Finding the right location for your business can be difficult. Once you find the right space, the focus often shifts to negotiating certain terms with the landlord, such as the amount of rent and the length of the lease. One important item that is often glanced over is whether the space can be utilized for what you want to accomplish. You may see similar businesses in the area and assume that if they are operating, you must be able to do so as well. However, further due diligence is necessary to ensure you do not sign a lease for a space that you cannot use as intended.
One of the most important steps to take is checking the zoning by-laws with the municipality to ensure they allow your intended use. If your use is not allowed and you begin to operate, the municipality could force you to close your location. Also, simply taking a cursory look at the by-laws is not sufficient as there can be subzones and exclusions to the general zoning for a certain location. For example, I recently had a client who was looking to open a medical office and their understanding was that this was allowed under the zoning by-laws for a location they were considering. Unfortunately, upon examining the by-laws more closely, there was an explicit exclusion that prevented the use of the location as a medical office (even though other types of offices were permitted). Luckily, my client looked into this ahead of time (before firmly committing to the space) and was able to walk away.
Even if the zoning bylaws allow for a certain use, the lease itself can also restrict the use of a certain space. In almost all leases, there is a section that outlines what a specific location can be used for so ensuring that your intended use complies with this description is extremely important. Furthermore, other tenants within the same shopping mall or complex often negotiate restrictions within their leases to limit competition from similar businesses (for example, no other dentists are allowed in the shopping complex or no other tenants can sell shoes). The landlord will then include all these restrictions in a schedule to all future leases. As a result, you need to closely examine these restrictions to make sure that will not have an adverse effect on your business.
So, the next time you find that perfect space, make sure there is nothing preventing you from using it the way you want to.
This blog post was written by Jason Peyman, a member of the Real Estate and Business Law teams. He can be reached at 613-369-0376 or at [email protected].
