Commercial Lease Use Clause in Ontario: Permitted Use, Exclusives, Radius Clauses and Consent

By Jatin Dua · Broker of Record, RE/MAX Quantum Realty · Updated 18 October 2026 · 11 min read — how the permitted use clause works, drafting it from real operations, exclusives and prohibited uses, radius and co-tenancy clauses, what the Commercial Tenancies Act says about consent, and the clauses to negotiate.

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What the use clause does, and what it does not

The use clause is the sentence in a commercial lease that says what you may do in the premises. It usually reads something like “the Tenant shall use the Premises only for the purpose of a [use] and for no other purpose.” It is short, it is often filled in last, and it decides more about the value of your business than almost any other clause.

It does three jobs at once:

• It limits you. Anything outside the words is a breach of the lease.
• It protects the landlord’s other tenants. The landlord uses your use clause to keep promises it has made to others, such as an exclusive it gave the pharmacy or the coffee shop.
• It decides who can take over your lease. When you sell the business or assign the lease, the buyer can only do what the use clause allows.

What it does not do is make the use legal. A landlord can agree that you may run a restaurant, a gym or a place of worship in a unit where zoning does not permit it, or where the Building Code requires a change of use permit you cannot get. The lease is a private contract. Zoning, the Building Code and licensing are public law, and they win.

Drafting the permitted use: narrow, broad and in between

Landlords prefer narrow clauses because they protect other tenants and keep the merchandising mix. Tenants want room to adapt and to sell. The answer is usually a precise core use plus named ancillary uses.

Write the clause from what the business actually does on a busy Saturday, not from its category name. A café that also sells beans and mugs, a cellphone repair store that sells accessories and unlocked phones, a pet store with grooming, a tutoring centre that runs summer camps: each of those extras needs to be in the words.

"And for no other purpose" and the ancillary-use problem

“And for no other purpose” turns the clause from a description into a fence. Courts read the words you agreed to. If the clause says “takeout pizza restaurant and for no other purpose,” adding a dine-in section, a liquor licence or a ghost-kitchen brand for delivery apps can each be argued as a breach.

Ways to keep the fence from closing in on you:

• Name the ancillary uses. Retail of related products, online sales and delivery fulfilment from the premises, classes and workshops, private events, catering.
• Allow “uses ancillary and incidental to the permitted use.” It is not a blank cheque, but it helps.
• Add an evolution clause. The landlord’s consent to a change or expansion of use is not to be unreasonably withheld, subject to other tenants’ exclusives that exist at the time you ask.
• Link to the business, not a brand. If the clause names a franchise brand, a rebrand or a de-franchise after the franchise term can become a breach.

Exclusive use clauses: what to ask for

An exclusive is the landlord’s promise not to lease other space in the property to a business that competes with you. For a pharmacy, a grocery store or a sweet shop in a small plaza, it can be what makes the location work.

A useful exclusive covers:

• The protected use, defined by what is sold or provided, not by a category name that a competitor can step around.
• A threshold. Many exclusives allow incidental sales by others below a share of floor area or sales, so you do not stop the grocery store selling a few of your items.
• The area it covers: the plaza, the landlord’s adjacent land, or future phases.
• Remedies that work. A lawsuit after a competitor opens is slow. Rent reduction, a right to terminate, or a duty on the landlord to enforce against the offending tenant is better.
• When it ends: if you stop operating the protected use, assign, or go dark.

Keep it proportionate. In guidance first issued June 4, 2025 and last updated May 28, 2026, the Competition Bureau said exclusivity clauses are only justified in limited circumstances, such as encouraging a key tenant to enter or invest, and that justification is assessed on timeframe, geography and the products covered. It said it will likely treat competitor property controls used by dominant firms without a pro-competitive justification as anti-competitive, and that these provisions generally apply only where at least one party has market power. A single independent tenant asking for a narrow exclusive in a neighbourhood plaza is a very different case from a national chain tying up a trade area, but narrow, time-limited exclusives are the safer ask for everyone.

Prohibited uses and other tenants' exclusives

The other side of the exclusive is the one aimed at you. Before you sign, ask the landlord for:

• A schedule of existing exclusives granted to other tenants in the property, in their actual wording.
• The prohibited-use list in the landlord’s standard lease and any restrictions in its financing, registered title or anchor-tenant agreements that bind the property.
• A representation that your permitted use, as written, does not breach any existing exclusive or restriction.

The classic dispute: you open a bubble tea shop, start selling coffee, and the café two doors down has an exclusive on “the sale of coffee and espresso beverages.” Your use clause allowed “beverages.” Their exclusive still wins against the landlord, and the landlord then enforces your lease against you.

Also look for restrictions buried in definitions, such as limits on cooking odours, music, hours or the share of floor area used for a particular product. Those are use restrictions in all but name.

Radius, co-tenancy and continuous operation

Three more clauses travel with the use clause and change its effect:

• Radius clauses stop you from opening another location within a set distance of the premises during the term. Landlords ask for them most often where rent includes a percentage of sales, because a second store nearby could pull sales away. If you plan to grow, negotiate the distance down, carve out existing locations and franchise units, and limit the restriction to the same use.
• Co-tenancy clauses give you relief, such as reduced rent or a right to terminate, if an anchor tenant or a minimum share of the plaza stops operating. Ask for one if your traffic depends on the grocery store or the pharmacy.
• Continuous operation (go-dark) clauses require you to stay open for set hours throughout the term. Combined with a narrow use clause, they leave you no room to pivot when the use stops working. Try to limit them to the first part of the term, or remove them.

