Commercial Lease With Option To Purchase

Commercial Lease With Option To Purchase Template for Canada

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Key Requirements PROMPT example:

"I need a Commercial Lease with Option to Purchase for my retail business leasing a 2,500 sq ft space in downtown Toronto, with a 5-year lease term starting March 1, 2025, and an option to purchase the property at market value after 3 years."

Document background

The Commercial Lease With Option to Purchase is a specialized agreement used in Canadian business transactions where a tenant wishes to lease a commercial property while maintaining the right to purchase it in the future. This arrangement is particularly valuable for businesses that want to test a location's viability before committing to ownership, or those that need time to arrange financing for a purchase. The document combines standard commercial lease provisions with detailed terms for exercising a purchase option, including pricing mechanisms, timelines, and conditions. It must comply with both federal and provincial regulations governing commercial real estate transactions in Canada, including property law, commercial tenancy acts, and relevant tax legislation. This agreement type is commonly used in expanding businesses, franchise operations, and companies with potential future growth plans.

Suggested Sections

1. Parties: Identification of the landlord and tenant, including full legal names and addresses

2. Background: Context of the agreement, including property description and general intent of the parties

3. Definitions: Key terms used throughout the agreement, including Property, Commencement Date, Option Period, etc.

4. Lease Term: Duration of the lease, including commencement and expiration dates, and any renewal options

5. Rent and Other Payments: Base rent, operating costs, utilities, property taxes, and other financial obligations

6. Use of Premises: Permitted use of the property and any restrictions

7. Maintenance and Repairs: Responsibilities of each party for property maintenance, repairs, and improvements

8. Insurance and Indemnification: Required insurance coverage and indemnification obligations

9. Option to Purchase: Terms of the purchase option, including price/calculation method and exercise period

10. Exercise of Option: Process and requirements for exercising the purchase option

11. Closing Provisions: Requirements and process for completing the purchase if option is exercised

12. Assignment and Subletting: Rights and restrictions regarding assignment of lease or purchase option

13. Default and Remedies: Events of default and available remedies for both lease and option provisions

14. General Provisions: Standard clauses including notices, governing law, entire agreement, etc.

Optional Sections

1. Environmental Matters: Required when property has potential environmental concerns or specific environmental requirements

2. Tenant Improvements: Include when specific improvements or renovations are permitted or required

3. Property Management: Needed when there are specific property management arrangements or requirements

4. Operating Costs Exclusions: Include when there are specific exclusions from operating costs calculations

5. Right of First Refusal: Add when tenant has additional rights regarding property sale to third parties

6. Financing Provisions: Include when specific financing arrangements affect the lease or purchase option

7. Co-tenancy Provisions: Required in multi-tenant properties with specific co-tenancy requirements

8. Parking and Common Areas: Include when specific provisions govern parking or common area usage

Suggested Schedules

1. Schedule A - Property Description: Legal description and details of the leased premises

2. Schedule B - Floor Plans: Detailed plans showing the leased area and any exclusive use areas

3. Schedule C - Rent Schedule: Detailed breakdown of rent payments, including any escalations

4. Schedule D - Operating Costs: Detailed list of includable operating costs and calculation method

5. Schedule E - Tenant Improvements: Specifications and requirements for any approved tenant improvements

6. Schedule F - Building Rules and Regulations: Standard building rules and regulations

7. Schedule G - Environmental Reports: Any relevant environmental assessments or reports

8. Schedule H - Purchase Option Details: Detailed terms and conditions of the purchase option, including price calculations

9. Schedule I - Permitted Encumbrances: List of permitted encumbrances that will remain on title

Authors

Alex Denne

Head of Growth (Open Source Law) @ ��Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

alex.den.21@genieai.co

Relevant legal definitions

Clauses

Relevant Industries

Commercial Real Estate

Retail

Manufacturing

Warehousing and Distribution

Professional Services

Healthcare

Hospitality

Industrial

Technology

Education

Food and Beverage

Automotive

Relevant Teams

Legal

Real Estate

Finance

Operations

Risk Management

Facilities Management

Business Development

Compliance

Property Management

Asset Management

Relevant Roles

Real Estate Manager

Property Manager

Chief Financial Officer

Business Development Director

Facilities Manager

Legal Counsel

Commercial Lease Administrator

Risk Manager

Operations Director

Asset Manager

Corporate Real Estate Manager

Expansion Director

Chief Operating Officer

Real Estate Investment Manager

Compliance Officer

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Authors

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