Encyclopedia
Recapture clause
A lease clause letting the landlord take back space if the tenant wants to assign or sublet.
For example: A tenant learns the landlord can recapture the space rather than consent to a sublease. (Illustration only, not a real deal.)
This is a general industry term with no single official definition. Your lease or contract wording controls.
Example only, not a real client. Say you lease a large office and later want to sublease half of it. Your lease lets the landlord take back the space instead of approving the sublease. Because we negotiated that recapture applies only to the portion you want to sublease, you keep the half you need.
What I’d tell a friend
Read the recapture clause before you plan to sublease or assign. It can take away space you were counting on.
Why it matters to you
If you ask to sublet or assign, the landlord may be able to take the space back instead. That can kill the sale of your business or leave you without the location you built.
How to use it in your deal
Tenants should try to remove the clause or limit it: no recapture for transfers to affiliates, buyers of your business or for short sublets, and a right to withdraw your request if the landlord says it will recapture. Ask that the landlord pay costs of separating the space if it recaptures part. If you might downsize, think about how the clause affects your options.
Landlords should keep the right but use it carefully, since recapturing space you can't re-lease quickly costs you rent. Buyers should know which leases include it, since it's a source of possible upside or vacancy. Owners can use it to assemble larger blocks for new tenants.
Tenants should ask for a chance to withdraw their sublease or assignment request once the landlord says it'll recapture, so you don't lose the space by asking.
Mistakes I see
Tenants not reading it until they want to sublet. No right to withdraw. Landlords recapturing without a new tenant lined up.
In BC and Vancouver
The lease controls. BC courts interpret recapture clauses alongside consent clauses.
Official sources: CanLII (court decisions)
What it does
A recapture clause lets a landlord end the lease, or part of it, when a tenant asks to sublease or assign. Landlords use it to capture rising rents or control who occupies the building.
It can come as a surprise to tenants who expected a simple consent.
Limiting it
Ask that recapture not apply to transfers to affiliates or a buyer of your business, and that it cover only the space you want to transfer.
Ask for the right to withdraw your request if the landlord chooses to recapture. Check with a BC lawyer on the wording.
Questions to ask before you sign
- Can the landlord recapture if I assign or sublet?
- Can I withdraw my request?
- Who pays to separate space?
- Are affiliates exempt?
Keep reading
Related terms: Assignment (lease), Sublease
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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.