As far as the law is concerned, it is very difficult to backtrack.

That is why lessors should, as regards termination of a lease, carefully evaluate their options, which are generally as follows:

• sue the tenant for all sums due according to the terms of the lease;

or

• come to an agreement with the tenant that allows for terminating the lease (usually by retaining the tenant’s assets and/or imposing a lump sum payment).

The landlord should weigh the risks and inconvenience of legal proceedings versus the opportunity of immediately receiving certain assets or a cash payment.

Whether you opt for the first option or the second, one thing is certain – stick to the option you choose. A legal dispute on that matter was recently argued in court[1].

In that instance, the judge had to decide between the position of the landlord, who claimed that he was entitled to all the monies due following early termination of the lease ($170,506.92), and that of the tenant, who alleged that he had an agreement (i.e. to hand over his assets in the rented space in exchange for a full release of claims against him), but that at the last minute the landlord had ultimately refused to sign the final documents.

After analyzing the evidence, the court concluded that there was in fact an agreement, and that the landlord’s about-face at the time of signing the lease had no effect on its validity. The court rendered its judgement by confirming that the landlord would have been entitled to $175,981.92 had he not consented to that transaction.

That is a good reminder for landlords that they should carefully consider all advantages and inconveniences before making a business decision.

Me François Nantel
Cain Lamarre
(March 21, 2017)

[1]   9027-1453 Québec inc.  c.  9021-5187 Québec inc., 2017 QCCS 760