Commercial Lease Litigation in Montreal: Understanding the Issues, Preventing Conflicts and Protecting Your Rights

In Montreal, disputes relating to commercial leases have become a daily legal reality. Commercial lease disputes are at the intersection of commercial law and real estate law, but they mainly fall under real estate law, for the following reasons: Commercial lease agreements, when not carefully drafted or adapted to the specific realities of the parties, can lead to serious legal and financial complications. In a context where every square foot is valued at the highest level, a disagreement over rent or use of the premises can quickly degenerate into costly legal proceedings.

This problem is all the more acute in a metropolis like Montreal, where the density of commercial spaces and fluctuations in the real estate market accentuate the complexity of rental relationships. The Quebec legal framework, based on the Civil Code, grants a great deal of contractual freedom to the parties, which can be a double-edged sword: when used properly, this freedom allows for flexible and tailor-made agreements; Poorly regulated, it opens the door to long and expensive disputes. It is therefore essential, for both landlords and tenants, to understand the potential sources of conflict in order to better anticipate them.

Common Causes of Commercial Lease Disputes

1. Non-payment or claim of rent

Default is the most common cause of commercial lease disputes. When a tenant is experiencing economic hardship or disputes additional costs not provided for in the contract, they can delay or suspend the payment of their rent. This behaviour immediately puts the landlord in a difficult position, especially if the landlord depends on this income to finance his or her own financial commitments, such as a commercial mortgage or common expenses.

In Montreal, non-payment of rent is often related to a sudden increase in rental charges, a dispute over the calculation of additional rent (property taxes, maintenance, insurance) or an unforeseen economic situation (construction, pandemic, drop in traffic). Many recent court decisions illustrate how the lack of precision in rent clauses can lead to divergent interpretations and protracted litigation. Some tenants also try to renegotiate the agreed amount by invoking a disturbance of enjoyment or a drop in commercial performance, which further complicates the situation.

2. Application for rent review or renewal

Another key point of commercial leases is the renewal of the lease and the revision of the rent. When a lease expires, the landlord may want a substantial increase in rent, depending on market valuation or renovations to the building. The tenant, for his part, may consider this increase unjustified or incompatible with his means. Without a clear clause providing for a review mechanism or an adjustment index, the negotiation quickly turns into a conflict.

Poorly drafted leases often do not specify the terms of renegotiation or the notice periods, which creates legal uncertainty. Some tenants continue to operate the premises without a formal agreement, which poses problems of tacit renewal or occupation without title. The courts must then interpret the intentions of the parties, often on the basis of email exchanges or previous practices, which makes the procedure cumbersome and weakens the position of both sides.

3. Subletting or non-compliant assignment

The Civil Code of Québec allows the assignment or sublease of a commercial lease under certain conditions, but the majority of contracts severely restrict this possibility. A sublease without written consent or to a company that does not comply with the use provided for in the lease exposes the offending tenant to immediate termination. In addition, the landlord may find himself with an unwanted occupant, engaging in an activity that is incompatible with the image of the building or the expectations of other tenants.

In large commercial complexes, this issue is particularly sensitive. For example, a tenant operating a clinic may want to sublet part of its space to an independent health professional. Without the landlord’s written permission, this action could be judged in breach of the lease. Montreal courts have already annulled unauthorized subleases, even though they were economically beneficial. Contractual rigour prevails, and any derogation without written agreement can be heavily sanctioned.

4. Damage to the premises and neglected maintenance

The question of the distribution of responsibilities related to the maintenance of the premises is a constant source of disagreement. Who should repair a faulty air conditioning system? Who is responsible for the damage caused by an infiltration? In the absence of specific clauses, these disputes can degenerate into requests for compensation or termination of the lease. Landlords often demand repairs for aesthetic or structural damage, while tenants complain about delays or inaction in promised repairs.

