Common questions, short answers

Short answers to questions I hear often. They're general and BC-specific, and the right answer for you depends on your lease, contract and situation. Terms are explained in the encyclopedia.

Leasing (tenants)

Is there a cap on how much my commercial landlord can raise rent in Vancouver?

No. BC has rent limits for residential tenancies, but not for commercial ones. Your rent and increases come from your lease, so the rent review and renewal clauses are what matter. See how commercial rent increases work in BC. Source: Commercial Tenancy Act (BC Laws).

How much can my landlord increase rent on renewal of a business lease?

It depends on the renewal clause. Many say renewal rent is fair market rent, set by agreement or, failing that, by arbitration. Some set fixed steps. If the clause is vague, get advice before you respond. See lease renewal. Source: Arbitration Act (BC Laws).

My landlord won't renew my lease. What are my options?

If you have a renewal option and exercise it properly, the landlord is generally bound by it. If you don't, there's usually no right to stay, so the options are negotiating, finding new space or planning a move. A lawyer can tell you where you stand. Source: Commercial Tenancy Act (BC Laws).

How do I properly exercise a renewal option?

Read the clause for the notice window, the form of notice and where it must be sent. Send it in writing, within the window, the way the lease requires, and keep proof. Being in default can sometimes cancel the option. See the renewal deadline tool. Source: Commercial Tenancy Act (BC Laws).

What does triple net (NNN) mean and what will I actually pay?

You pay basic rent plus your share of property tax, insurance and operating costs. The share and what counts as a cost depend on the lease, so ask for the last few years of statements. See triple net leases.

My NNN/common area maintenance (CAM) charges jumped. Can I fight it?

Start by asking for the reconciliation detail and checking it against what the lease lets the landlord charge. Many leases give an audit right within a set time. If something's charged that the lease doesn't allow, raise it in writing. Source: Commercial Tenancy Act (BC Laws).

Why do CAM reconciliations go up every year?

The Canada Revenue Agency (CRA) handles federal tax. Property tax, insurance, wages and repairs tend to rise, and the landlord estimates monthly, then trues up after year end. A jump can also mean a capital item or a new cost category; check whether your lease allows it. Source: CRA: current or capital expenses.

Do property tax increases get passed to tenants?

Under most net leases, yes: your share of property tax is part of additional rent. Under a gross lease, the landlord usually carries it, at least up to a base year. Your lease controls. See why your property tax bill went up. Source: BC Assessment appeal guide.

Should I sign a personal guarantee on a commercial lease?

Many landlords ask for one from newer businesses. If you sign, try to limit it in amount and time, and get a lawyer to read it first, since it can make you personally liable. Source: Commercial Tenancy Act (BC Laws).

What should I negotiate before signing a café or retail lease?

Usually: the permitted use, exclusive use, fixturing period, tenant improvements, renewal options, assignment rights, the guarantee and how operating costs work. See what's negotiable in a lease. Source: Commercial Tenancy Act (BC Laws).

How much free rent or fixturing time can I get in Vancouver?

It varies with the market, the building, the term and your covenant. I don't publish typical numbers because they change fast. Ask what recent deals in that building got. Source: Commercial Tenancy Act (BC Laws).

What should a restaurant ask about build-out and TI allowance?

Ask what's in the base building (power, gas, venting, grease, washrooms), who pays for what, when the allowance is paid and what you have to remove at the end. See tenant improvements. Source: Business licences (City of Vancouver).

What commercial lease traps should small businesses avoid?

Common ones: missed renewal deadlines, unlimited personal guarantees, demolition or relocation clauses, broad operating cost definitions and restoration obligations. Read the full lease with a lawyer. Source: Commercial Tenancy Act (BC Laws).

My landlord's lease terms seem unfair. Is this normal?

A landlord's first draft tends to favour the landlord. Many terms are negotiable before you sign. After you sign, the lease generally binds you. Source: Commercial Tenancy Act (BC Laws).

Can I get out of my commercial lease early?

Only if the lease allows it or the landlord agrees. Options include assigning, subleasing, a negotiated surrender or a buyout. See lease surrender. Source: Commercial Tenancy Act (BC Laws).

Can I sublet part of my space?

Usually only with the landlord's consent, and some leases let the landlord take the space back instead. See assignment and sublease. Source: Commercial Tenancy Act (BC Laws).

Is an offer to lease binding?

It can be. Depending on the wording, an accepted offer to lease can be a binding agreement even before the formal lease is signed. Have a lawyer read it. See offers to lease. Source: Commercial Tenancy Act (BC Laws).

