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ARTICLE · 11 DECEMBER 2015

We Agreed To What? Lease Extensions & The Standard Form Lease

Borden Ladner Gervais LLP
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A party (franchisor) entered into a commercial lease for a ten year period with the option to extend the lease for two terms of five years each.

CanadaReal Estate and Construction
Brennan Carroll
Brennan Carroll
Mario Pedro (Articling Student)
Mario Pedro (Articling Student)
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Introduction

The Ontario Superior Court of Justice's contentious judgement in 1251614 Ontario Ltd. v. Gurudutt Inc., 2015 ONSC 2141 provides a cautionary lesson for tenants entering into leases and those exercising lease extension or renewal options (referred to as extensions hereafter). The judgment is the first of its kind by an Ontario court directly addressing the issue of a landlord's option to impose a current standard form lease on a tenant exercising an extension.

Facts & Decision

A party (franchisor) entered into a commercial lease for a ten year period with the option to extend the lease for two terms of five years each. The franchisor assigned the lease to the current tenant (franchisee). The tenant sought to exercise its extension option. Pursuant to the extension clause, the landlord had the option to present the tenant with a new lease in the landlord's then current standard form. The extension clause provided:

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