Option To Lease Agreement

Option To Lease Agreement Template for Canada

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Key Requirements PROMPT example:

"I need an Option to Lease Agreement for a retail space in Vancouver, with a 6-month option period starting March 1, 2025, including specific provisions for store fit-out and signage rights."

Document background

The Option To Lease Agreement is a strategic commercial real estate instrument used in the Canadian market when a potential tenant needs to secure the right to lease a property without immediately committing to a full lease agreement. This document is particularly valuable when businesses require time for due diligence, securing financing, or obtaining necessary permits before committing to a lease. The agreement typically includes detailed terms about the option period, exercise procedures, and the fundamental terms of the eventual lease. It's commonly used in commercial property development, business expansion scenarios, or when tenants need to align property acquisition with business planning. The document must comply with Canadian federal and provincial property laws, including the Commercial Tenancies Act and provincial real estate regulations, making it a crucial tool in commercial real estate transactions.

Suggested Sections

1. Parties: Identification of the option grantor (property owner) and option holder (potential tenant)

2. Background: Context of the agreement and brief description of the property and parties' intentions

3. Definitions: Key terms used throughout the agreement

4. Grant of Option: Express grant of the option and its basic terms

5. Option Period: Duration for which the option can be exercised

6. Option Fee: Amount payable for the option and payment terms

7. Exercise of Option: Procedure and requirements for exercising the option

8. Lease Terms: Key terms of the lease that will come into effect upon exercise of the option

9. Representations and Warranties: Statements of fact and promises by both parties

10. Conditions Precedent: Conditions that must be satisfied before the option can be exercised

11. Assignment: Rights and restrictions regarding transfer of the option

12. Notices: How and where formal communications between parties should be made

13. Governing Law: Jurisdiction and applicable law

14. Execution: Signature blocks and execution requirements

Optional Sections

1. Due Diligence: Terms regarding property inspection and investigation rights - include when the option holder needs time to investigate the property

2. Property Maintenance: Obligations regarding property maintenance during the option period - include when the property requires specific maintenance standards

3. Deposit: Terms regarding any security deposit - include when a deposit is required beyond the option fee

4. Exclusivity: Prohibition on granting similar rights to others - include when exclusivity is negotiated

5. Environmental Matters: Environmental warranties and indemnities - include for industrial or potentially contaminated properties

6. Development Rights: Rights to develop or modify the property - include when development is contemplated

7. Multiple Properties: Special provisions for portfolio options - include when multiple properties are involved

8. Right of First Refusal: Additional rights if the property is sold - include when negotiated alongside the option

Suggested Schedules

1. Property Description: Legal description and details of the property

2. Form of Lease: Complete form of the lease agreement to be entered into upon exercise

3. Option Exercise Notice: Pro forma notice for exercising the option

4. Financial Terms: Detailed breakdown of all financial obligations including option fee, rent, and other charges

5. Due Diligence Requirements: Specific requirements and procedures for property investigation

6. Permitted Use: Detailed description of allowed uses for the property

7. Property Condition Report: Current condition of the property and any existing defects

8. Required Insurance: Details of insurance requirements for both parties

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok��˰� | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

alex.den.21@genieai.co

Relevant legal definitions

Clauses

Relevant Industries

Real Estate

Retail

Commercial Property

Industrial

Office Space

Hospitality

Healthcare

Manufacturing

Warehousing

Professional Services

Technology

Education

Relevant Teams

Legal

Real Estate

Finance

Operations

Business Development

Risk Management

Facilities Management

Property Management

Asset Management

Corporate Development

Relevant Roles

Real Estate Manager

Property Manager

Commercial Lease Administrator

Legal Counsel

Business Development Manager

Facilities Manager

Chief Financial Officer

Real Estate Director

Operations Manager

Site Selection Manager

Expansion Manager

Asset Manager

Property Development Manager

Lease Negotiator

Risk Manager

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Let's create your Option To Lease Agreement

Authors

Alex Denne

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