Re: Help regarding lease extension problem of small business in Canada

0korjae@xxxxxxxxx> wrote in message news:1192560437.788213.215290@xxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Hi, if any lawyer or those experienced with similar issues can help me
out, I would be super appreciated and won't forget the help!!

We own a small convenience store in Ontario Canada and we have been
paying rent of $2200 + ~$1000 TMI past 7 years (rent went up $200
about 3 years ago). In Feb, 2008, lease will expire but we have 5
years option left.

We had good relationship with landlord but due to business downturn,
we decided to sell the business at discounted price compare to the
market.

We found the similar buyers who were interested in and one already
finished verification of business operation and everything.

Only problem left was lease extension and we had one meeting with
landlord to express our desire to extend the lease at hopefully little
discounted rent due to business downturn. At minimum, we had to
extend the lease at same rate in order to finish the sale of the
business.

However, it's been 3 weeks since he promised to get back us with
renewal of lease agreement.
When I call him, he kept saying next week.

We are getting really worried, confused as to what he's thinking.
Another big problem is that buyer doesn't want to wait for this non-
sense and might break the deal.

Is there anything we can do about this?
Does landlord deserve every right as to what he wants to do with the
tenant at this point? (With 5 years option left)

Say, he has brother he wants to give our business for free and can he
just tell us, from now, pay 1 million of rent, if not, get out?
Is there any legal protection we can use when above situation does
occur?

You have asked a contract question without showing us the contract. So in order to answer the question I will have to guess about what the contract says. That will result in an academic answer, but here goes. Possibility One: If the contract says that you have the right to extend the contract at the current rent, or at some specified increase from the current rent, or at an increased rent determined by a specified formula, then that's your right. You don't need anything from the landlord in that situation. Just sent a Certified Mail letter, return receipt requested, exercising your option to extend the lease for an additional 5 years. Don't forget to keep a copy of your letter. That's all there is to it. If the landlord doesn't send you any acknowledgement, you have no reason to care. And you don't need a new lease document.

Possibility Two: If your lease says you have the right to renew at "current market rates", you would normally discuss the matter with the landlord to determine how much the rent will be. But if the landlord won't cooperate, you could ask real estate brokers and decide for yourself what the rent will be, within a small tolerance plus or minus. Then you could do the same thing as discussed above, exercise the renewal/extension by mail, without any cooperation from the landlord.

Possibility Three: If your lease says that you have the right to renew the lease at a rental rate to be determined by negotiations, or "to be mutually agreed", that's almost like not having an option at all. Even with no option, the parties have the right to negotiate an extension. So such an option at a price to be agreed doesn't add much. If that is the situation you are in, then the answer is you have almost no right to force the landlord to respond to your requests, or to force the landlord to be reasonable in setting the new rate. I used the word "almost" above because there is one, very small, value in having an option to renew at a price to be agreed. It is possible to get a court to agree with your interpretation of that clause to mean that the parties agree to negotiate in good faith and be reasonable. That could limit the ability of the landlord to demand an outrageous amount of rent for the renewal term. This use of the option clause is nearly useless, but I can't say it's entirely meaningless.

Possibilities Four through Seventy: I hesitate to guess.

So your first step is to determine what the lease says about your right to renew. The attorney you used to assist with the contract for the sale of your business will likely be able to help interpret the lease.

This answer must not be relied on as legal advice for the reasons posted
here: http://mcgyverdisclaimer.blogspot.com . And I am not your attorney.

McGyver

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