Entrepreneurship & Small Business

Commercial lease (small store) in Toronto

  • Last Updated:
  • Jul 9th, 2020 1:11 pm
[OP]
Newbie
Jul 4, 2020
5 posts
Toronto

Commercial lease (small store) in Toronto

Located in downtown Toronto. Just wondering if anyone here can give me some advice, or if anyone else is in a similar situation.

My mother owns a small store, and signed a commercial lease extension last year (5 years) prior to the pandemic hitting. It forced her store to close, and hasn't re-opened since for two reasons: 1) She's in the older age group (65+) and doesn't quite feel safe, and 2) It's a non-essential business in an industry that will likely not recover. She was just barely scraping by before. To open the doors now to make $0 doesn't make much sense.

Being locked into this lease for 4 more years, we are wondering what options are left? I'm aware that she signed a contract that must be honoured. I just don't see how we can continue to hemorrhage money for the next 4 years. Is there any way to get out of this legally? Just looking for some ideas that we can move on ASAP, as the stress levels are increasing by the day.
Last edited by edladle on Jul 10th, 2020 6:51 pm, edited 1 time in total.
11 replies
Deal Fanatic
Oct 7, 2007
9134 posts
5018 upvotes
I am not an expert but here are some things I might try if I were your mom:

1. Has she tried talking to the landlord and explaining her situation? Sometimes, people are understanding and the landlord may be willing to work something out. Also, if something happens legally down the road, your mom can show she made a sincere effort to approach the landlord in trying to work something out.

2. Has your mom thought of trying to find someone who might take the lease over? If your mom is able to replace herself with someone else willing to pay the rent, I would think it might make it easier for the landlord to let your mom out of her current situation.
[OP]
Newbie
Jul 4, 2020
5 posts
Toronto
Appreciate your reply and advice. Currently in the middle of communicating with the landlord. I'm actually e-mailing them on her behalf, since it's harder to express her thoughts in detail (with English being her second language). From the outset, it's hard to tell if they are understanding of the situation but I've laid out all the concerns and willingness to work things out with them.

As for #2, she has not tried that yet. To be honest, wouldn't even know where to begin with that. Is there a place where people look to take over commercial leases? Or is it just as simple as trying to sell the business?
Deal Guru
User avatar
Mar 23, 2008
13006 posts
9952 upvotes
Edmonton
Is your mother's business incorporated, or did she have to sign a personal guarantee on the lease? Those things might affect advice you get.

C
[OP]
Newbie
Jul 4, 2020
5 posts
Toronto
It's not incorporated. I contacted a lawyer who mentioned that the likely only way to get out of the lease without litigation would be to negotiate a deal. Guess I'm just looking for every option available, such as the suggested lease takeover. Would prefer to get going on something as possible, as we don't want this lingering over us too long.
Deal Addict
May 12, 2014
3289 posts
3270 upvotes
Montreal
The options are not great. But you can consider:
- trying to sublease or assign the lease;
- selling the business, or even paying someone to take it over.

The above options will depend on your specific lease clauses.

I'm sorry to say this, but you may also want to consider bankruptcy as an option.
[OP]
Newbie
Jul 4, 2020
5 posts
Toronto
So I contacted the landlord (or his representative), and definitely not too thrilled with their response. I was open and willing to negotiate a way out, again citing my family's concerns.

The landlord's suggestion was that my elderly mother (who has had recent heart issues) to open up her business, get some loans, and hope that things get better. All the while criticizing her for not letting them know sooner about her desire to close. We did not know the impact this would have had on her business a month ago, let alone two months back. We're not trying to get out of this free. My family is willing to help my mother out of this, by whatever financial means necessary. We are concerned for her health and safety, and don't want her running a business by herself during this pandemic. Yet, they are coming at us in this tone.
Member
Apr 2, 2020
205 posts
89 upvotes
That's terrible. Sorry to hear.

A third option, which I did when my Landlord wouldn't defer my rent during the lock-down, is to start a grassroots social media campaign.

I called my MLA, mayor, leader of the opposition, posted and shared on Facebook etc...and bashed our landlord. The CFIB was good to deal with as well. I also contacted other tenets in the building and got them on my side. The landlord ( a billion dollar REIT) eventually caved. I'm sure not ONLY because of me though.

The landlord doesn't want to get a bad reputation especially since times will be tough for them in the next few years.

It's worth a try.
[OP]
Newbie
Jul 4, 2020
5 posts
Toronto
Thanks for that idea. I like it. Would never have considered that as an option before, but seeing their response I might have to go that route. Unfortunately there are only two other commercial tenants in the building, both (essential) of whom weren't impacted as heavily as my mom. But still worth looking as an option.

It's funny cuz I'm a residential landlord (single condo unit). And trying to put myself in the commercial landlord's bigger shoes, I would never be that callous towards my tenants. Thankfully my tenants weren't impacted, but I did have a plan in place if they needed any type of relief or had to get out of their lease early. I would have understood, and worked with them.
Member
Apr 2, 2020
205 posts
89 upvotes
My landlord also told me to take out a loan to pay them when the government shut my business down. My rent is $12,000 per month.
Deal Addict
Jan 12, 2017
1622 posts
949 upvotes
Nice tantrum
Pronoia wrote: That's terrible. Sorry to hear.

A third option, which I did when my Landlord wouldn't defer my rent during the lock-down, is to start a grassroots social media campaign.

I called my MLA, mayor, leader of the opposition, posted and shared on Facebook etc...and bashed our landlord. The CFIB was good to deal with as well. I also contacted other tenets in the building and got them on my side. The landlord ( a billion dollar REIT) eventually caved. I'm sure not ONLY because of me though.

The landlord doesn't want to get a bad reputation especially since times will be tough for them in the next few years.

It's worth a try.

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