We signed a commercial lease for 3 years (1999 - 2002) for a small commercial studio. We continued to occupy the premises for another 2 years after the lease expired. The landlord never offered to renew, he never communicated any increase in rent and never gave us reconciliation statements for the actual operating expenses for the common area that we shared with the other tenants.

After we gave our notice to vacate in 2004, he sent us a letter that we owed all sorts of back-rent and fees totaling over $10,000. We asked for proof of actual costs, which he didn't provide. He just sent us a typed invoice. He sent it to collection, which we disputed and told them that we had no intention to pay. The landlord (or the collection agency) has filed a small claim against us and dropped the amount to $10,000 in order to keep it as a small claim.

After digging around in the lease that expired in 2002 (it over 30 pages long and cryptically worded), I found an article in the lease:

If the Tenant shall continue to occupy the Leased Premised after expiration of the term of this Lease with the consent of the Landlord and without any further written agreement there shall be no tacit renewal of the Lease and the term hereby granted and the Tenant shall be a monthly tenant subject to 30 days notice to vacate at a monthly rental equal to the monthly installments of rent plus 20% and additional rent payable hereunder during the term hereby granted or any renewal thereof, such rental to be paid in advance on the first day of each and every month and such monthly tenancy shall be on the terms and conditions and subject to all other charges and amount payable herein set out except as to the length of tenancy.

If there is a legal expert out there who can decipher that paragraph, I'd be very thankful.
I interpret the above as "if you want to rent month to month, the landlord can up your rent by 20%".

When I checked it out on the Commercial Tenancies web page, the landlord is required to give us advance notice when he wants to increase the rent. He never did, so I'm thinking he's just trying being a bully. Since we left the commercial space, we bought our first home, so I'm thinking the ex-landlord (or the collection agency) knows that we have assets that we don't want to risk.

My questions are:
Does the landlord have any legal basis for his claim:" "Your rent was raised 2 years ago, but I forgot to tell you before you moved out, so now you owe us $10,000"

Will my credit be affected by the collection? How do I have that removed?

Other than my losing sleep and missing a few days a work (and the court costs), I don't think I'll lose any money on this. Can I counter sue? For what damages?

I'm less interested in suing the crazy old landlord (The man is just too old and pathetic to sue) - I want to sue the collection agency for pursuing this. They should KNOW that it's a ridiculous collection.

Thanks for your help!

When did you move out?

I'll explain why I'm asking... If you take the literal wording of the lease, you became a month-to-month tenant after your written lease expired, at a rent equal to your original rent plus 20%. That means that each month that you did not pay the increased rent, the landlord had the right to sue you for the balance.

There is a statute of limitations that puts a limit on how long a person can sue for something after the event has occurred. I believe the statute of limitations in a situation like this is two years. So if you began your month-to-month tenancy on July 1, 2002, the landlord's right to sue you for the additional rent for that month expired on July 1, 2004. His right to sue you for additional rent for August, 2002 expired in August, 2004. And so on. So if you moved out on December 31, 2004, his right to sue you for additional rent for December, 2004 expired on December 31, 2006.

As long as you moved out before 2005 the landlord has lost his right to sue you for any additional rent or other charges according to the statute of limitations. Of course you should check to confirm that in your area the statute of limitations for debts is 2 years.

We moved out June 2004. We gave 90 days notice, thinking that we were being nice so he wouldn't have a problem finding a new tenant for the space. Obviously, being nice kind of backfired on us.

The limitations act is a bit sketchy because a claimant has a limit of 6 years to file if the event happened (or the contract was signed) before Jan 2004. I don't know whether this means that it's 6 years after the END of the contract, or 6 years after the event.

The limitations act changed in 2004 down to 2 years. Since he didn't tell us until after we moved out, (2004), does that mean that he has 2 years from the date told us? Or since the "event" happened in 2002, 2003 and 2004, do the limitations act not apply in this case?

I understand that when we were still tenants (going month to month), he could raise the rent however much he wanted. But he happily took our money for 2 years without saying a word about an increase. He stopped by the unit a number of times and could have easily told us that he planned to raise the rent, but he never did. He didn't say a word until after we told him we were moving out.

I thought that the part in the lease that says: "shall be no tacit renewal" meant that the obligations outlined in the lease would be no longer binding after the term of the lease expired. The Ontario Commercial Tenancy Act says that the landlord is required to give reasonable advance notice of any increase in rent, and he didn't give advance notice - does he still have any claim?

I don't think he has a valid claim, but of course it all depends on how the judge feels that day. I think you have a good shot. The landlord acted in bad faith and waited way too long to make any kind of claim.

Good luck!