A Car Wash Operator Sent You an LOI: What a Toronto Landlord Should Check Before Answering

The letter is two pages and the reply is due in two weeks. Here is what the zoning by-law and two chapters of the Municipal Code decide, and which lease clause each answer belongs in.

I’m Arthur Zhao. Picture the email: a car wash operator’s broker sends a two-page letter of intent for your commercial lot, with a rent number, a ten-year term and a line asking for a reply within two weeks. The rent is attractive. The question is what you are actually agreeing to if you say yes in principle.

A car wash is not a use you can approve on rent alone. Whether the lot qualifies is answered by Toronto’s zoning by-law; what the building has to do with its drains and its water connection is answered by the Municipal Code; and several of those obligations sit with the property owner, not the operator. None of that is in the LOI, but all of it ends up in the lease.

So instead of walking through the by-laws in the order the City wrote them, this piece follows the clauses your lease will need: the permitted use clause, the site plan behind it, compliance and permits, who installs and tests the equipment, and what paper the tenant has to hand you afterwards. It is a list of facts and rules to check, not legal advice; the drafting itself belongs with a commercial real estate lawyer.

The permitted use clause: what you can actually promise

The LOI will usually describe the use loosely, something like “car wash and ancillary uses.” Before you agree to that wording, confirm what the zoning by-law calls the use and whether your lot allows it.

The defined term. In By-law 569-2013, Chapter 800, a Vehicle Washing Establishment means “premises used for washing or cleaning vehicles.” The same chapter says, in the drive through facility definition, that “A vehicle washing establishment or a vehicle fuel station is not a drive through facility.” So the drive-through rules do not govern a car wash; it has its own section, s.150.96.

Is the lot under this by-law at all? Section 1.5.7 says 569-2013 applies to all lands in the City except those shown on the Zoning By-law Map with diagonal hatching and the name of a former general zoning by-law. If your lot is hatched, the older by-law is the one to read, and nothing below about 569-2013 settles the question.

Does the zone permit it? Permission is zone by zone. Two examples I checked: in the CR zone, a vehicle washing establishment is listed among the uses permitted with conditions under 40.10.20.20, and those uses are permitted under the letter “c” in the zone label, with condition (25) requiring compliance with s.150.96. In the E zone, it is listed under 60.20.20.20, and condition (18) again sends you to s.150.96. For any other zone, read that zone’s own permitted use list; there is no general rule that commercial zoning allows car washes.

Is s.150.96 triggered? The section applies to vehicle washing establishments with an interior floor area greater than 38 square metres. If the operator’s plan is above that, the lot tests in the next section apply.

For the lease, the practical point is that a permitted use clause should describe a use the zoning actually allows on your lot, in terms that match the by-law, and should say what happens if the tenant cannot obtain the permits it needs. How to word that protection is a question for your lawyer.

The site plan exhibit: where the s.150.96 numbers live

Section 150.96 is unusually geometric, which makes it a good candidate for a site plan attached to the lease rather than a sentence in the use clause. According to the City of Toronto’s Zoning By-law 569-2013, a vehicle washing establishment is subject to the following, among other rules:

Location. The lot must abut a major street on the Policy Areas Overlay Map, and have a front lot line of at least 26.0 metres.

Inside the building. All mechanical washing, waxing and drying must take place within a wholly enclosed building.

Stacking aisle. A mechanical vehicle washing establishment must provide at least 10 vehicle stacking spaces in a stacking aisle on the same lot, each at least 3.0 metres wide by 6.5 metres long.

Vehicle access. Access may be a minimum of 6.0 metres and a maximum of 11.0 metres wide, measured along the lot line abutting a street. It must be at least 7.5 metres from any other vehicle access on the lot and 3.0 metres from any lot line. On a corner lot, access must be at least 7.5 metres from the point where the front and side lot lines meet, and the lot lines abutting another lot must be fenced.

Setbacks. The side yard setback is the greatest of 3.0 metres, 4.5 metres from a side lot line abutting a Residential or Residential Apartment zone lot, 7.5 metres from a side lot line abutting a street, or the zone’s own minimum. The rear yard setback is the greatest of 3.0 metres, 7.5 metres if the lot abuts a Residential or Residential Apartment zone lot, or the zone’s own minimum. The building’s vehicle entrance and exit must each be at least 12.0 metres from any lot line abutting a street.

