Canada: When Office Tenants Go Dark

Last Updated: April 8 2011

Edited by Manuel Martins

By Laurie Sanderson

Most office leases require the tenant to actively carry on business from their leased premises and prohibit the tenant from vacating or abandoning the premises. It is becoming increasingly common, however, for tenants to object to these provisions and to request the lease include a "go dark" provision.

In a retail situation, it is clearly imperative that the lease includes a continuous use covenant. In an office situation, however, the situation is somewhat different. Firstly, office leases do not typically include the payment of percentage rent. As such, our revenue stream is not dependent on ensuring our tenant maximizes its sales potential.

Additionally, the commercial success of the other office tenants of an office building is not dependent on or impacted by a fellow tenant ceasing to operate. The exception, of course, is the mixed use building that includes tenants offering services to the other tenants of the building, such as a drycleaner, restaurant/cafeteria or photocopy service. For these service providers, the vacancy rate in the building will have a clear impact on their success and the consequent rental value of their premises.

That aside, our typical retail analysis with respect to a go dark request, will not apply to our office tenants. While we may have fewer grounds on which to oppose or deny a request to go dark by an office tenant, there are, however, legitimate concerns which need to be addressed.

Restrict To Office Only Buildings:

As noted above, if there are service tenants in the building whose profitability will be impacted by a reduction in the number of occupants in the building, it will be very difficult to grant a go dark request. Ironically, it will be easier to grant a small tenant the right to go dark than a larger tenant, but it is, of course, the larger tenant that we will be more likely prepared to accommodate.

Ensure Your Lender Does Not Object:

Because the landlord's revenue stream will not be impacted upon by the failure of the tenant to operate and thereby generate sales to pay percentage rent (because none is payable), it is unlikely the lender will object, but this should be included as a condition to the right to go dark in order to ensure we are not offside with the lender.

Make Conditional On No Adverse Impact On Landlord's Insurance:

Whether the tenant vacating the building will impact on your insurance will, for the most part, depend upon on how much of the building is being vacated. If the building is being occupied by a single tenant, the decision of that tenant to vacate the building will be viewed by your insurer as a material change in circumstances. As such, you will be legally required to notify your insurer to this effect.

We can also anticipate that this will drastically increase the insurance premiums payable for this property. As such, as part of the analysis whether to grant the go dark right, we must first confirm that the tenant is both responsible for any increase in the cost of the landlord's insurance, and that it has the financial ability to bear to this cost.

Further, most leases prohibit the tenant from doing anything that will cause a cancellation or a threatened cancellation of the landlord's insurance. Unless the tenant in question is a very small tenant (in which case leaving the building will have no affect on the landlord's insurance), the right to go dark should be made subject to this provision of the lease.

Require Notice:

A decision to go dark is not made in a spurious manner. As such, it should not be an issue for the tenant to be required to give you a significant amount of prior notice that it intends to vacate the premises and the date it intends to do so. The landlord requires this notice period for a number of reasons; one of which is to advise the insurer that part of the building will be vacant.

Confirm That The Right To Go Dark Is Subject To The Tenant Continuing To Pay All Rent When Due:

Not only should the right to go dark be subject to the tenant not being in default at the time of the request, but also that the consent extend only so long as the tenant continues to keep its lease in good standing.

Require Security:

In an office lease, part of the security for the tenant's rent covenant is represented by the landlord's distress right; that is, our right to seize the tenant's assets and sell them for non-payment of rent. By permitting a tenant to vacate the premises and remove its assets, we are forgoing this form of security. Depending upon the strength of the tenant's covenant, the landlord should require the tenant to post hard security (cash) with the landlord in lieu of its distress right.

Grant The Landlord A Right To Recapture Its Premises:

In consideration for granting the go dark right, require the tenant to grant you the option to recapture the premises and terminate the lease without recourse at any time following the date the tenant vacates the premises. The tenant will, of course, require the landlord release the tenant from any further obligation with respect to the lease arising after the termination date. It is, however, imperative that the landlord have the right to recapture the space in order to take advantage of any opportunity that may arise to re-let the premises at favourable rates.

In furtherance of this right, also require the tenant to agree that the landlord and its authorized agents have the right to show the premises to prospective tenants after the tenant vacates. This should not be objected to by the tenant as it is clearly in both parties interest that the premises be re-let. This right should, however, be clearly drafted to confirm that the right to recapture and terminate is at the landlord's sole discretion and without any obligation to do so. The purpose of the provision not being to require the landlord to terminate, but to give us the option to do so in the event that there is an opportunity to re-let the space on favourable terms.

