Situation · Tenants and owners
Moving your business: what to do with the lease or the building
When a business moves, the old lease usually doesn’t end on its own. Common exits are to: assign it, sublet it, negotiate a surrender, or wait out the term. Many need the landlord’s consent, depending on the lease. A good first question for your lawyer is what your assignment clause allows.
For: Tenants · Business owners
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Plain-English definitions with BC sources, from the encyclopedia:
General information only. This page is not legal, tax, accounting or financial advice, and it isn’t an opinion on your situation. Laws, rates and figures change, and examples are illustrative. Get advice from a lawyer, accountant or other qualified professional before you act. Reading this page doesn’t create an agency or client relationship. Cam Appleton is a Commercial Real Estate Agent licensed by the BC Financial Services Authority (BCFSA RE611549) with Coldwell Banker Prestige Realty. Terms and disclaimer.
Your four exits
Assignment
Someone else takes over the lease. Assignment rights usually come from your lease rather than the Commercial Tenancy Act. You may stay liable, and a personal guarantee often isn’t released.
Sublease
You stay the tenant and rent to someone else. You usually remain responsible to the landlord.
Surrender
You and the landlord agree to end the lease, usually with a payment. See lease surrender.
Wait it out
Sometimes the lowest-cost option if little term is left.
| Exit | Your liability | Consent | Cost |
|---|---|---|---|
| Assignment | May continue, check the lease | Usually needed | Legal fees, maybe a payment |
| Sublease | Continues | Usually needed | Rent gap if the sublet rent is lower |
| Surrender | Usually ends when signed | Needs the landlord’s agreement | A negotiated payment |
Check the consent clause
The Canada Revenue Agency (CRA) handles federal tax. The City’s lease guide notes that some landlords seek the right to cancel the lease when a tenant asks for consent to assign or sublet. Read that clause before you ask. CRA’s Memorandum 19.4.1 covers Goods and Services Tax (GST) on assigning a commercial lease, so have your accountant check any payment.
Also check restoration obligations and the overlap with your new space. More in assignment and sublease.
Making the exit easier
- Leaving doesn’t end the lease
- You may stay on the hook for rent, and so may a guarantor. The usual exits are a sublease, an assignment or a negotiated surrender, each with a different price and risk.
- Read the assignment clause first
- At common law a tenant can generally assign or sublet unless the lease says otherwise, and most leases require landlord consent. A sublease that hands over the whole remaining term may be treated as an assignment. Read the clause, with your lawyer, before you market the space.
- Find clauses that might help
- Look for termination, demolition, redevelopment or relocation clauses. If the landlord wants the space back, your remaining term and any renewal options may have value.
- Budget for restoration
- Many leases require you to restore the premises at the end. A one-page summary of term, rent, recoveries, options, assignment, demolition and restoration helps before you commit to new space.
- Line up the new space before you give notice
- Starting 6 to 18 months out gives room. Zoning, permitted use, power, parking and timing at the new address can be made conditions of the offer to lease rather than promises.
- Your lease may be something to sell
- A favourable lease is one of the things buyers and incoming tenants pay for. An assignment may turn a liability into value.
- Look at it from the landlord’s side
- The landlord’s question is risk: will the new tenant pay? Bringing a strong replacement with their finances ready can make consent easier.
- Offer what costs you little
- A smooth handover, leaving fixtures or a little overlap can cost you little and help win consent.
An assignment may leave you liable unless the landlord releases you, and guarantees often outlive the business’s time in the space. Have a lawyer review the assignment or surrender terms and confirm your exposure. Ask your accountant about moving costs, write-offs and GST on fit-outs.
Cam is a licensed real estate agent, not a lawyer or accountant.
If you own the building
Sell it, lease it out, or keep it as an investment. A lease can be an asset or a liability, so it can help to understand yours before you sign the next one. Plan the move with relocating your business and the moving checklist.
Common mistakes
- Leaving without reading the assignment and sublease clauses.
- Assuming the landlord will let you walk away.
- Signing the new lease before the old one is dealt with.
- Forgetting restoration costs on the space you’re leaving.
Assignment consent when you leave the city
Leaving town does not end the lease by itself. Most transfers need landlord consent. “Transfer” in many forms includes assignment, sublease, and a change of voting control.
Landlords can set reasonable conditions: financials, experience, same use, and current rent. Courts have pushed back when consent is used only to reclaim the space or jack up the deal. Still, plan months for consent, not days.
Ask early, keep rent current, and have your lawyer manage the consent package so a move date does not strand you on a Vancouver lease.
Questions people ask
Can I get out of my commercial lease early?
Generally through your lease’s terms or a deal with the landlord, such as assignment, sublease or a negotiated surrender. Ask your lawyer what your lease allows.
Assignment vs sublease: what’s the difference?
An assignment hands the lease to someone else. A sublease keeps you as tenant renting to someone under you.
Can the landlord refuse consent?
It depends on the lease wording. Check whether your lease says consent can’t be unreasonably withheld, and whether it gives the landlord a right to cancel instead.
In practice
How I help with moving out of Vancouver
This page is for you if you're thinking of moving your business to Burnaby, Richmond, Surrey or farther out to save on rent.
- Happy to compare rent, additional rent and property taxes across municipalities for the space you need.
- We can map how a move changes commutes for your team and access for customers.
- I’ll search for space in the new area and help you negotiate it.
What to watch for
- Savings eaten by staff turnover or lost customers.
- Different zoning and business licence rules in each city.
- Ending your current lease early.
The steps, in order
- Compare total costs, not just rent.
- Ask your team where they live and how they get to work.
- Line up the new lease before giving notice on the old one.
Good questions to ask
- What are total occupancy costs in each area?
- Does the new city's zoning allow my use?
- What does it cost me to leave my current lease?
Lease and property law has BC-specific wrinkles, so for anything legal, check with a BC real estate lawyer before you rely on it. This page is general information, not legal, tax or financial advice. Cam Appleton is a licensed real estate representative with Coldwell Banker Prestige Realty.
Next step
Moving?
Send me your lease. I’ll walk through the exits to discuss with your lawyer and help find the new space at the same time.
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