Case snapshot
At a glance
- Case
- Can a Commercial Lease Be Enforced Without a Signed Lease Document in Ontario?
- Court / Tribunal
- Ontario Superior Court of Justice
- Citation
- 2026 ONSC 5103 ↗
- Date
- September 11, 2026
- Area of law
- Litigation Law
- Key issue
- Whether an Agreement of Purchase and Sale containing a lease covenant and schedule created a binding commercial lease without a separately executed lease document, and whether insurance-related breaches justified termination.
- Outcome
- The court declared the commercial lease valid and enforceable, set aside the landlord's Notice to Quit and Notices of Default, granted relief from forfeiture, issued a permanent injunction restraining the landlord from interfering with the tenant's possession, and ordered repayment of rent overpayments with prejudgment interest.
- Why it matters
- Commercial tenants and landlords need to understand that lease obligations embedded in purchase agreements can be fully enforceable, and that minor or brief breaches do not automatically justify termination.
Legal principle
The rule from this case
Ontario courts will look at the full context of a commercial arrangement — including purchase agreements, schedules, and related covenants — to determine whether a binding lease exists, even when no standalone lease document was signed. Where the language is clear and unambiguous, the court will enforce it as written, applying the principles from Sattva Capital Corp. v. Creston Moly Corp. and Corner Brook (City) v. Bailey. When a tenant has committed a breach — such as a temporary gap in insurance coverage — the court can grant relief from forfeiture under the Commercial Tenancies Act if the breach was brief, the landlord's interests were ultimately protected, and terminating the lease would be inequitable in the circumstances. Relief from forfeiture is an equitable remedy that prevents a landlord from using a technical breach to end a lease when the overall harm does not justify such a drastic result.
Important limits
What this does not mean
This decision does not mean that every purchase agreement automatically creates an enforceable lease. The court's finding depended on specific language — a proposed lease clause read together with a lease covenant, an assignment covenant, and a detailed schedule — that left no genuine ambiguity. Agreements with looser or more conditional language may be interpreted differently. This case also does not mean tenants can ignore insurance or other lease obligations without consequence. The court emphasized that the insurance was in place at the time of the application and that the landlord's interests had been protected. Tenants who allow significant or prolonged breaches to continue may not receive the same equitable relief, and the outcome will always depend on the specific facts and the wording of the lease.
Can a Purchase Agreement Create a Binding Commercial Lease in Ontario?
Yes — where the language of a purchase agreement is clear and unambiguous, Ontario courts will treat it as creating a binding commercial lease, even without a separately signed lease document. In 1000662603 Ontario Inc. v. Gizzarelli, 2026 ONSC 5103 (CanLII), the Superior Court of Justice declared a commercial lease valid and enforceable based on the terms embedded in an Agreement of Purchase and Sale (APS), without any standalone lease ever having been executed.
The court applied the interpretive principles from Sattva Capital Corp. v. Creston Moly Corp. and Corner Brook (City) v. Bailey, reading the APS’s proposed lease clause together with a lease covenant, an assignment covenant, and a detailed schedule. Once the court found no genuine ambiguity in that language, the lease terms — including the fixed term, monthly rent, the tenant’s maintenance obligations, and insurance requirements — were all enforceable.
If you are involved in a commercial real estate transaction where lease terms appear in a purchase agreement, our Ontario litigation lawyers can help you understand what obligations may already be binding on you.
What Happens When a Landlord Issues a Notice to Quit or Notice of Default?
A Notice to Quit or Notice of Default does not automatically end a commercial tenancy. In this case, the court examined both notices carefully and found them legally invalid. Setting aside those notices was a significant part of the tenant’s success.
For a notice to be effective, it must comply with the requirements of the Commercial Tenancies Act and the terms of the lease. Landlords who issue notices that do not meet those requirements — whether because the underlying breach is not established, the notice is procedurally defective, or the timing is wrong — risk having those notices declared void by a court.
What Is Relief from Forfeiture and When Does It Apply in Ontario?
