Leasing to a Used Car Dealer in Ontario: OMVIC Premises Rules, Zoning and the Lease

Quick Answer

Confirm the zone and that a vehicle dealership is permitted on this lot

Mark the outdoor display area and the required parking on a site plan

Write the use: sale, display and storage of used vehicles, with ancillary office

Set a term of at least six months and give the dealer unrestricted access

Carve regulator inspections out of your entry and consent rules

Attach the site plan to the lease as a schedule

Before you sign a letter of intent: can this lot be a dealership at all?

In Toronto the first question is not the dealer’s financial statements. It is whether Zoning By-law 569-2013 lets this lot be used as a Vehicle Dealership. The by-law defines that use as “premises used for the sale, rental or lease of vehicles displayed or stored on site” (Chapter 800, definition 885), and it sits apart from the other vehicle uses.

In a CR (Commercial Residential) zone a vehicle dealership is a permitted use with conditions. The use table at 40.10.20.20 lists it with condition (26), which sends you to the specific use rules in Section 150.90. Those rules have two parts. Section 150.90.20.1(1) applies to every dealership: the lot’s front lot line must abut a major street shown on the Policy Areas Overlay Map. Section 150.90.20.1(2) applies only when vehicles are displayed or stored outside. A paved former tire-shop yard is built for exactly that, and the comparison below shows what it triggers.

In the employment zones the answer reverses. The E zone use table (60.20.20) lists Vehicle Depot and Vehicle Repair Shop, but not Vehicle Dealership. The EL, EO and CL use tables do not list it either. If your property is in one of those zones, the lease cannot make a dealership lawful. That would take a planning change, which is a question for a planner, not for your lawyer’s lease draft.

Two cautions before you rely on the zone label. First, read the full zone string and any site-specific exception that applies to the lot, because exceptions can change what is permitted there. Second, not every Toronto lot is governed by 569-2013 (some still fall under a former general zoning by-law), and Mississauga, Markham, Vaughan and every other municipality have their own by-laws and use tables. Outside Toronto, start from that city’s zoning, not this one.

💡 The yard is what makes a former tire shop attractive to a dealer, and it is also what triggers most of Section 150.90. Set the rent with the fence, the landscaping strip and the parking the dealer cannot use already in mind.

While drafting the lease: the clauses the dealer’s registration depends on

OMVIC’s Dealer Premises Guideline (2022) is the only regulator document that speaks directly to your lease. Under “Location” it expects a dealer to “provide a premises lease with a minimum term of six months; the lease must permit the sale/inventory of vehicles and provide unrestricted access to the premises by the dealer.” That gives you three drafting points:

• Permitted use. Name the use expressly: sale, display and storage of used motor vehicles, with an ancillary office. A loose “automotive use” leaves the dealer arguing that it covers sales and inventory.
• Term. Six months is the guideline’s floor. See the point below on why a short trial term works against you.
• Access. The guideline asks for unrestricted access by the dealer. If your plaza has locked hours or a gate you control, reconcile that with the lease before signing, not after.

Two more items belong in the draft itself. Signage: O. Reg. 333/08 s.30(1) requires the dealer to post, at each place it trades from, a sign that is clearly visible to the public, displays a registered name of the dealer and “cannot be removed except through express human effort or force majeure”. That is a permanent sign, so agree its location and its removal at lease end now. Office build-out: s.28(7) and (8) require an office at each trading location large enough for secure storage of the records the regulation requires the dealer to keep there. Decide who builds it, who owns it when the term ends, and whether it must be removed. If the dealer will share the site with a repair business, the environmental clauses in a repair-shop lease are a useful reference; they are a separate topic from this one.

Before you hand over the keys: the physical set-up

Three rules from the regulation shape the space itself. Under O. Reg. 333/08 s.28(6), each place a dealer is authorized to trade from must be separate from a dwelling (dealers registered only as wholesalers or brokers are exempt). In a mixed building, confirm that the dealer’s space and access do not run through a residential unit. Under s.28(7) and (8), the dealer must keep an office there, sized for secure storage of the records it must keep at that place.

OMVIC’s guideline adds its expectations on top. The dealer should have a separate, permanent, fully secured and enclosed office (walls to ceiling and a lockable door), room for six years of books and records or equivalent electronic storage, an exclusive work area with a desk, chairs and file cabinets, and electricity, heat and access to a washroom. For the selling floor it expects a display area marked with the dealership’s name and a sign on each vehicle naming the selling dealer. On size, the guideline gives no square-metre figure. It says only that the premises should be sufficient, in the Registrar’s opinion, for displaying vehicles.

A practical consequence for handover: if the office walls, the washroom or the heat are part of your landlord’s work, the dealer cannot present a finished location until you deliver them. Tie your delivery date to that.

When the dealer registers your address

Under O. Reg. 333/08 s.28(1), the dealer’s certificate of registration lists the places it is authorized to trade from. Your property becomes one of those places. From then on, s.29(1) requires the dealer to post its certificate of registration for that place, at that place, “so that the public is likely to see it”, and s.30(1) requires the permanent sign described above.

For you, the useful document is the certificate itself. Once the dealer is registered at your address, ask for a copy for your lease file. It is the cleanest evidence that the use you permitted is the use the regulator approved.

During the term: compliance is ongoing

Registration is not a one-time hurdle that the dealer clears and forgets. O. Reg. 333/08 s.28(9) makes compliance with all municipal by-law requirements at each trading location a condition of registration, so a by-law problem at your property can become a registration problem for your tenant. OMVIC’s guideline also says it has the right to notify other regulatory and enforcement authorities, including municipal by-law offices, where there is evidence of non-compliance.

Inspections are part of this too. Under MVDA s.15(1), the registrar or a person the registrar designates in writing may enter and inspect a registered dealer’s business premises at any reasonable time, except any part used as a dwelling.

One situation landlords ask about is a dealer sharing space with a repair shop. The guideline’s display exception covers a dealership that shares space with a non-arm’s length business, such as a repair shop. That means a business connected to the dealer, not simply any repair tenant who happens to be next door.

• ☐Pull the zoning for the lot and confirm Vehicle Dealership is permitted (in Toronto: CR zone, condition (26), Section 150.90)
• ☐Check that the front lot line abuts a major street on Toronto’s Policy Areas Overlay Map
• ☐Ask the dealer whether it plans outdoor display or storage, and measure the building’s interior floor area against the 150 m² threshold
• ☐Identify which yard spaces are required parking and cannot hold inventory
• ☐Confirm the use under that municipality’s own by-law if the property is outside Toronto or has a site-specific exception

• ☐State the permitted use as sale, display and storage of used vehicles with an ancillary office
• ☐Set a term of at least six months, in line with OMVIC’s guideline
• ☐Grant the dealer unrestricted access to the premises, and carve regulator inspections out of your entry rules
• ☐Attach a site plan showing the display area, required parking, fence and landscaping strip
• ☐Fix the sign location and who removes the sign and the office at the end of the term

• ☐Confirm the space and its access are separate from any dwelling
• ☐Deliver (or approve) an enclosed, lockable office with heat, electricity and washroom access
• ☐Agree how the display area and spots will be marked with the dealership’s name
• ☐Request a copy of the dealer’s certificate of registration showing your address

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