Ontario business owners sign personal guarantees on commercial leases without reading them. The guarantee usually sits on page 18 to 25 of the standard lease form, in the same plain font as the rest of the document, and it survives the closure of the company that signed.

A signed personal guarantee binds the owner's personal assets to the landlord's claim. If the company defaults on rent, the landlord recovers against the owner's home, savings, and other personal property. The clause is enforceable in Ontario courts. It does not expire when the lease ends if rent is unpaid.

Below are five clauses an Ontario business owner should read before signing a commercial lease. The order matches what matters most when the lease starts producing consequences.

What does the personal guarantee on your commercial lease actually cover?

The personal guarantee is a separate contract written into the lease. It names the owner (or owners) personally and confirms that the owner backs the company's obligations under the lease. The standard form covers rent, additional rent (taxes, maintenance, insurance), damages, and legal costs the landlord may recover from the company.

Three details to confirm before signing:

  • The guarantee's duration: does it survive lease termination or last only through the initial term?
  • The guarantee's cap: is liability limited to a dollar amount or unlimited?
  • The release condition: what triggers the guarantee's end?

Standard forms in Ontario typically run unlimited and without a release condition. Owners frequently sign without knowing they have negotiating room on all three.

Before you sign, write down the guarantee amount, the lease term, the unpaid rent exposure, and the release condition. Those four lines show what the guarantee puts at risk.

How does the renewal clause shape your control of the space?

The renewal clause sets the terms on which the tenant can extend the lease. Two structures dominate Ontario commercial leases. The first gives the tenant an option to renew at the landlord's then-current market rate, with the renewal exercisable by written notice within a defined window. The second gives the tenant a fixed extension at a known rent.

Owners should confirm three points:

  • The notice window: how many months before lease expiry must the tenant give written notice?
  • The rate-setting mechanism: market rate, fixed amount, or formula?
  • The renewal length: one term, multiple terms, or open-ended?

A renewal clause with a short notice window and a market-rate reset gives the landlord pricing control at every renewal. A renewal clause with a long notice window and a fixed rent gives the tenant predictable cost and control of the space.

When can a landlord demolish under a demolition clause?

A demolition clause lets the landlord terminate the lease early to demolish, redevelop, or substantially renovate the building. The clause is common in commercial leases for older Toronto and GTA buildings where the landlord plans a future condo conversion or office redevelopment.

Three terms shape the clause's reach:

  • The triggering definition: what counts as 'demolition' or 'substantial renovation'?
  • The notice period: how many months before termination must the landlord give notice?
  • The compensation: does the tenant receive relocation costs, fixturing reimbursement, or rent abatement?

Standard forms often give the landlord broad triggering language ('substantial renovation' undefined), short notice periods (six months), and zero compensation. Each of those three is negotiable before signing.

What rights does a relocation clause give the landlord?

A relocation clause lets the landlord move the tenant to a different space within the same building or complex. The landlord uses the clause to consolidate leases, accommodate a larger anchor tenant, or repurpose specific floors.

Five points to confirm before signing:

  • The substitute space's size and location: must it be equivalent or merely comparable?
  • The triggering notice period: how much warning does the tenant receive?
  • The cost coverage: who pays for the move, fixturing, and re-signage?
  • The downtime: does the tenant get rent abatement during the move?
  • The right to refuse: can the tenant terminate the lease instead of moving?

A standard relocation clause without these protections lets the landlord move the tenant on short notice to inferior space at the tenant's own cost. With the protections written in, the clause becomes manageable.

How much time do you get under the default and cure period?

The default and cure period defines how long the tenant has to fix a problem before the landlord can terminate the lease and enforce the personal guarantee. Two defaults matter most: monetary default (missed rent) and non-monetary default (breach of a covenant such as use, insurance, or signage).

Standard Ontario commercial leases typically give the tenant five business days to cure a monetary default after written notice, and fifteen to thirty days to cure a non-monetary default after written notice.

Owners should confirm three things:

  • Whether the cure clock starts on the missed-payment date or on the landlord's written notice
  • Whether the tenant gets a second chance if a default repeats
  • Whether the landlord must mitigate damages before pursuing the personal guarantee

A cure period that starts on missed payment, allows no second chance on a repeat default, and has no mitigation duty stacks the default risk on the tenant. Each of those is negotiable.

What this means before you sign.

A commercial lease that runs five to ten years carries roughly $300,000 to $1.5 million in committed rent for a typical Ontario small business location. The five clauses above are the levers that decide how that commitment behaves under stress.

DRG Law reviews commercial leases for Ontario business owners. Damaris Guimaraes reads every intake personally. Service in English or Portuguese.