Some cases are particularly contentious, such as invisible damage (mould, cracks behind walls) or pre-existing construction defects. Quebec case law requires landlords to deliver premises in good condition, but there are many grey areas, especially when renovations have been carried out by the tenant. The absence of an inventory of fixtures on entry or exit often aggravates conflicts, leaving room for subjective interpretations.

5. Failure to comply with exclusivity or usage clauses

Exclusivity clauses aim to protect a tenant against direct competition in the same building or shopping centre. If a lease grants a delicatessen the exclusive right to sell organic products, the landlord cannot then rent a neighbouring premises to a similar business. However, these clauses are sometimes ignored, misinterpreted or deliberately circumvented.

Failure to comply with these contractual commitments can result in significant commercial damage. Loss of customers, confusion of brands or price wars become concrete consequences. In several judgments rendered in Montreal, companies have obtained substantial damages after demonstrating that an exclusivity clause had been flagrantly violated.

6. Contestation of peaceful enjoyment

The peaceful enjoyment of the premises is a fundamental obligation of the landlord. If the tenant cannot carry out his activity normally due to noisy works, repeated nuisances or technical failures, he can claim a reduction in rent, or even terminate the lease without penalty. The most common causes include major renovations to the building, lack of maintenance of the common areas or an untreated infestation.

Quebec courts are increasingly recognizing this form of disorder as a legitimate basis for recourse. For example, a restaurant owner who suffered a loss of customers due to noisy and poorly planned façade work recently obtained a 40% rent reduction for several months. Evidence often relies on testimonies, photos, documented complaints, and unanswered correspondence.

Summary table of causes and appeals

Remedies available in the civil courts

Unlike residential housing disputes, which fall under the jurisdiction of the Administrative Housing Tribunal (TAL), commercial lease disputes must be dealt with before the civil courts of Quebec. This means that the process is usually longer, more formal, and most importantly more expensive. The two competent courts are the Court of Québec (Civil Division) and the Superior Court of Québec, depending on the amount claimed and the complexity of the dispute.

The Court of Québec has jurisdiction over disputes with a value of less than $85,000, which covers a large portion of disputes relating to unpaid rent, claims for damages or disturbance of enjoyment. However, as soon as the case involves complex evidence, such as commercial valuations or technical expertise, the Superior Court becomes the appropriate forum. The latter also has jurisdiction to order injunctions, rule on major economic damages, or issue safeguard orders.

Recourse #1: Recovery action

The most direct and frequent recourse remains the lawsuit for the recovery of unpaid rent. This type of action seeks to force the tenant to pay the amounts owed under the lease, including interest, incidental costs, and sometimes attorneys’ fees if a contractual clause provides for it. Proof of the obligation is usually simple if the lease is well drafted: it is sufficient to show that the tenant was required to pay a specific amount on a given date, which he did not do.

In some cases, the landlord adds additional costs to their claim: late payment, contractual interest, loss of rental income, etc. The judges then analyse whether these costs are provided for in the lease and whether they comply with the principles of civil law, in particular that of proportionality.

Recourse #2: Termination of the lease and eviction

Another important recourse is the request for termination of the lease, which can be accompanied by a request to evict the tenant. This recourse is usually reserved for serious or repeated situations of non-compliance: chronic non-payment, non-compliant use of the premises, deliberate damage, subletting without authorization, etc. It aims to end the contractual relationship so that the landlord can recover the premises and re-rent them.

The Superior Court can order the physical eviction of the premises by a bailiff, if the tenant refuses to leave despite a judicial termination. This requires formal and sometimes complex legal steps, especially when the tenant disputes or countersues for disturbance of enjoyment or damages.

Recourse #3: Claim for damages

In addition to unpaid rent, the parties can also claim damages for losses incurred. The landlord can invoke a loss of earnings, repair costs, loss of opportunity (e.g., a new tenant refused because of the conflict). The tenant, on the other hand, can claim compensation for the loss of customers, necessary work not carried out by the owner, or damage to the image.