Other uses on the lot. A retail store and personal service shop on a lot with a vehicle washing establishment is capped at 20.0 square metres of interior floor area. If you were hoping to lease a separate retail pad on the same lot, this is the line that limits it.

Two rulebooks, two different questions

The compliance clause: what Chapter 681 asks of the premises

Chapter 681 (Sewers) has three provisions a landlord should read before agreeing to a car wash, and they do not all say what people assume.

Sand and grit, generally. Section 681-10 D(1) requires every owner or operator of a premises from which sand, grit or similar materials may enter a municipal sewer connection or sewer to take all necessary measures to prevent it. That applies broadly, not only to car washes.

The interceptor requirement, read literally. Section 681-10 D(4) requires an interceptor, installed in compliance with the Building Code, for an industrial vehicle or equipment wash operation or a premise where sand, grit or similar materials is discharged to a municipal sewer. Whether a particular retail car wash falls within the words “industrial vehicle or equipment wash operation” is not spelled out in the text. Do not assume either way; ask the operator what its design includes and how it addresses D(1) and D(4), and get the answer in writing.

Oil interceptors, if the use expands. Section 681-10 C(1) requires an oil interceptor where motor vehicles are repaired, lubricated or maintained. A wash-only tenant is not described there, but if the LOI mentions oil changes or light servicing, this provision comes into play.

Pollution prevention plans. Car washes are listed under NAICS 811192 in Chapter 681, Article I, Appendix 1, Subject Sectors. Under s.681-5, a subject sector industry must submit its first pollution prevention plan within one year of commencing operations, submit a plan update by the end of the third year after the plan was due, and prepare a new plan every six years, unless it is continually participating in a Council-approved Best Management Practices Plan. If the General Manager does not say a plan is unapproved within 90 days of receiving it, it is deemed approved. The duty sits with the industry, which in a lease is your tenant, but you will want to see the filings.

The cost and equipment clause: the backflow device under Chapter 851

This is the provision where the lease allocation matters most, because the by-law text names the owner.

Car washes are Severe. According to the City of Toronto’s Municipal Code (Chapter 851, Water Supply, consolidated 2019), Schedule 5, titled Backflow Prevention Device for Premise Isolation Based on Industry Sector, lists Car Washes at a hazard level of Severe. Section 851-8D(4) requires every owner of a property identified in Schedule 5 to install, at the owner’s expense, backflow prevention device(s) in accordance with the standards and specifications identified in Schedule 5. Under s.851-8D(10)(b), the owner determines the proper device in accordance with the CSA B64 Series Standards, and the General Manager may direct a specific type. I have not set out the device type here; that is for the designer and the City, not a blog post.

Who counts as the owner. Chapter 851 defines owner as a person with a right, title, estate or interest in a property “other than that of only an occupant.” A lease can decide who reimburses whom; it does not change who the by-law addresses.

Permits and testing. A building permit is required for each backflow prevention device installed or replaced (s.851-8D(10)(a)). Each device must be inspected and tested at the owner’s expense by an authorized tester: on installation, within 72 hours after it is cleaned, repaired, replaced, serviced or overhauled, when it is relocated, and annually (s.851-8D(11)). If a test shows the device is not working properly, it must be repaired or replaced within 48 hours (s.851-8D(15)).

The Chapter 851 consolidation I read carries an April 1, 2019 date on its pages, so check the current version for later amendments before relying on the details.

The reporting clause: what the tenant should hand you, and when

Several of the Code’s deadlines produce paper. A lease that does not require copies leaves the landlord finding out about a missed filing from the City.

Backflow test reports. The owner must submit a complete report on the City’s form within seven days of any test (s.851-8D(12)), and the device must carry a record card or test tag showing the address, device details, test date and tester’s certificate number (s.851-8D(13)). If a required test is missed, the General Manager may order the owner to test within seven calendar days (s.851-8D(14)).

Device surveys. The General Manager may require a backflow prevention device survey; if no date is given, it is due within 30 days of the notification (s.851-8D(16)).

Pollution prevention plans. The first plan, the year-three update and each six-year plan under s.681-5 are all documents you can ask the tenant to copy to you.

Which party books the tester, who pays, how quickly copies come to you, and what happens if a report is late are all drafting choices. Ask your commercial real estate lawyer to tie each one to a specific clause rather than a general “comply with all laws” covenant.

Working through the LOI, stage by stage

Each item points back to a provision above. Verify the current text of each by-law before you rely on it.