Commercial Lease Fixturing and Rent-Free Periods in Alberta

1. Define every date and period

Create one schedule for access, possession, fixturing, lease commencement, base-rent commencement, additional-rent commencement, opening, expiry and option notices. Cite the controlling clauses.

Do not use possession, commencement and rent commencement as interchangeable dates. A delay in one may or may not move another.

• Access
• Possession
• Fixturing
• Lease commencement
• Rent commencement
• Opening
• Expiry

2. State exactly what is free

Identify whether relief applies to base rent only, base and additional rent, another charge or a defined dollar amount. Schedule utilities, insurance, security, parking, storage, waste, after-hours services and taxes separately.

Rent-free does not necessarily mean cost-free. Use the lease language rather than a headline number or informal promise.

3. Define access and permitted work

Specify the premises condition, access hours, loading, elevators, staging, storage, contractors, security, utilities and work allowed before full possession. Identify landlord and tenant approvals.

Early access can create damage, safety, insurance and coordination exposure. The agreement should state that work and access do not create unstated approval or occupancy rights.

4. Coordinate design, permits and approvals

Build dependencies for landlord design review, municipal permits, building approvals, health or sector approvals, utilities, inspections and occupancy. Assign each deliverable and decision date.

A fixturing period does not guarantee permit issuance or legal opening. Separate landlord consent from regulatory approval.

5. Allocate work, cost and ownership

Define landlord work, tenant work, allowances, change orders, cost overruns, payment evidence, liens, warranties, ownership and end-of-term restoration. Tie scope to drawings and specifications.

Free rent and improvement allowance are different economic and delivery tools. Compare their cash timing and conditions separately.

6. Set insurance and risk controls

Confirm required policies, certificates, additional insureds, builders risk where applicable, contractor coverage, indemnities, safety and damage reporting before access. Coordinate lender and property-manager requirements.

Do not assume the landlord's building policy covers tenant work, contents, delay or contractor operations. Insurance professionals should confirm the actual project.

7. Address delay and extension mechanics

Define landlord delay, tenant delay, force majeure, permit delay, utility delay and casualty with notice, evidence, extension and outside-date consequences. State whether rent commencement changes.

An opening delay does not automatically extend free rent or fixturing. Counsel should align remedies, termination rights and payment obligations.

8. Model complete cash flow

Schedule base-rent relief, additional rent, utilities, deposits, design, permits, construction, equipment, financing, moving, downtime and opening working capital. Show when each amount is paid.

A longer free period can be less valuable than timely landlord work or a funded allowance depending on cost, delay and financing. Net effective rent should use the actual structure and timing.

9. Apply tax and accounting advice

CRA distinguishes rent-free periods, rent reductions, cash payments and leasehold improvements because GST/HST consequences can vary with structure. Document the actual consideration and invoicing.

Obtain transaction-specific legal, tax and accounting advice before execution. A commercial concession label does not determine tax or financial-statement treatment.

10. Control delivery through opening

Maintain a dated register for access, drawings, approvals, permits, insurance, construction, inspections, utilities, deficiencies, occupancy, opening and rent commencement. Preserve evidence closing each item.

This guide is educational and is not lease interpretation, construction, insurance, municipal, tax, accounting or legal advice.