The burden of proof then rests on demonstrating the causal link between the other party’s wrongful conduct and the losses suffered. In a 2024 judgment in Montreal, a clothing merchant obtained more than $120,000 in damages for business interruption after suffering repeated water damage caused by the neighboring building, whose owner had not repaired a defective pipe.

Recourse #4: Safeguard Orders and Injunctions

Where the situation requires a quick response, the parties may apply to a judge for a safeguard order or interim injunction. These mechanisms are intended to preserve rights pending final judgment. For example, a landlord can get an order prohibiting the tenant from removing property from the premises until the end of the lease. Similarly, a tenant can request that work be stopped immediately if it seriously harms its activity.

These extraordinary remedies are subject to strict criteria, including urgency, risk of irreparable harm and balance of convenience. They often require the presence of a seasoned lawyer and a well-documented file from the start.

Contract prevention: the key to avoiding disputes

Write a tailor-made lease, not a generic model

Prevention begins with a professional and personalized lease drafting. Too often, parties use templates found online or written for a different context. This can create legal loopholes, contradictory clauses or the absence of essential mechanisms. A good commercial lease should be tailor-made according to the activity, the location, the expenses, the mode of operation of the business, and the relationship of dependence between the parties.

For example, a lease for a hair salon will not contain the same requirements as a lease for a data center or restaurant. The breakdown of common expenses, safety obligations, insurance or rights of control over the development can be totally different.

Critical clauses to include

Among the essential clauses are:

• Rent details (fixed, variable, indexed, additional charges)

• Maintenance responsibilities (tenant vs. owner)

• Exclusive or restrictive use of the premises

• Assignment or subletting procedures

• Renewal or notice rules

• The dispute resolution procedure (mediation, arbitration)

Each clause must be formulated with rigour and precision. A vague or absent clause can lead to months of legal debate and significant losses.

Periodic review and legal support

A commercial lease should never be considered a static document. It deserves to be reviewed periodically, especially when it is renewed or in the event of a major change in activities. A lawyer can not only ensure its validity, but also detect inconsistencies, propose improvements, and adapt the document to evolving standards (accessibility, security, municipal taxes, etc.).

Companies that invest in preventive legal follow-up significantly reduce their risk of entering a dispute, and when a dispute does arise, they have a strong case that makes it easier to defend their rights.

Why use a firm like Azran Avocats

Concrete and strategic expertise

Faced with the complexity of commercial leases and the financial stake that each square foot represents in an environment like Montreal, working with a firm like Azran Lawyers offers essential protection. Specializing in commercial real estate law and civil litigation, this firm assists both landlords and tenants in all stages of the contractual relationship.

Their strategic approach begins with the negotiation of the lease, with advice on the legal structure, taxation, and protection mechanisms. In the event of a conflict, they prefer amicable settlements when it is in the client’s interest, but do not shy away from vigorous action in court if necessary.

A detailed knowledge of the Montreal terrain

Azran Lawyers has an in-depth knowledge of the realities of the Montreal real estate market. They regularly intervene in the central boroughs (Plateau, Downtown, Griffintown), but also in the suburbs (Saint-Laurent, Lachine, Laval, Longueuil), which gives them a realistic vision of commercial practices and rental dynamics. Whether you own a mixed-use building or manage several franchises, their team knows how to adapt its advice to your specific needs.

Long-term support

In addition to one-off disputes, Azran offers a long-term legal partner relationship. Their services include periodic review of contracts, management of renewals, analysis of comparable rents, and rapid intervention in the event of conflicts. Their goal is not only to resolve a dispute, but to preserve their clients’ business stability and secure their assets. Commercial lease disputes in Montreal are not inevitable. In a competitive environment where legal rules leave a lot of room for interpretation, prudence, contractual rigour and the use of experts are the best allies to avoid pitfalls. Whether it is to prevent a dispute, manage a conflict or negotiate an advantageous lease, preparation and legal support are crucial.