Landlord consent to assignment is the approval a commercial landlord must give before a tenant’s lease can be transferred to a buyer — and because negotiating it can run in parallel with, or well past, everything else in a deal timeline, it is one of the few diligence items that actually needs to start before the letter of intent, not after.
The legal standard the landlord is held to depends entirely on what the lease itself says. Where the lease is silent, courts have generally been prepared to read in a requirement that consent not be unreasonably withheld — but “a well-drafted commercial lease can validly give the landlord much broader discretion, including the right to withhold consent in its sole or absolute discretion,” which is why the article’s own advice is to “read the specific wording of your lease’s assignment clause closely” before assuming a refusal is even improper. A landlord who does have to act reasonably is not thereby powerless, either: as a companion piece sets out, a landlord can routinely require financial evidence that the buyer can carry the rent, a personal guarantee, an increased security deposit, confirmation the buyer’s intended use fits the lease, an estoppel certificate confirming no arrears or side agreements, recovery of the landlord’s own legal costs for reviewing the request, and sometimes a chance to renegotiate lease terms outright, particularly near the end of the term.
That list is exactly why timing matters more here than in most diligence items. “Approach the landlord early — negotiating consent terms can take real time, and a business sale timeline shouldn’t assume it will be quick,” the same source advises, and every item on the landlord’s list — guarantees, deposits, estoppel certificates — is something the buyer’s own counsel needs time to review before agreeing to it, not something that can be rushed through in the days before closing.
A buyer signs an LOI to acquire a business operating from a single leased location, with a 60-day path to closing. The lease requires landlord consent to assignment, silent on the standard, so the reasonableness rule likely applies — but the landlord still has every right under that standard to demand financial statements, a personal guarantee from the buyer’s principal and an increased deposit before signing off. Counsel opens the consent request in week one, not week seven, precisely because reviewing and negotiating a guarantee and an estoppel certificate is not a same-week exercise, and a 60-day timeline that assumes landlord consent is a formality is the most common reason business-sale closings actually slip.
See also: Assignment clause · Change of control clause · Asset purchase agreement.
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