Update on new City of Toronto Zoning Bylaw

By Brian T. Parker

In the September edition of the Real Estate & Urban Development @ Gowlings newsletter we reported at a high level on the new City of Toronto Zoning Bylaw 1156-2010 (the "Bylaw") and the myriad of changes that have been introduced under the guise of "harmonization". The Bylaw, which was approved by Council on August 27, 2010, has since been appealed to the Ontario Municipal Board by over 600 parties, with initial pre-hearing conferences not being scheduled before June, 2011.

It was clear at the time, and even more so now, that many of the changed provisions are not borne out of any related provision in a predecessor Bylaw. A case in point is the new definition of "Gross Floor Area" as it will apply to all non-residential properties across the amalgamated City. The new definition reads as follows:

"means the total area of each floor level of a building, above and below grade, measured from the exterior of the main wall of each floor level, including voids at the level of each floor, such as an atrium, mezzanine, stairwell escalator, elevator, ventilation duct or utility shaft, but excluding areas used for the purposes of parking and loading"

It is clear that gross floor area now includes all void space. This is a departure from the definitions of gross floor area contained in the former bylaws of the amalgamated City which in one form or another, permitted the exclusion of void space from the floor area calculation. The new definition effectively amounts to a down zoning, as total "bulk" of the building will now include previously exempted space.

It is worthy of mention that the gross floor area formula is used to determine other related aspects of a development including the calculation of the amount of density bonus to be paid under Section 37 of the Planning Act, and the cash payment in lieu of providing parkland. The new definition of gross floor area makes these obligations to pay and/or provide, effectively more onerous. The development industry have appealed the definition of gross floor area to the Ontario Municipal Board, among other aspects of the Bylaw.

The new definition will cause those properties that are built to their maximum floor area permission to now exceed that permission; and for those properties that may have had some remaining floor area entitlement under the former definitions, that is now taken up in an amount equal to the total amount of existing void space. In order to reduce the cloud of uncertainty created by legal non-conformity, built into the Bylaw is new gross floor area exemption language which recognizes as permitted, the higher gross floor area value, inclusive of void space. However, there is no Bylaw mechanism to compensate owners for the loss of what would otherwise be as-of-right floor area entitlement. And any floor area entitlement that may remain, must now must be developed under the new, more restrictive definition of gross floor area.

While the City has sought to cure other aspects of Bylaw non-conformity with similar exemption language (e.g. building height and setbacks), not all built form changes under the new Bylaw have been covered off with exceptions. Therefore, the City has developed a series of general provisions in the Bylaw that address legal non-complying buildings. Some care must be taken however, as it is likely that a number of the City's general provisions on non-conformity may fall afoul of 2009 decisions of the Ontario Municipal Board and the Divisional Court in City of Ottawa v. TDL Group Corp., which found that municipalities may not put constraints on property owners' legally non-conforming (and non-complying), or "grandfathered" rights beyond those found in common law. As a result, those sections of the Bylaw are also currently under appeal by a number of appellants.

Drilling down on some of the more contentious details of the Bylaw, as this article, and our preceding September article did, may now be all for naught! In a stunning reversal of position at its meeting on March 24, 2011, the City's Planning and Growth Management Committee (the "Committee") voted unanimously to stop any further work on the Bylaw, and instead, directed its planning staff, in consultation with its legal department, to report directly to Council on April 12th on a bylaw to repeal Bylaw 1156-2010.

Before the Committee on March 24, was a Report by the City's Chief Planner which was recommending even further amendments to the Bylaw already under appeal. Many of the same cast of objectors to the Bylaw the first time around, were there again on March 24, grilling the Committee further about countless problems with the Bylaw that is barely seven months old.

The Committee roundly agreed that it was senseless to further amend a Bylaw that has already been shown to clearly not work. Rather than accepting the Planning Commissioner's recommendation for more changes, the Committee directed staff to further consult with stakeholders and to bring back a revised harmonized bylaw with no greater scope than the new Bylaw, no later than January, 2012.

The unanimous recommendation of the Committee to repeal, and bring back a revised harmonized Bylaw no later than January, 2012, will go to Council on April 12th. In the interim, planning and legal staff are considering a repealing bylaw and the financial implications of this. It is widely expected that Council will vote to repeal the Bylaw and direct legal staff to prepare that Bill on April 12. That direction is somewhat complicated by the fact that Committee, in the same breath, has also recommended that Council sustain the provisions in the Bylaw related to outdoor, and rooftop patios and nightclubs. If and when the Bylaw is repealed, the previous bylaw regime, being the myriad of zoning bylaws of the pre-amalgamated municipalities', will again apply.

