Entrepreneurship & Small Business

If i buy a commercial building, can i teminate someones lease

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  • Sep 9th, 2022 1:43 pm
Member
May 20, 2002
213 posts
26 upvotes

If i buy a commercial building, can i teminate someones lease

Hi all, the scenario is that our business in our commercial/industrial plaza is growing too fast.

The cost for us to move is too high.

If we buy the entire commerical plaza, can we kick out a tenant if we intend to use the space next door to us?

I know this is the case for residential buildings.
11 replies
Member
May 20, 2002
213 posts
26 upvotes
Unfortunately i dont know. Ours does not stipulate either
Deal Addict
Aug 28, 2007
2167 posts
539 upvotes
Calgary
It will be a provincial regulation, if any. Probably best to hire a local property / real estate lawyer for an hour and ask that question
Deal Fanatic
Jan 21, 2018
9652 posts
10924 upvotes
Vancouver
Normally the lease is a two-way commitment to the stated term, to be terminated early only by mutual agreement achieved through negotiation and appropriate compensation. If the document describes a bunch of circumstances under which the landlord can terminate the lease for cause (e.g, failure to pay rent, wrecking the building, impacting other tenants), but is silent on arbitrary termination at the landlord's discretion, you can assume that a court would interpret that as not being permitted.

The way to solve this problem is to approach the other tenants and offer money. Use the money you presumably have to buy the building, and instead get them to move out while you sub-let their premises (assuming that's permitted).
Deal Addict
Dec 3, 2013
1814 posts
3254 upvotes
Somewhere over the r…
Scote64 wrote:

The way to solve this problem is to approach the other tenants and offer money. Use the money you presumably have to buy the building, and instead get them to move out while you sub-let their premises (assuming that's permitted).
I would imagine that would be very difficult to do, assuming the other guys business is viable.
Deal Fanatic
Sep 23, 2007
5654 posts
2168 upvotes
CowDoc wrote: Hi all, the scenario is that our business in our commercial/industrial plaza is growing too fast.

The cost for us to move is too high.

If we buy the entire commerical plaza, can we kick out a tenant if we intend to use the space next door to us?

I know this is the case for residential buildings.
This problem can get complex. Let me get this right. You are currently a tenant in a commercial plaza and you want to buy the WHOLE plaza? My first thought is...who else is in that plaza. Most plazas have more than 2 stores.

Your end goal is to take the space next door? Buying a WHOLE plaza seems like a very round about way to achieve this. You'd become a landlord and depending on how the deal is struck, you might be assuming all existing tenancy agreements in the plaza. You'd be responsible for maintaining the property. You said the cost to move is high, but I'm not grasping how moving can cost more than buying the whole plaza.

If you have the funds to buy out the whole plaza, it would be reasonable to say you have enough funds to also just buy out the business next door? Why don't you start off with a softer approach and get to know the owner next door? Maybe you can discreetly get more information first? Who knows...maybe the owner is aiming to retire soon.

If you buy out the whole plaza, it'd be a very reasonable request to have your lawyer request for some information like financial statements of prior years, and ask for information about existing leases. Depending on what information you get, you can go from there. But going this route requires you to commit to paying some legal fees to explore buying the whole plaza.

Furthermore, what is your business? If business is growing, are there not other ways to meet customer demands besides getting more space? Like if you're running a bakery for example, you can rent cheaper "kitchen" spaces to mass produce. Then ship to your main store front. You can also set up a website so customers can order online and pick up at the main store given a schedule. If you're providing accounting services, you can do a lot of things online. It's 2022 and there are just so many ways to manage the business without requiring more space. Many businesses I know have been trying to DOWNSIZE.

Sorry man, overall, I'm scratching my head. This kind of problem can obviously get very complex and you've not provided much information. Even a lawyer can't help you with what little you have provided. I can't even grasp how your need for more space jumped you to buying out a whole plaza. To me, it seems to make more sense to first discuss with your neighbour to see if an agreement can be reached. If not, then consider moving to another location. Surely a move can't cost as much as buying out the whole plaza. Plus, even if you take over the plaza, depending on what's written on the lease, the next door neighbor can choose to fight you in court which you don't want. Civil cases like these take forever to resolve and very difficult and expensive to have lawyers go over the cases.
Deal Expert
User avatar
Jan 9, 2011
19733 posts
28613 upvotes
Vancouver
CowDoc wrote: Hi all, the scenario is that our business in our commercial/industrial plaza is growing too fast.

The cost for us to move is too high.

If we buy the entire commerical plaza, can we kick out a tenant if we intend to use the space next door to us?

I know this is the case for residential buildings.
You will have to check the existing leases with the tenants and refer to the relevant legislation in your province. For BC: https://www.bclaws.gov.bc.ca/civix/docu ... g/96057_01
I wouldn't do anything without getting advice from a lawyer experienced in this area.
Member
May 20, 2002
213 posts
26 upvotes
The business is an emergency vet clinic. We have 42 partners.

The cost of moving is high considering moving surgical suites and xrays etc.

The real cost would be that we have already been approached by large US buyers that would love to take over our location. If we move then they would assume our lease. That would ve terrible for our business. People literally jump in their care and drive to us when their pet is sick.

Also several partners wish to have real estate holdings.
Deal Expert
User avatar
Jan 9, 2011
19733 posts
28613 upvotes
Vancouver
@CowDoc You haven't said what province you are located in so we can't really help. Even so, consult a lawyer and read up on your province's relevant legislation. I already posted the one for BC if you are here.
Member
May 20, 2002
213 posts
26 upvotes
Ontario,. Thanks for all the discussion so far
Deal Fanatic
Jul 26, 2007
7579 posts
5272 upvotes
Toronto
You would need to make new lease agreement with existing tenants since old landlord company they dealt will no longer be valid and probably cut ties and dissolve the company.

Similar to when you buy an existing company. Seller and buyer both signs the new leased based on old lease. Since seller don't want any liability, they will just dissolve their company after selling to the buyer.

On that new lease, you can make it favourable to you or not and hope the tenant leaves on their own will. I think the regulations protects the existing lease agreement but not from signing new lease for new entity to old tenants.

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