Commercial lease due diligence should answer a practical question: can this tenant lawfully, physically, financially and operationally open and remain in these premises on the proposed terms? A checklist is useful only when every item has an owner, source, date, status and consequence. A polished listing package is not evidence that the review is complete.
This is general information, not legal, tax, environmental, engineering, accounting or investment advice. Obtain advice specific to the property and transaction.
1. Create a decision and evidence register
List every requirement, source document, responsible reviewer, deadline, condition, finding and unresolved item. Separate information supplied by the landlord or brokerage from municipal, technical, legal and tenant-generated evidence.
Connect the register to offer conditions and notice dates. Receiving a document is not the same as accepting its accuracy, sufficiency or legal effect.
2. Confirm premises, parties and authority
Identify the landlord, tenant, guarantor, premises, building, legal description where needed, rentable and usable area, parking, storage, common areas and included rights. Confirm signing authority and the proposed tenant entity before documents are executed.
Review survey or condominium information when boundaries, access, shared systems or exclusive-use areas matter. Counsel should address title, authority and the enforceability of property rights.
3. Verify the use and approval pathway
Prepare an exact operating narrative and ask the municipality what use is currently approved, whether the proposed activity changes use or intensity, and what development, building, trade, occupancy, signage and business-licence steps apply.
Calgary and Edmonton both distinguish land-use or development review from building-safety and trade-permit work. One approval does not automatically satisfy the others. Include sufficient condition time for complete applications, revisions, construction and inspections.
4. Reconcile area and occupancy economics
Confirm the measurement basis and area used for rent and recoveries. Rebuild first-year and term cost from base rent, additional rent, utilities, administration, parking, storage, insurance, maintenance, capital exposure, percentage rent where applicable and GST/HST.
Request prior operating-cost statements and current estimates where available, then read the lease definitions, exclusions, gross-up, allocation, caps and reconciliation rights with counsel. A quoted additional-rent estimate is not a fixed total unless the contract makes it one.
5. Inspect the premises and building interfaces
Verify layout, dimensions, structure, envelope, roof interfaces, HVAC, electrical service, plumbing, drainage, ventilation, fire and life safety, accessibility, elevators, loading, waste, data, security, parking and exterior areas at a scope appropriate to the operation.
Determine which systems exclusively serve the premises, which are common, current condition, available capacity and responsibility for repair, replacement and compliance. Use qualified technical professionals for conclusions outside ordinary observation.
6. Define landlord work, tenant work and evidence
Attach a scope, plans, specifications, standards, schedule and responsibility matrix. State approval, pricing, change-order, access, insurance, lien, inspection, deficiency, warranty, allowance and reimbursement mechanics.
Confirm ownership and removal of improvements and trade fixtures. CRA states that GST/HST treatment of lease inducements and leasehold improvements depends on the transaction; the accountant should review the actual structure.
7. Test insurance and risk allocation before signing
Give the proposed use, premises facts, work scope and draft insurance obligations to a qualified commercial insurance professional. Confirm availability, limits, exclusions, construction coverage, additional insured or loss-payee evidence and timing.
Counsel should review indemnities, waivers, damage, destruction, environmental, hazardous-material, interruption and restoration provisions. A preliminary quote or certificate is not the policy and does not confirm every lease requirement.
8. Review control, flexibility and exit rights
Map term, commencement, delay, renewal, expansion, contraction, relocation, demolition, redevelopment, assignment, sublease, change of control, permitted transfers, default, remedies and restoration. Model the business consequence of each right rather than treating boilerplate as neutral.
If flexibility is essential, define the evidence, consent standard, fees, continuing liability and timing required to use it. An option with missed notice dates or unworkable conditions may have little operational value.
9. Coordinate financing, franchise and third-party approvals
List lender, investor, franchisor, board, licensing, health, utility, equipment and other approvals on which the transaction depends. Confirm the documents and lead time each reviewer needs.
Program or lender eligibility for leasehold improvements is not automatic. ISED's CSBFP guidelines define eligible contexts and restrictions, while the participating lender controls the credit and eligibility decision.
10. Reconfirm the business case before waiver
Update the cost model, opening schedule, unresolved risks and cash requirement using final evidence. Compare the result with the original mandatory criteria and the tenant's working-capital capacity.
Have each professional control conclusions within their scope. Commercially can coordinate discovery, comparison, information flow and brokerage negotiation; it does not issue a legal, tax, engineering, environmental, insurance, financing or municipal opinion.
Primary sources
Verify the current rules.
Government and regulator pages can change. These links were reviewed on August 26, 2026.
RECA: Real Estate Act Rules↗City of Calgary: Opening a business↗City of Edmonton: Changes to existing buildings and sites↗CRA: Commercial real property—sales and rentals↗ISED: Canada Small Business Financing Program guidelines↗A real property decision?
Provide the operation, physical requirements, market, cost ceiling, approval needs and opening date for a property-level search.Who, how and why
Who: Commercially Research & Editorial.
How: Primary-source research and AI-assisted drafting were used to organize this guide around a practical commercial real estate decision. Source links, factual claims and material limitations were checked against Commercially's editorial standards on the review date.
Why: To help owners, buyers and tenants identify the records, questions and professional advice that belong in a real transaction work plan.
Editorial owner: Commercially Research & Editorial.
Commercial review: Slav Loban, Commercial Real Estate Division Leader.
Questions or corrections: hello@commercially.ca
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