Understanding the commercial leasing process can play an important role in things going smoothly. Being well-prepared will drastically improve your experience, and there is no replacement for a skilled realtor.
- You will have an in-depth discussion with your Realtor, so they have a clear understanding of your budget and zoning.
- Your Realtor will present you with appropriate properties and explain their respective lease terms.
- When you find the right property, your Realtor will make an O.T.L. (Offer to Lease), which is not a legally binding lease, but is legal intention. In anticipation of this, you should make the following arrangements:
- Your lawyer will be available and ready to review a final lease agreement.
- You will be able to provide copies of your photo identification and incorporation documents in compliance with BC anti-fraud laws (a.k.a. FINTRAC).
- You have your business plan ready. Some landlords require a business plan and will perform credit checks.
- You can provide quotes from any contractors you will use upon occupation.
- After 2-3 days, the prospective landlord will counter-offer with escalations, deposit info, etc.
- Counter-offers will go back and forth at 2-3 day intervals, allowing time to review and consider.
- Once you have an excepted offer, you will set a timeline for the landlord to provide a formal, legally binding lease and disclosure on strata fees and obligations. Typically, 4-5 business days are expected.
- Ensuring in advance that your lawyer is available at this stage is crucial. Lawyers are often busy, and you will want to engage them immediately upon receipt of the lease and disclosure. If changes are needed, your Realtor will negotiate with the landlord on your behalf. Often such negotiations involve some back-and-forth, so allow 2-3 weeks for this stage. It’s vital to grant sufficient time, since if you fail to meet a deadline, the lease becomes void, and the process stops.
- After a finalized lease is agreed upon and signed, the deposit is paid in trust to your Realtor’s brokerage. Having a third-party trustee hold the money pending the removal of subjects is in the best interest of both the renter and the landlord. Cheques, bank drafts, and/or banking information may be required. The final lease will include a specific subject removal date and a possession date.
- Before the subject removal date, you must meet certain conditions, such as obtaining or modifying your business licence and securing insurance. Often, your Realtor will help you with these steps.
- Within 48 hours after the subject removal date, the deposit is transferred to the landlord. Additionally, copies of your updated business license, proof of insurance, and documentation supporting the satisfaction of any additional subjects are submitted.
- Most landlords will supply keys to the premises upon receipt of the deposit, as long as they have a copy of the certificate of insurance that meets the terms of the lease agreement. However, a landlord may occasionally wait until the set possession date.
(Important Note: If you fail to meet deadlines or commitments under the Offer to Lease, the deal is no longer valid and may be terminated by the landlord.)
Typical Timeline for Leasing a Commercial Property
- Day 1: View properties.
- Day 2: Prospective property found. Realtor presents an O.T.L.
- Day 4-5: Landlord counter-offers.
- Day 7-9: Counter-offer accepted.
- Day 11-15: Lease received and submitted to lawyer.
- Day 12-36: Realtor negotiates changes recommended by lawyer.
- Day 26-36: Lease signed. Deposit put into trust.
- Day 31-46: Subjects removed. Deposit transferred to landlord. Acquire keys to newly leased commercial property!
*Note: Timeframes may vary, and may not always meet these averages. Occasionally things happen more quickly or slowly.