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Before buying commercial property in Ontario, confirm that you can use it as planned, what rights and obligations come with it, and what you will need to close. Start early enough to review the agreement’s deadlines. A zoning issue, a tenant’s renewal option or a lender’s environmental requirement can change the value or timing of the purchase.
This guide is for buyers acquiring an existing commercial property in Ontario, such as an office, retail unit or industrial building, for their own use or as an investment.
Key takeaways
- Check whether your proposed use is permitted and what approvals the building may need.
- Review registered access and restrictions, current leases, and the property’s physical and environmental condition.
- Check when your financing and review conditions expire, what the seller must deliver, and how tax and adjustments affect funds due at closing.
Tell us your intended use and any offer, condition or closing date. We check conflicts and availability and explain the consultation scope and fee before booking. An inquiry does not retain the firm or confirm that we can meet a deadline.
What should the purchase agreement cover?
The agreement sets out what you are buying, when you must decide whether to proceed and what each party must deliver at closing. The legal description, included equipment or fixtures, deposit terms and possession date can all matter. If the deal also involves buying the business that operates on the property, identify which assets and contracts are included and which need separate review.
For each financing or due diligence condition, check its scope, deadline and what happens if it remains outstanding. Check when the seller must provide records, when your consultants can access the site and whether you have enough time to review their findings. If you have already signed, have the agreement reviewed promptly. Its terms help determine your options and what happens to the deposit.
Can you use the property as planned?
Check the municipal zoning for the specific address and the activity you intend to carry on. Parking, loading, outdoor storage or a proposed expansion may affect what is permitted. If the seller relies on a use that was lawful before the zoning rules changed, check which activity was protected, whether it continued and whether your plans go beyond it.
Zoning and building approvals answer different questions. A proposed change in use can require a permit even if you plan no construction. Ask about outstanding permits or orders, and identify any occupancy, fire safety or licensing requirements relevant to your operation.
Example: A warehouse with a customer showroom
Zoning may allow a unit to be used for warehousing, while a customer showroom can raise separate zoning, parking and building questions. If you need the showroom to operate, confirm whether that use is permitted while there is still time under your agreement to address it.
What can title and property records tell you?
Title review can identify registered mortgages, easements, restrictions and other interests. A survey and relevant agreements can help assess where a driveway, loading area or shared facility sits and who may use or maintain it. Check which interests the seller is expected to remove and which will remain after closing.
If you are buying a commercial condominium, review the declaration, rules, status certificate and shared costs for issues that affect your use or budget. A site visit, municipal records and specialist reports can help answer separate questions about physical access, condition and compliance.
What if tenants already occupy the property?
Review the leases and amendments alongside the rent roll. Look at rent actually payable, arrears, deposits, renewal rights, operating-cost obligations and any promises the seller has made. A lease may also give a tenant an option to purchase or a right of first refusal. The transaction may call for tenant confirmations about the lease terms or outstanding issues.
If you plan to occupy the space, check whether the seller must deliver vacant possession and how that fits with any existing lease rights. If tenants are staying, clarify how rent, deposits and other lease items will be adjusted or transferred at closing.
What building and environmental risks should you review?
Building and environmental consultants can help you assess the roof, mechanical systems, repair needs and the site’s past uses. Former uses such as a garage or dry cleaner can warrant closer environmental review. A Phase One environmental site assessment reviews the history and potential concerns. Depending on the findings and the reason for the review, a Phase Two assessment may be needed to test for contamination.
Ontario generally requires a record of site condition before specified changes to a more sensitive use, such as a change from industrial to residential use, subject to applicable exceptions. A lender may require an environmental assessment as a funding condition even when the buyer intends to continue the current use. Review any findings with your consultants and lawyer while the agreement still gives you time to address them.
What can change the amount needed at closing?
Compare the lender’s funding conditions and timing with the purchase agreement. The lender may require an appraisal, insurance, environmental reports or other documents before advancing funds. An initial financing approval may still have outstanding conditions.
Budget for Ontario land transfer tax and, for property in the City of Toronto, municipal land transfer tax where applicable. For the goods and services tax or harmonized sales tax (GST/HST), confirm whether the sale is taxable, whether the price includes any applicable tax, and who must account for it. On some taxable sales, a buyer registered for GST/HST must account for the tax directly. Confirm how that affects your closing funds and whether any credits are available with your tax adviser. Property taxes, prepaid rent and other contractual adjustments can also change the closing balance.
How can Legal Route help with the purchase?
Legal Route can review the agreement, title and relevant documents, explain issues that affect your decision to close, and coordinate the legal work for closing. Depending on the scope, that may include reviewing leases or lender documents and working with your consultants or tax advisers. Legal Route’s legal services are provided by lawyers licensed by the Law Society of Ontario.
What to have ready for an initial inquiry
Share the property address, what you intend to do with the space, whether tenants are in place and any offer, condition or closing dates. Let us know if there is a signed agreement. Wait for secure delivery instructions before sending agreements, financing documents or reports.
Commercial real estate consultations in Brampton and across Ontario
In Brampton. In-person appointments are available by arrangement at our Brampton office, 2074 Steeles Avenue East, Unit 17.
Toronto and the GTA. We assist with commercial property matters across the region, including Mississauga, Vaughan and Burlington.
Across Ontario. Virtual appointments are available for suitable matters. See our Ontario service areas for appointment options.
Frequently asked questions about commercial property purchases
When should I involve a real estate lawyer?
Ideally, before signing, so there is time to review the conditions, access to records and closing obligations. If the agreement is already signed, share the relevant dates when you inquire.
What if I plan to expand the seller’s existing use?
Check whether the approval or legal protection covers the expansion. For example, adding outdoor storage can raise zoning questions even if you carry on the same business indoors.
Can I buy a tenanted building and use part of it myself?
It depends on the leases, what space you need and what the seller has agreed to deliver. Confirm the space the lease gives the tenant, including any storage, parking or access rights, before relying on a move-in date.
Do all purchases need an environmental assessment?
The site history, intended use, lender requirements and contract all matter. An environmental consultant can help identify the assessment that fits the property and its proposed use.
Will I have to pay HST to the seller at closing?
It depends on the property, the transaction and the parties’ tax status. Some buyers must account for the tax directly. If the buyer accounts for the tax directly, ask your tax adviser how that will affect the timing and amount of any tax payment.
Discuss your commercial property purchase
Tell us what you are buying, how you plan to use it and when the next decision is due.
Request a commercial property consultation
Call 905-283-8514 or see our Brampton office and appointment details. An inquiry does not establish a lawyer-client relationship or confirm that the firm has accepted the matter.
Related Legal Route resources
Official resources
- Ontario’s guide to municipal zoning bylaws
- Ontario’s guide to building and change-of-use permits
- Ontario’s environmental site assessments and records of site condition
- Ontario land transfer tax and Toronto’s municipal land transfer tax
- Canada Revenue Agency guidance on real property and GST/HST
This article provides general legal information about Ontario commercial property purchases. Your agreement, the property and your intended use determine which issues apply.