Frequently Asked Questions

Question about commercial renting?

  • “What is Gross lease means?”

Gross leases, once the most common standard for office space, simply require the tenant to pay a flat monthly amount; the landlord is responsible for all the expenses of operating the building, including taxes, insurance, and repairs. (Because of rising energy costs, many landlords now charge tenants separately for heat and electricity, which used to be part of most gross rents.)

  • “What does Net lease means?”

It is a type of commercial real estate lease under which you typically pay for one incidental expense directly. In a single net lease, you usually pay the base rent plus property taxes (though in some cases, you might pay for insurance or utilities instead). The landlord pays all other expenses.

  • “What does Double Net (NN) lease means?”

It is a type of commercial real estate lease under which you usually pay the base rent plus two incidentals (for example, property taxes and insurance). The landlord usually covers all other expenses.

  • “What does Triple Net (NNN) lease means?”

It is a type of commercial real estate lease under which you typically pay the base rent, plus property taxes, building insurance and utilities, as well as other operating and maintenance costs. The landlord assumes no costs, other than those for structural repairs.

  • “What are common area maintenance charges?”

As the name implies these are charges for maintenance of the common areas such as stairways, elevators, escalators, hallways public washrooms. This type of Additional Rent is most often encountered in an enclosed mall but can be found in other types of commercial real estate as well.

  • “What does TMI mean in Real Estate?”

T.M.I. stands for Taxes, Maintenance and Insurance. It is also called “additional rent”. In a net rent situation, the tenant will pay a portion of the landlord’s realty taxes, maintenance expenses and property insurance based on the percentage of the building the tenant is occupying.

  • “How do you interpret the price per square foot?”

Some leases are listed as a monthly net or gross amount and that’s easy to understand. When they are listed as a price per square foot it involves an extra step to determine the monthly rate. Fortunately, it’s a simple equation: the price per sqft is stated as an annual rate so if a 1000 sqft. space is $20/sqft then it is $20,000/year or $1,667/month.

  • “Is the HST applicable on the TMI portion of a commercial lease?” 

Generally, commercial leases from a landlord who is registered for the GST/HST are taxable. Property taxes paid by a tenant are to be treated as part of the payment to the landlord for the rental of the real property, even if the tenant pays the taxes directly to the municipality. Therefore, the amount of property taxes payable by a tenant is considered to be part of the rent and is subject to GST/HST in the same way as the amount of rent payable by the tenant. This will be the case whether or not the rental agreement states that the payment of property taxes by the tenant is to be considered as “rent” or “additional rent”

  • “What does Tenant improvement allowance means?”

It is a cash amount offered by a landlord to help you pay for renovations to a leased space. The allowance is usually a certain amount of money per square foot of rented space. It is sometimes offered as a tenant inducement.

  • “How should I price my space wants to rent?”

Most rental amounts are quoted on a Per Square Foot basis and this is usually the annual rental amounts. This is merely a mechanism for calculating the annual rental amounts on a property and a method for comparing different properties. The other advantage is that it represents a tenant’s proportionate share of the Operating Costs. The more space that a tenant leases, the higher its portion of the Operating Costs. However, in a formal lease, all methods of calculation should be eliminated to avoid any misunderstandings. The best way to price your property is by finding out what other nearby apartments have rented for (“comparables”). Real estate agents have access to a ton of rental history so if you hire an agent, you’ll be able to price your apartment or condo more easily.

  • “Will my rent increase every year?”

One very important factor to know is if and when, and by how much your rent might go up over the term of the lease. It is expected that rents will increase as property values increase, so most leases include a rent increase on the anniversary date of the lease. Plus, if your landlord can rent the space for more than you agreed to pay a year ago, he is within his rights to ask for the increase. However, it would be a nightmare if your rent suddenly doubled. You should negotiate the timelines and amounts of increases before you sign the lease. If your landlord balks at this find another space

  • “Is a personal guarantee required?”

What happens if your business goes south and you can no longer afford to make the lease payment? Are you responsible for paying the rent out of your own pocket? Probably so. Most landlords insist on a personal guarantee from the owner or an officer of the corporation. This means that even if you go out of business you are still on the hook for the remainder of the monies owed.

  • “Can the monthly payment go up at anytime?”

It’s typical that a lease contain what’s known as an “escalation clause” that allows the landlord to pass on increased building operating expenses to the tenants. If your lease contains such a clause you should ask for a cap on the amount the lease payment may rise over a given period of time and an accounting of the items that are forcing the increase.

Question about residential rental?

  • ” What’s an Agent?”

A real estate broker or real estate salesperson (often called a real estate agent) is a person who acts as an intermediary between sellers and buyers of real estate/real property and attempts to match up sellers who wish to sell and buyers who wish to buy.

  • “Should I hire an agent helping to rent my place?”

Many real estate agents offer leasing services that include pricing, advertising, showing, screening, negotiating and paperwork (the total cost is usually one month’s rent, half of which is typically offered to the agent who brings a buyer). Rentmar is a great website to showcase your vacant space to prospective tenants, but you still have to set several meetings, screening and do paperworks. If you don’t have the time (or skills) to find a great tenant, consider hiring a professional.

  • “What if I have a pet?”

Landlords can’t evict a tenant for having a pet, but they can refuse to rent to someone with a pet in the first place. If you own a condo, the Condominium rules take precedence over the Residential Tenancies Act, so if the condo doesn’t allow pets, you may be able to evict Fido or Fifi.

  • “Is the rent can be increased by the landlord?”

Rent increases are usually controlled by the government. Generally speaking, landlords can increase the rent once every 12 months by up to a maximum equal to the Consumer Price Index (CPI) for that year. In 2016, the maximum allowable rent increase in Ontario was 2%.

  • “Can my landlord enter into my apartment?”

Generally, Landlords have the right to enter an apartment to repair and maintain it (with 24 hours notice or in the case of an emergency). The landlord also have the right to show the unit to prospective tenants and/or buyers with appropriate notice.

  • “I decided to move back into my place which I have rented out. Do I have to notify my tenants in advance?”

You may NOT move back into your condo or apartment during the term of the lease. If the tenant is on a month-to-month lease, you may provide 60 days notice in writing (counting from the 1st of the coming month) in order to occupy the unit (note: you or a family member must be the person occupying the unit – you cannot simply give notice to the tenant in order to allow someone else to move in).

  • “I decided to sell the rental residence. What should I do with my tenants?”

If you have a valid written lease, you may NOT evict the tenant in order to sell the property. The lease simply transfers to the new owner (at the current rent and terms). If you have a ‘month-to-month’ tenant, you may give the usual 60 days written notice to the tenant, on behalf of the new buyer (assuming the new buyer is moving in themselves).

  • “How much rent should I ask for my unit?”

The best way to price your property is by finding out what other nearby apartments have rented for (“comparables”). Real estate agents have access to a ton of rental history so if you hire an agent, you’ll be able to price your apartment or condo more easily.

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