Who pays the commission on a commercial lease?

It's set by agreement, often between the landlord and the brokerages, and BC rules require it to be disclosed. See how commissions work. Source: Real Estate Services Rules (BC Laws).

What is a demolition or redevelopment clause, and should I worry?

It lets the landlord end the lease early to redevelop, after notice. If your building is near transit or in a plan area, take it seriously. See your building is being redeveloped. Source: Transit-oriented areas (Government of BC).

How is rentable vs usable area measured?

Usable area is the space you use. Rentable adds a share of common areas. The lease says which standard applies. See load factor. Source: Commercial Tenancy Act (BC Laws).

Buying and selling a business

Where should I start if I want to buy a small business in BC?

Decide what you can afford and run, line up an accountant and lawyer, and look at the lease early, since it often decides the deal. See buying a business. Source: Income Tax Act (Justice Laws).

Asset purchase or share purchase: which is better?

Buyers often prefer assets because the liabilities stay behind. Sellers often prefer shares for tax reasons. Ask an accountant about your situation. Source: Income Tax Act (Justice Laws).

My landlord won't transfer the lease to the buyer. What now?

Check what the lease says about consent. Some leases say consent can't be unreasonably withheld. A lawyer can advise. See selling your business and the lease. Source: Commercial Tenancy Act (BC Laws).

Does the landlord have to consent to assignment when I sell my business?

If the lease requires consent, yes. A share sale can also need consent if there's a change-of-control clause. Source: Commercial Tenancy Act (BC Laws).

Do I pay Goods and Services Tax (GST) when buying a business? What is the GST44 election?

An asset purchase can attract GST, but if conditions are met, the buyer and seller can elect under the Excise Tax Act (form GST44) so GST isn't payable on the sale. Ask your accountant. Source: Excise Tax Act (Justice Laws).

What is a Provincial Sales Tax (PST) clearance certificate and do I need one?

It confirms the seller doesn't owe PST. Without one, a buyer of a business's assets may become liable for the seller's unpaid PST. Ask the Province or your lawyer. Source: Provincial sales tax (Government of BC).

How are small businesses valued?

Often as a multiple of seller's discretionary earnings or earnings before interest, taxes, depreciation and amortisation (EBITDA), adjusted for risk, lease and assets. The multiple varies by industry and deal. Source: Income Tax Act (Justice Laws).

How do I verify a seller's financials?

Match statements to tax returns, bank deposits and sales records, and have an accountant review them before removing subjects. Source: Income Tax Act (Justice Laws).

Do I pay property transfer tax when buying a business?

Usually not when no land is transferred. If land is part of the deal, it can apply, and there are rules around share sales. See PTT and share sales. Source: Property transfer tax (Government of BC).

What happens to employees when a business is sold?

Under BC's Employment Standards Act, employment is generally deemed continuous when a business is sold. Get legal advice on your obligations. Source: Employment Standards Act (BC Laws).

Property tax and assessment

Should small commercial owners appeal their assessment?

If the value or class seems wrong, it's worth checking against sales near the valuation date. The appeal has a deadline early in the year. Source: BC Assessment appeal guide.

How do I appeal a commercial property assessment?

Contact BC Assessment first, then file a notice of complaint by the deadline on your notice. See BC Assessment's appeal guide. Source: BC Assessment appeal guide.

What is Vancouver's Development Potential Relief Program?

A City pilot that has given tax relief to some eligible Class 5 and 6 properties with high development potential. Eligibility and deadlines are set yearly. Source: Development Potential Relief Program (City of Vancouver).

What's this year's business property tax rate in my city?

Rates are set by each municipality every spring. I don't republish them here because they change; check your city's site or tax notice. Source: Assessment Act (BC Laws).

Is my warehouse Class 5 or Class 6?

It depends on how the property is used. BC Assessment sets the class; check your notice and its class definitions. Source: BC Assessment: property classes.

Does the Empty Homes Tax apply to commercial or live/work property?

It applies to residential property. Live/work and mixed-use properties can be partly residential, so check with the City. Source: Empty Homes Tax (City of Vancouver).

Does the speculation and vacancy tax apply to a mixed-use building?

It can apply to residential parts in designated areas. Check the Province's rules and exemptions. Source: Speculation and vacancy tax (Government of BC).

What is land assessment averaging?

A City of Vancouver program that phases in tax increases for some properties with big land-value jumps. Source: Land assessment averaging (City of Vancouver).

