This paper discusses the considerations and interests of commercial landlords and tenants upon an expropriation as well as discussing drafting and negotiating expropriation clauses in commercial leases in accorandce with Ontario Law. Drafting and negotiating expropriation clauses in commercial leases can be difficult. This may be due in part to the fact that it is an area of law that is often not familiar to most commercial leasing lawyers. In addition, as with damage and destruction, it is one area of the lease that will most likely never be considered again by the parties throughout the term of the lease. The fact that the possibility of an expropriation occurring is quite remote means that the clause is often neglected or overlooked. In those situations where a tenant wants to negotiate the clause, many landlords will be reluctant to amend their standard form of lease on this issue as the preference is to have the same language in all of its leases for a particular development. Given the number of business and legal issues that are considered very relevant to one or both parties in a commercial lease negotiation, it is understandable that this clause is not generally given much priority. However, it is important for legal advisors to understand how expropriation law can impact the leasehold interest and to ensure that the expropriation clause in the lease does not limit or deprive the parties of rights they otherwise would have had.
This paper also includes discussion of the following:
- Compensation
- Separate Interests
- Compensating Tenants
- Defining the “Tenant”
- Valuing the Tenant's Compensation
- The Value of the Tenant's Leasehold Interest
- Disturbance Damages
- Calculating Disturbance Damages
- Compensating Landlords
- Drafting and Negotiating Expropriation Clauses
- Defining “Expropriation”
- Abatement of Rent
- Termination
This paper was written for the Law Society of Upper Canada's Six-Minute Commercial Leasing Lawyer program, February 16, 2011.
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