Gross lease: identify what is actually included.
In a gross lease, specified property costs are generally bundled into the rent. That does not mean every expense is covered. Utilities, parking, particular services, increases or other adjustments may be treated separately. Ask which costs are included, which can change and how the agreement describes them.
Net lease: rent plus allocated expenses.
A net lease separates base rent from some property related costs paid by the tenant. The allocation varies with the agreement. Read the definitions of additional rent and operating costs, the tenant’s share, exclusions, administration charges and any annual reconciliation process. A label alone cannot establish your total obligation.
Triple net lease: three expense categories, many details.
Triple net, often called NNN, commonly places property taxes, building insurance and maintenance or operating costs on the tenant in addition to base rent. How those costs are measured and shared, and who pays for major repairs, replacements or capital work, depends on the wording. When assessing a triple net lease in Toronto, review the actual cost allocation rather than assuming a standard form.
Percentage rent in retail leasing.
Some retail agreements include rent linked to sales, potentially alongside a base amount. The definition of sales, exclusions, reporting, audit rights and any threshold or breakpoint require careful review. The structure must be assessed against the business and the written agreement with appropriate legal and accounting advice.
Tenant improvements and allowances.
Tenant improvements are changes to prepare the space for the tenant’s use. An allowance, if negotiated, is not necessarily an unconditional payment. Review eligible work, approval processes, payment conditions, deadlines, ownership of improvements and any restoration or repayment requirements. Distinguish landlord work from tenant work and establish who obtains permits.
Renewal options and future flexibility.
A renewal option is a contractual right, not an automatic extension. It may depend on notice within a particular window, compliance with the lease and a specified rent setting mechanism. Expansion, assignment, subletting, relocation and early termination are separate concepts. None is implied simply because you may want flexibility later.
Offers, conditions and commencement.
Possession, rent commencement and opening for business may be different dates. An offer to lease may be binding before the formal lease is signed. Conditions for approvals, inspections or document review need precise wording. Have your lawyer assess the document and any deadline before you make a commitment.
Further reading
For general Canadian business context, see BDC’s commercial lease guidance. Ontario lease documents and your particular obligations should be reviewed with qualified legal counsel.