Landlords are often faced with requests from prospective tenants
for a broad use clause or "exclusive" use protection in
their leases. With an increasing number of tenants that offer
similar merchandise or services, landlords must be alert to the
dangers of promising tenants too general of a use clause that could
conflict with the exclusive use of current tenants or impede on
their ability to attract future tenants.
A recent case from the Ontario Superior Court of Justice, 2249778 Ontario Inc. v. Smith, dealt with a
tenant operating as a fast food restaurant who also had an ATM
installed in the premises. The landlord objected to the ATM on the
grounds that the tenant was offering "banking services"
which were not included as a permitted use under the lease.
The tenant argued that the ATM was a tool which facilitated his
business by lowering his costs and providing convenience for
customers. The court ultimately sided with the tenant,
concluding that the ATM was appropriate for "business
reasons" and that the installation of the ATM did not in any
way change the purpose of the premises, which was a fast food
The case above illustrates the importance of a use clause that
considers, and if necessary explicitly prohibits, activities which
may be ancillary to the general purpose or use of the premises, but
which are nevertheless in the landlord's interest to control.
When agreeing to a tenant's proposed use, the description
should be kept as specific as possible and should include details,
particularly of the type of merchandise or services offered.
Landlords should also consider specific carve-outs for activities
which could interfere or conflict with the uses of existing tenants
or the uses of prospective tenants that landlords may want to
attract in the future (for example, large, big-box tenants).
Avoiding overly broad use clauses without explicit prohibitions
ensures landlords have the flexibility to lease to a wide variety
of retailers and is critical in developing and maintaining a
diverse and productive shopping centre.
The Ontario Court of Appeal confirmed that courts will generally support and uphold decisions of condominium directors because they are better positioned than judges to make decisions pertaining to their buildings.
According to the city bylaws in Calgary, the grading of lots for new buildings must be done properly so that the water never flows toward the new building or any other nearby properties, but away from those buildings.
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