Changing the use later, and assignment: the Commercial Tenancies Act

Ontario’s Commercial Tenancies Act fills some gaps in commercial leases, but fewer than people expect when it comes to use:

• Section 23 applies to covenants against assigning, subletting or parting with possession without consent. It deems the consent not to be unreasonably withheld, unless the lease contains an express provision to the contrary, and lets a judge decide whether consent was unreasonably withheld. It does not mention changes of use. Consent to change your permitted use is governed by whatever the lease says, and if the lease says nothing, the landlord can usually say no.
• Section 24 says a consent extends only to the permission actually given. Consent to add yoga classes does not cover adding a retail shop next year.
• Section 26 says a waiver of a covenant in one instance is not a general waiver. A landlord who tolerated your side use for two years can still enforce the clause later unless it agreed otherwise.
• Section 19(2) says that for breaches other than unpaid rent, the landlord must serve notice specifying the breach and, if it can be remedied, give you a reasonable time to remedy it before re-entry or forfeiture. Section 20 lets a tenant ask the court for relief from forfeiture.

Assignment is where use clauses bite hardest. A buyer of your business inherits your use clause. If the buyer wants to change the concept, the landlord can treat the assignment as the moment to renegotiate. My guides on selling a restaurant with a lease assignment and on what buyers must check in a restaurant lease go through this from both sides.

The use clause and the city: zoning, permits and licences

Your use clause should match three public-law facts, and the lease should be conditional on confirming them:

1. Zoning. In Toronto, a Zoning Use Review ($214.79 per request as of January 1, 2026) confirms whether listed uses such as office, restaurant, child care, personal services and medical or dental are permitted at an address. A Zoning Applicable Law Certificate covers other uses and construction. Mississauga and Brampton handle the same question through their building departments’ zoning sections.
2. The Building Code. Under section 10 of the Building Code Act, changing the use of part of a building in a way that increases hazard, typically a change of major occupancy, requires a permit even with no construction. My guide to the change of use permit covers the process and costs.
3. Licensing and inspections. Many uses need a licence or a health inspection before you open. Toronto requires a zoning review for business licences in categories such as eating or drinking establishments, entertainment places of assembly, holistic centres and nightclubs. Personal service settings face public health inspection, covered in my guide to personal service setting inspections; cannabis stores, vape shops, pawn shops and money services businesses each have their own regulators.

The use-related clauses to negotiate

1. Permitted use written from real operations, with named ancillary uses and “uses ancillary and incidental thereto.”
2. Landlord representation that the permitted use does not breach any existing exclusive, prohibited use or title restriction, with the existing exclusives attached as a schedule.
3. Your exclusive, defined by products or services, with an incidental-sales threshold, a clear area and a rent-reduction or termination remedy.
4. Change-of-use consent not to be unreasonably withheld, subject only to exclusives existing at the time.
5. Assignment to a buyer of the business for the same or a similar use, with consent not unreasonably withheld and no recapture or profit-sharing on a sale of the business.
6. Radius clause narrowed to the same use, a short distance and the initial term, with existing locations carved out, or removed.
7. Co-tenancy relief if a named anchor or a set share of the property goes dark.
8. Continuous operation limited or deleted, so you can close and still assign or sublet.
9. Conditions on zoning confirmation, any change of use permit and any licence the use needs, with the landlord’s cooperation on applications.

Deal-killers to check before you sign

• A use clause that names your category but not the services or products that make your money.
• A landlord who will not disclose existing exclusives in writing.
• An existing tenant’s exclusive that overlaps your core product.
• A use the zoning does not permit, or a unit whose last lawful use triggers a change of use you have not priced.
• A sole-discretion consent clause on assignment combined with a narrow use clause, which makes your business hard to sell.
• A radius clause that blocks your second location.
• Continuous operation obligations for the full term with no co-tenancy protection.

For use-specific versions of these issues, start with my guides to restaurant premises, hair salon premises, clothing boutiques, dollar stores, places of worship in a plaza and coworking spaces.

Where I fit

I help business owners lease and sell commercial space across Toronto and the GTA, and the use clause is the first thing I read in any lease. Before you sign, I check that the permitted use matches what the business really does, ask for the landlord’s existing exclusives, and confirm zoning so the use clause and the city agree. If you own a retail business, my retail store valuation tool shows how lease terms feed into what a buyer will pay.

Frequently asked questions

Sources

• Government of Ontario — Commercial Tenancies Act (e-Laws) — ss. 18(2), 19(2), 20, 23, 24, 26
• Competition Bureau Canada — Competitor property controls and the Competition Act — exclusivity clauses guidance, 2025 and 2026
• Government of Ontario — Building Code Act, 1992 (e-Laws) — s. 10 change of use permit
• City of Toronto — Zoning Use Review — confirming a permitted use, $214.79
• City of Toronto — Zoning Applicable Law Certificate — fuller zoning and applicable law review
• City of Toronto — Zoning review for business licence — licence categories needing zoning review
• City of Mississauga — Projects that require a building permit — change of use needs a permit; zoning applies regardless
• City of Brampton — Change of Use building permit requirements — check zoning before applying

Related reading

• Change of use permits for commercial tenants
• Selling a restaurant: the lease assignment
• What buyers must check in a restaurant lease
• Pharmacy premises requirements
• Restaurant premises in Ontario
• Convenience store premises
• Change of use permits for a new commercial tenant