The City's Bylaw struggles continue......stay tuned for further updates.

A bottle of Schlitz, please! – Incoming amendments to the Construction Lien Act

By Adam Zasada

The construction and real estate industries have changed immeasurably in the last two decades. Given that the Ontario Construction Lien Act (the "CLA") has remained virtually unchanged for more than 20 years, some might suggest that some renovations to the legislation are long overdue. Some might say that...I'm just sayin'...

With the CLA now almost old enough to buy itself a beer south of the border, the Ontario Legislature recently passed the Open for Business Act, 2010, which includes several changes to the CLA. One of these changes is already in effect and the other three are expected to come into effect in the near future.

While, in the grand scheme of the construction industry the amendments are far from game changers, they will have a real impact on projects where there is equipment being supplied and installed and on condominium developments.

Definition of "improvement"

In 2007, the Court of Appeal upheld a trial judge's ruling that the transporter and installer of a 100,000 square-foot, 500,000 ton automotive assembly line (built off-site, disassembled, transported, reassembled on-site, and fastened to the building with 2,000 to 3,000 bolts) did not have lien rights, because the installation of the assembly line did not fall within the definition of an "improvement"! The Court of Appeal refused to interfere with the trial judge's finding that the assembly line was "portable". I'm not kidding, either. Really, "portable" – that's what the judge decided.1

The construction industry (and more than a lawyer or two) was shocked by the Court's interpretation and so too, it seems, did the Ontario Legislature disapprove because the definition of "improvement" at section 1 of the CLA has (albeit three years later) been amended and now expressly includes the installation of industrial, mechanical, electrical or other equipment on the land where the equipment is essential to the normal or intended use of the land.

It will be very interesting (for construction law nerds like myself, anyway) to see how far the courts will go in extending lien rights to installed equipment.

This amendment came into force in October, 2010.


Under this amendment (new section 33.1 of the CLA), condominium developers will be required to publish notice of their intention to register the condominium declaration in accordance with the Condominium Act in a construction trade newspaper (the Daily Commercial News) five to fifteen days prior to registration.

This amendment will provide unpaid persons having liens notice of the pending registration of the condominium declaration so that they can preserve their lien rights before the lands and premises are legally divided into separate condominium units and title is transferred to homebuyers.

Prior to the registration of the declaration, the condominium improvement can be liened in the normal manner, even if the work of the person having a lien is to parts of the project which, after registration of the declaration, will be common elements. This amendment will provide an opportunity to avoid the much more expensive and time consuming requirement of liening the common elements of a condominium after the declaration has been registered.

This amendment is not yet in effect.

Affidavit of Verification

Prior to these amendments (to sections 34 and 40(1) of the CLA), a claim for lien had to be verified by an Affidavit of Verification which was typically sworn by the lien claimant. In an effort to keep pace (or at least not fall out of sight) with the new(ish) electronic registration system for land titles documents, verifying a claim for lien by Affidavit will no longer be required.

Also, instead of cross-examining the deponent of the Affidavit of Verification, the lien claimant, the agent or assignee of the lien claimant, or a trustee of the workers' trust fund (as the case may be) will be subject to cross examination.

These amendments are not yet in effect.

Sheltered Liens

Under these amendments (to sections 44(9) and 47(2) of the CLA), a lien claimant whose lien is sheltered under a certificate of action that has been vacated from title by Court Order will still be able to proceed with an action to enforce its sheltered lien as if the Order to vacate had not been made.

These amendments were introduced to facilitate the vacating of liens by Court Order while, at the same time, protecting the rights of sheltered lien claimants.

These amendments are not yet in effect.


1. See Kennedy Electric Limited v. Dana Canada Corporation, 2007 ONCA 664 (CanLII) and Kennedy Electric Ltd. v. Rumble Automation Inc., 2004 CanLII 47787 (ON S.C.)

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
16 Jan 2018, Seminar, Birmingham, UK

Join Gowling WLG's pensions team as they explain some of the biggest challenges facing trustees and employers in the coming year and provide practical ways of dealing with them.

23 Jan 2018, Seminar, London, UK

Join Gowling WLG's pensions team as they explain some of the biggest challenges facing trustees and employers in the coming year and provide practical ways of dealing with them.

25 Jan 2018, Seminar, Birmingham, UK

2018 is set to be another big year in employment, with employers set to face new challenges and responsibilities. At our event, looking ahead to next year, we will be discussing four key issues you might face in 2018, providing useful tips and answering your questions.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions