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Buying & Selling a Business

Can my landlord demand extra security deposit from my buyer before approving the assignment?

TSL Written by the Treadstone Law team· Updated August 2026

Generally yes, if your lease's consent provision gives the landlord room to set conditions on approving a new tenant, and this is a fairly common request. Landlords often use the assignment process as a chance to reassess the risk a new tenant represents, and an increased security deposit — alongside or instead of a personal guarantee — is one of the more common ways landlords try to offset a perceived increase in that risk, particularly where the buyer's financial track record is shorter or less established than the seller's.

Whether the specific amount demanded is defensible depends on your lease's wording and, where a reasonableness standard applies to consent generally, on whether the demand is genuinely tied to a legitimate concern about the buyer rather than being used as leverage unconnected to any real risk.

This is a negotiable point in most deals rather than a fixed requirement, so it's worth pushing back on a demand that seems disconnected from your buyer's actual financial position. A Treadstone business lawyer can assess whether the request is reasonable and help negotiate its size.

Key takeaways

  • Landlords can often require an increased deposit as a condition of approving a new tenant.
  • This is common where the buyer's financial track record is shorter than the seller's.
  • Whether the amount is defensible depends on your lease and whether it's genuinely risk-related.
  • Treat the deposit demand as negotiable rather than a fixed condition you must accept.
This is general information, not legal advice. It doesn’t create a lawyer–client relationship, and the rules can change. For advice on your situation, a Treadstone business lawyer can help.
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