Relief from forfeiture is a court remedy that prevents a landlord from terminating a commercial lease based on a breach when doing so would be inequitable. Under sections 20(1), 20(8), and 19(2) of the Commercial Tenancies Act, Ontario courts have the authority to grant this relief where the circumstances warrant it.
In this case, the alleged breach involved a gap in the tenant’s insurance coverage. The court found that the gap was brief, that insurance was in place by the time the application was heard, and that the landlord’s interests had not suffered lasting harm. Allowing the landlord to forfeit the lease in those circumstances would have been inequitable, so relief was granted. The court’s analysis focused on the proportionality between the breach and the consequence of termination.
Can a Landlord Be Permanently Restrained from Interfering with a Tenant’s Possession?
Yes — where a landlord has wrongly attempted to interfere with a tenant’s right to occupy commercial premises, a court can issue a permanent injunction. In this case, the court not only set aside the invalid notices but also granted a permanent injunction restraining the landlord from interfering with the tenant’s use and occupation for the duration of the lease. The landlord was also restricted from attending the premises without reasonable advance written notice.
Permanent injunctions in commercial tenancy disputes are not routine, but they are available where a court finds that declarations alone would not adequately protect the tenant’s right to possession. This type of relief underscores how seriously Ontario courts treat a tenant’s right to quiet enjoyment.
Can a Tenant Recover Rent That Was Overpaid to a Landlord?
Yes — where a landlord has collected rent above what the lease actually permits, a court can order repayment of the overpaid amount. In this case, the court reviewed the payment history and found that the landlord was not entitled to the higher rent amount being charged. The excess payments were treated as overpayments, and the court ordered them to be repaid with prejudgment interest under the Courts of Justice Act.
The court also gave the tenant a practical remedy: if the landlord failed to repay the overpayment, the tenant was entitled to withhold that amount from future rent payments. This set-off mechanism provides real-world protection without requiring the tenant to return to court immediately.
How Do Ontario Courts Interpret Ambiguous Commercial Lease Terms?
Ontario courts interpret commercial contracts — including leases — by reading the document as a whole, in light of the surrounding circumstances at the time it was made. This approach, confirmed in Sattva, means that courts look beyond the literal words of a single clause and consider the entire agreement and its commercial context.
In this case, the court found no ambiguity once all the relevant provisions were read together. That finding was critical: it meant the court did not need to resolve competing interpretations, and the tenant’s position was supported by the plain meaning of the agreement. Parties who draft or sign commercial agreements with loosely worded or conditional lease provisions may face much more uncertainty if a dispute arises.
For tenants and landlords in the Hamilton and Burlington area dealing with commercial lease disputes, our Burlington litigation lawyers and Hamilton litigation lawyers are available to discuss your situation.
Questions and Records to Discuss with a Lawyer
- What documents govern your tenancy — is there a standalone lease, a purchase agreement with lease terms, or both, and how do they interact?
- Have you received a Notice to Quit, Notice of Default, or any other notice from your landlord, and what are the stated grounds?
- Is there a history of rent payments that differs from what the lease specifies, and do you have receipts or bank records to support your position?
- Has there been any gap or issue with insurance coverage, and when did coverage resume?
- Has the landlord attended the premises, changed locks, or taken any steps that may interfere with your right to occupy?
If you are navigating a commercial lease dispute — whether as a tenant or a landlord — the team at UL Lawyers is available to discuss your circumstances. Reach out through our contact page to get started.
This article is automated commentary on a public court decision and is for general information only — not legal advice. Decisions rely on facts unique to each case. If you are affected by a similar issue, contact a lawyer for advice specific to your situation.
FAQ
Frequently asked questions
Yes. Ontario courts can find a binding commercial lease based on the terms of an Agreement of Purchase and Sale or other documents, provided the language is clear and unambiguous when read as a whole.
Relief from forfeiture is a court remedy under Ontario's Commercial Tenancies Act that allows a tenant to keep their lease even after a breach, where terminating the lease would be disproportionate or inequitable given the circumstances of the breach.
Yes. If a court finds that a landlord collected more rent than the lease permitted, it can order repayment of the excess amount, including prejudgment interest, and may allow the tenant to set off the overpayment against future rent.