Buying and investing in commercial property

Is buying an industrial strata unit a good idea for my business?

It can be if you'll stay long enough and want stability. Check strata documents and resale demand. See buying a building for your business. Source: Strata Property Act (BC Laws).

What strata documents should I review before buying a commercial unit?

The information certificate, bylaws, minutes, financials, depreciation report and insurance. See strata documents checklist. Source: Strata Property Act (BC Laws).

How much down payment do I need for a commercial property?

It depends on the lender, the property and your finances. Ask a few lenders early. See financing commercial property. Source: Bank of Canada: key interest rates.

What are commercial mortgage rates tied to?

Variable rates usually follow prime, which tends to follow the Bank of Canada's policy rate. Fixed rates often track government bond yields. Source: Bank of Canada: key interest rates.

What is a capitalisation rate (cap rate), and what's normal in Vancouver now?

Net operating income (NOI, the income left after running costs) divided by price. I don't publish a "normal" number because it varies by property and changes. See cap rates. Source: Bank of Canada: key interest rates.

Do I need an environmental assessment to buy an industrial lot?

It's not always legally required, but buyers and lenders often want one. See the Province's site remediation pages. Source: Site remediation (Government of BC).

How much is property transfer tax on a commercial building?

PTT is charged on the fair market value when the transfer is registered. See the Province's page or the PTT calculator. Source: Property transfer tax (Government of BC).

Is there GST on buying commercial property?

Tax names used here: Harmonized Sales Tax (HST). Generally yes. How it's paid depends on whether the buyer is registered. Ask an accountant. Source: CRA GST/HST Memorandum 19.4.1.

Should I own or lease my business premises?

Owning can build equity; leasing keeps cash in the business. See the lease vs buy calculator. Source: Income Tax Act (Justice Laws).

What does the SkyTrain/TOA law mean for my property's value?

It requires cities to allow minimum densities near stations, which may affect land value. Get a site-specific opinion. Source: Transit-oriented areas (Government of BC).

Landlords

How do I pass operating costs to tenants fairly?

Define costs clearly in the lease, budget, reconcile yearly and share supporting documents. Source: Commercial Tenancy Act (BC Laws).

What can a landlord do when a commercial tenant stops paying?

Options may include distress, termination, or suing, depending on the lease and law. Get legal advice first. See when a tenant stops paying. Source: Rent Distress Act (BC Laws).

Should I ask for a personal guarantee from a new tenant?

Many landlords do for newer businesses. Weigh it against the tenant's covenant. Source: Commercial Tenancy Act (BC Laws).

Can I refuse a tenant's assignment request?

It depends on the lease. Many leases say consent can't be unreasonably withheld. Get advice. Source: Commercial Tenancy Act (BC Laws).

How do I sell a building with tenants in place?

Gather leases and a rent roll; buyers will want estoppel certificates. See selling with tenants in place. Source: Land Title and Survey Authority of BC.

What will rate hikes do to my building's value?

Higher borrowing costs can push cap rates up and values down, but it varies. Source: Bank of Canada: key interest rates.

Campgrounds and recreational vehicle (RV) parks

Is buying a co-op RV lot or share a good idea?

Read the governing documents and resale rules carefully, and get legal advice. Source: Strata Property Act (BC Laws).

What's it really like to own an RV park or campground?

Seasonal, hands-on and regulated. See buying an RV park. Source: Drinking Water Protection Act (BC Laws).

Can people live year-round in a BC campground?

It depends on local zoning and permits. Some long-term sites may fall under the Manufactured Home Park Tenancy Act. Source: Manufactured Home Park Tenancy Act (BC Laws).

Can I run a campground on Agricultural Land Reserve (ALR) farmland?

The Agricultural Land Commission (ALC) oversees land in the Agricultural Land Reserve. Only within the ALC's rules. Check with the ALC. Source: Agricultural Land Commission.

How are RV parks valued: per site or on income?

Mainly on income, with price per site as a rough check. Source: Income Tax Act (Justice Laws).

What water and sewer permits does a campground need?

Drinking water systems may need permits under the Drinking Water Protection Act; check with your health authority. Source: Drinking Water Protection Act (BC Laws).

General information for British Columbia only. It isn’t legal, tax, accounting or financial advice, laws and rates change, and reading it doesn’t make you my client. Any numbers or scenarios are hypothetical. Check the linked official source and talk to a lawyer, accountant or other qualified professional before you act or sign anything. See the terms and disclaimer.