Commercial Lease Agreements in Alberta: Key Legal Considerations

A commercial lease is often one of the largest and longest commitments a business will make. Unlike a home rental, a commercial lease in Alberta is not governed by the Residential Tenancies Act — there is very little statutory protection for the tenant. That means your rights come almost entirely from the document you sign. Understanding — and negotiating — the key terms before you commit can save your business a great deal of money and stress.

Commercial leases are different

Commercial leasing is largely a matter of freedom of contract. The agreement is usually drafted by the landlord and tends to favour the landlord, and the residential tenancy protections most people are familiar with simply do not apply. What you negotiate is what you get, so the details matter enormously. This is closely tied to general contract principles and is squarely within business law.

Understand the rent structure

Base rent is only part of the picture. Many commercial leases are "net" leases, meaning the tenant also pays additional rent — operating costs such as common area maintenance, property taxes, building insurance, and utilities. These can add substantially to the headline rent. Make sure you understand how operating costs are calculated, how they can increase over the term, and whether you can review or audit them.

Term, renewal, and early exit

Consider the length of the term and whether you have an option to renew — and how the rent will be set if you do. Look closely at whether you can assign or sublet the lease if you sell your business, which connects directly to the goodwill you have built up. Watch for demolition or relocation clauses that let a landlord end or move your tenancy, and understand the default and termination provisions.

Personal guarantees

Landlords often ask the business owner to personally guarantee the lease, which puts your personal assets at risk if the business cannot pay. Before you sign, understand the scope of any personal guarantee and try to limit it — for example, by capping the amount, limiting the time it applies, or having it released once the lease is assigned. This is one of the most important points to negotiate and to have a lawyer review before signing a commercial lease.

Use, exclusivity, and fit-out

Check that the permitted use clause actually covers your business, with room to adapt if your business evolves. If you are worried about competition, consider negotiating an exclusivity clause so the landlord cannot lease nearby space to a direct competitor. Clarify who pays for leasehold improvements and fit-out, and what condition you must return the premises in at the end of the term.

Repairs, maintenance, and insurance

Leases allocate responsibility for repairs and maintenance in different ways — who looks after the roof, the HVAC, and the structure versus the interior can vary widely. Understand what you are responsible for, what insurance you are required to carry, and what indemnities you are agreeing to.

Why a lawyer review pays off

Commercial leases are long, dense, and — crucially — negotiable. A review before you sign catches the costly clauses, clarifies your obligations, and improves your position while you still have leverage. Once you have signed, you are typically locked in for years, so this is an investment that tends to pay for itself.

Frequently asked questions

Can I negotiate a commercial lease?

Yes. Commercial leases are routinely negotiated — rent, term, renewal, guarantees, and many other terms. The landlord’s first draft is a starting point, not the final word.

What is additional rent in a commercial lease?

Additional rent usually refers to operating costs — common area maintenance, property taxes, insurance, and utilities — charged on top of base rent. It can significantly increase your total occupancy cost.

Should I sign a personal guarantee on a commercial lease?

Sometimes it is unavoidable, but you should understand and try to limit it. Options include capping the amount, limiting the duration, or securing a release on assignment. Get advice before agreeing.

About to sign a commercial lease? Libra Law reviews and negotiates commercial leases for Alberta businesses so you know exactly what you are agreeing to. Explore our business law services, call or text +1 (587) 438-2051, or get in touch before you sign.

This article provides general information about Alberta law and is not legal advice. Every situation is different. For advice about your specific circumstances, please speak with a lawyer at Libra Law.