Environmental Law Considerations When Leasing Space for Childcare Centres

By Carolina Recinos

Leasing commercial space for a childcare centre in Ontario involves more than just finding the right location and space. In addition to navigating zoning, and licensing requirements, tenants must also consider environmental laws governing childcare centres.

When evaluating a potential location and space, many first-time childcare centre operators focus their efforts on ensuring compliance with zoning by-laws and the licensing requirements of the Ministry of Education. However, meeting municipal zoning and licensing requirements does not guarantee the space complies with the provisions of provincial environmental laws and regulations governing childcare centres.[1] For example, one environmental regulation classifies childcare centres as “institutional use” and considers such use to be more sensitive than “commercial use” within the definition found under that regulation.[2] If the space to be used for a childcare centre is not classified as having a residential or institutional use within the meaning of that regulation, a Record of Site Condition (“RSC”) may be required if the property and/or the tenant’s proposed use does not fall within an exemption set out under the regulation. Securing an RSC involves obtaining a Phase One environmental site assessment, and if contamination is suspected, a more extensive Phase Two assessment will also be required. These processes can be costly and time consuming. Furthermore, if remediation of contamination at the premises is required, this may significantly increase expenses and delay occupancy. If these issues are not properly addressed in a lease, costly disputes can arise between landlords and tenants.  Navigating through these issues can be tricky without the assistance of a qualified professional.

If a landlord already has a Phase One report confirming no suspected contamination, tenants should verify its suitability for institutional use and obtain a reliance letter from the report’s author to ensure they can rely on its contents.

In some cases, the need for an RSC becomes apparent only after a tenant has already entered into a binding lease and applies for licensing and/or permits.  At that stage, a tenant may face significant unplanned costs and delays which can also affect landlords.  Therefore, parties negotiating leases for childcare centres must consider the applicability and impact of environmental laws and should seek appropriate advice before entering into binding agreements.

This article is for general informational purposes only and does not constitute legal advice.  For advice with respect a specific situation, please consult a lawyer.