I recently leased a large commercial space in Toronto, Ontario, Canada, but have not yet signed the lease. I have paid 2 months rent as a deposit, and was given 3 months rent free to do renovations. I am now in my first week of business, and things are very slow. What I need to know is, am I legally bound by the terms of the lease - or anything else - if I have not signed the official lease? I would still like to try to make this work, but if I don't get the numbers through the door that I need, and then cannot pay the rent next month, can I just leave with no penalties other than losing my 2 months rent deposit and the renovations I have done?

To be exact relating to the lease: I made an offer to lease, signed it, and submitted it through a broker. Then the landlord came back with changes, which I agreed to by putting my initials beside the changes. Then the broker said the landlord would come back with the official lease. The landlord gave me this official lease just over a month ago (which was actually much different that what I had seen before), during the rent-free renovation period. I have had it ever since and have not yet signed it. The landlord has not signed it either, and I think he may ave forgotton about it.

We clearly did have a verbal agreement to lease, I have paid 2 months rent as a deposit, and I did sign the initial offer to lease. My question now is can I get out without penalty since I have not signed the official lease.

Please help.

The fact that you signed a lease and made payments on it binds you to the terms. If the landlord made changes that you didn't sign off on they may not be binding. But the lease you did sign is.

I AM THE PERSON WHO POSTED THE INITIAL QUESTION, THIS IS MY REPLY TO THE FIRST ANSWER:

But I did not sign an actual lease. I signed my "offer to lease", which was at the initial stage of the negotiations. When the landlord came back with his changes, I could have disagreed and left then and not been bound by anything. Does this make any difference?

Doesn't matter. By paying money and having that money accepted a contract was entered into.

OK, so now that I'm in a contract, what if I simply cannot pay my rent? Obviously I will be kicked out of the space, but what else can happen?

You or the company can be sued for the balance of the contract.

And if they sue, but I have no money or assests, only loads of debt, can they do anything from there? Might not be the proper place to post this question, but it's worth a try...

If you are "judgement proof". Then it might not hurt that much.