CANADA – QUÉBEC Law and Practice Contributed by: Eleonora Eusepi, Sabrina Guillot, Janie Chaloux and Nicolas Gosselin, BCF Business Law LLP
6.8 Costs Payable by a Tenant at the Start of a Lease Other than rent (including security deposits or pre- paid rent), there are no costs payable by a tenant at the start of a lease. 6.9 Payment of Maintenance and Repair In most commercial leases, tenants are responsible for the maintenance and repair costs of common are - as (such as parking lots, gardens, and landscaping) as part of additional rent. Under net – and especial - lytriple‑net – leases, tenants cover these costs as part of their proportionate share of operating expenses. However, this obligation is nuanced by the type of commercial lease in question. For example, it is pos - sible that maintenance and repair costs of common areas be included in the rent payable by tenant and the responsibility lies with the landlord. 6.10 Payment of Utilities and Telecommunications In multi‑tenant commercial properties, utilities and telecommunications costs are typically paid either directly by each tenant or indirectly through the land - lord, depending on how the building is set up. When individual units can be separately metered, tenants usually arrange and pay for their own utility and tel - ecom services directly to the service provider. If sepa - rate connections are not available, the landlord sup - plies the services and then bills tenants, often adding an administrative fee. 6.11 Payment of Property Taxes In net, double‑net, and triple‑net commercial leases, taxes are generally part of the tenant’s additional rent obligations. In a gross lease, the landlord generally pays the property taxes, although the cost is usually built into the higher all‑inclusive rent. 6.12 Insurance Issues In commercial leases, the landlord typically insures the building, as he holds the insurable interest. However, commercial leases routinely shift this cost to the ten - ant through additional rent or operating costs, espe - cially in net, double‑net, or triple‑net leases. In such leases, tenants reimburse the landlord for building insurance premiums as part of operating expenses.
period without ownership, granting the right of occu - pancy in exchange for rent. There is also the grant - ing of emphyteutic rights (typically for long periods), a usufruct, specific usage rights, or even servitudes. 6.2 Types of Commercial Leases There are many different types of commercial leases, which depend largely on the leased property and the sharing of costs and expenses between the parties. Common examples include office, industrial and retail leases, which can be structured as gross, semi-gross or net leases. 6.3 Regulation of Rents or Lease Terms Unlike residential leases, for which the terms and rent payable are regulated in Québec, commercial rents and lease terms are freely negotiated. 6.4 Typical Terms of a Lease The terms of a lease are freely negotiated between the parties. Typically, the initial term of a lease is anywhere between two and ten, often with renewal options. Maintenance and repair obligations depend on the type of lease (gross, semi-net or net). However, the landlord generally remains responsible for structural elements. Rent is most commonly payable monthly in advance on the first day of every month. 6.5 Rent Variation Although extremely uncommon, rent could in theory remain the same as long as the lease lasts, if such was provided for in the lease. However, rents are typi - cally subject to yearly increases based on an agreed percentage, or even according to the increase in con - sumer price index. 6.6 Determination of New Rent Commercial leases will generally include a determi - nable procedure to determine the new rent. Such a procedure is typically either: (i) a fixed percentage increase to the current rent; (ii) an increase according to the consumer price index; or (iii) to be negotiated between the parties prior to the date of such increase. 6.7 Payment of VAT Goods and Services tax (GST) and Québec sales tax (QST) are payable on rent.
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