it.

Interest on late rent

If the lease charges interest on late rent at a rate per day, week, month or any period under a year (for example, 1.5% a month), the federal Interest Act limits it to 5% a year unless the lease also states the equivalent yearly rate. State the yearly rate in the lease.

How Automanagement helps

Commercial units alongside residential ones, with business tenants (business name, BN and GST/HST number).
GST/HST added to commercial rent charges once you enter your registration.
Base rent, additional rent (TMI/CAM) and scheduled rent steps on each lease.
Reminders before a renewal-notice deadline, and the signed lease kept with the lease record.

Sources

Commercial Tenancies Act, R.S.O. 1990, c. L.7: ontario.ca/laws/statute/90l07
Government of Ontario, Renting commercial property in Ontario: ontario.ca/page/renting-commercial-property-ontario
CRA GST/HST Memorandum 19.4.1 (Commercial Real Property, Sales and Rentals); GST/HST Memorandum 19-2-2 (Residential Real Property Rentals, source of the general cost-recovery principle applied here); GST Memorandum 300-6-8 (Deposits): canada.ca
Interest Act, R.S.C. 1985, c. I-15, s. 4: laws-lois.justice.gc.ca/eng/acts/I-15

Get legal advice before you act

Re-entry and distress have strict conditions, and your lease can change them. Talk to a lawyer before you change the locks or seize a tenant's goods.

Frequently asked questions

Does the Landlord and Tenant Board handle commercial tenancies?

No. Commercial disputes go to Small Claims Court (under $50,000) or the Superior Court of Justice. The LTB can only decide whether a tenancy falls under the Residential Tenancies Act.

Is there rent control on commercial leases in Ontario?

No. The Commercial Tenancies Act doesn't regulate rent increases, so the lease should set the rent and how often it increases.

When can a commercial landlord change the locks for unpaid rent?

Unless the lease says otherwise, once rent has been unpaid for 15 days: if rent was due January 1, the locks may be changed on January 17. Get legal advice first.

Can a landlord change the locks and also seize the tenant's goods?

No. For unpaid rent, the landlord can either end the tenancy or seize and sell the tenant's property (distress), not both.

Do I charge HST on TMI or CAM?

Generally yes, on a commercial lease. Operating and maintenance costs the tenant reimburses as part of the rent usually take on the rent's tax status, so 13% HST normally applies in Ontario, unless a specific charge is really a separate supply.

How should a lease state interest on late rent?

As a yearly rate. Under the Interest Act, a rate stated only per month (or any period under a year) is limited to 5% a year unless the yearly equivalent is also stated.

Commercial units, handled

Automanagement handles commercial units next to residential ones: business tenants, GST/HST on rent, TMI/CAM and rent steps, built for Canadian landlords.

Start free More landlord guides

General information for landlords, not legal or tax advice. Rules change; confirm the current requirements with the Government of Ontario. Last reviewed 2026-10-01. Official source