What happens to leasehold improvements at the end of the commercial lease?

At the end of a commercial lease, the fate of leasehold improvements depends on the provisions of the lease and the rules set out in the Civil Code of Quebec .

Tenant improvements may include partitions, flooring, electrical installations, fixed equipment and other improvements made to meet the tenant's needs.

According to the Civil Code of Quebec , the tenant is in principle required to remove, at the end of the lease, the constructions and works that he has carried out in the leased premises.

When these improvements cannot be removed without damaging the premises, the landlord may, in particular:

• Retain the improvements, paying the tenant compensation corresponding to their value;
• Demand their removal, with the premises being returned to the condition they were in at the start of the lease.

When restoring the premises to their original condition is impossible, the landlord may keep the improvements without paying compensation.

However, in a commercial lease, the parties may agree on different terms, including that certain improvements will remain on the premises without compensation or that the tenant will have to remove them at his own expense.

It is therefore important to specify in the lease which improvements can be retained, which ones must be removed, and the obligations relating to the restoration of the premises.

A clear clause regarding the fate of leasehold improvements at the end of the lease helps to avoid disputes and unforeseen costs for both the landlord and the tenant.