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Lease Buy Out Agreement for Canada

Lease Buy Out Agreement Template for Canada

A legally binding agreement governed by Canadian law that facilitates the early termination of a lease arrangement through a negotiated buyout payment. This document outlines the terms and conditions under which a tenant can terminate their lease obligations before the natural expiration date, including the buyout amount, payment terms, release of liabilities, and any continuing obligations. It addresses provincial and federal requirements, including tax implications, and can be customized for commercial, retail, or industrial leases across different Canadian jurisdictions.

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What is a Lease Buy Out Agreement?

A Lease Buy Out Agreement is essential when parties wish to terminate a lease before its natural expiration date in exchange for a negotiated payment. This document is commonly used in Canadian commercial real estate transactions when tenants need to exit their lease obligations early due to business restructuring, relocation, or other strategic decisions. The agreement typically includes detailed provisions for the buyout calculation, payment terms, release of obligations, tax considerations, and compliance with relevant provincial and federal laws. It provides legal protection for both landlords and tenants by clearly documenting the terms of the early termination and ensuring all parties understand their rights and obligations during and after the buyout process.

What sections should be included in a Lease Buy Out Agreement?

1. Parties: Identification of the landlord and tenant, including full legal names and addresses

2. Background: Context of the original lease agreement and reasons for buyout

3. Definitions: Key terms used throughout the agreement including 'Lease', 'Premises', 'Buyout Amount', 'Completion Date'

4. Buyout Terms: Details of the buyout amount, payment terms, and completion date

5. Release and Discharge: Mutual release of obligations under the original lease

6. Tax Matters: Treatment of GST/HST and other tax implications

7. Representations and Warranties: Statements of fact by both parties regarding their authority and the lease status

8. Confidentiality: Obligations to keep the buyout terms confidential

9. Governing Law: Specification of applicable Canadian jurisdiction

10. Execution: Signature blocks and execution requirements

What sections are optional to include in a Lease Buy Out Agreement?

1. Asset Transfer: Used when the buyout includes transfer of equipment or fixtures

2. Third-Party Consents: Required when guarantors or other third parties need to approve the buyout

3. Employee Matters: Included when the premises involve transferred employees or services

4. Environmental Matters: Required for properties with potential environmental concerns

5. Insurance: Included when specific insurance arrangements need to be addressed

6. Intellectual Property: Required when the lease involves licensed IP or branding elements

7. Security Deposit: Needed when addressing the return or application of existing security deposits

What schedules should be included in a Lease Buy Out Agreement?

1. Schedule A - Original Lease: Copy or summary of the original lease agreement and any amendments

2. Schedule B - Buyout Calculation: Detailed calculation of the buyout amount including any adjustments

3. Schedule C - Payment Schedule: If the buyout is to be paid in installments, details of payment dates and amounts

4. Schedule D - Premises Condition Report: Current condition of the premises if relevant to the buyout terms

5. Schedule E - Asset Inventory: List of any assets or equipment included in the buyout

6. Schedule F - Outstanding Obligations: List of any surviving obligations or liabilities post-buyout

Authors

Alex Denne

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

Jurisdiction

Canada

Publisher

Ƶ

Document Type

Purchase Agreement

Cost

Free to use
Relevant legal definitions


























Clauses

























Relevant Industries

Real Estate

Retail

Commercial Office

Industrial

Manufacturing

Healthcare

Hospitality

Education

Technology

Professional Services

Warehouse and Distribution

Financial Services

Relevant Teams

Legal

Real Estate

Finance

Operations

Facilities Management

Risk and Compliance

Property Management

Asset Management

Treasury

Corporate Services

Relevant Roles

Real Estate Manager

Property Manager

Legal Counsel

Corporate Lawyer

Chief Financial Officer

Finance Director

Facilities Manager

Operations Director

Real Estate Director

Lease Administrator

Asset Manager

Portfolio Manager

Commercial Property Manager

Risk Manager

Compliance Officer

Industries








Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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