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Buying & Selling a Business

What if my landlord says my buyer isn't a strong enough covenant to approve the assignment?

TSL Written by the Treadstone Law team· Updated August 2026

This is generally one of the more defensible grounds a landlord can rely on. A tenant's "covenant" — their financial strength and ability to pay rent and perform lease obligations over the remaining term — is a legitimate, central concern for any landlord assessing a proposed assignee, and most consent clauses (whether they impose a "not unreasonably withheld" standard or not) are understood to allow the landlord to weigh this factor.

Whether a specific refusal on covenant grounds is reasonable, though, still depends on the evidence behind it. A landlord relying on a genuine, documented concern — weak financials, limited experience, no personal guarantee available — is on solid footing; one making a vague or unsupported claim of weak covenant, without engaging with financial information actually provided, is on shakier ground and may be acting unreasonably if your lease incorporates that standard.

If your landlord raises this objection, ask what specifically is driving the concern and whether additional security — a personal guarantee, a larger deposit, a co-signer — could address it. A Treadstone business lawyer can assess whether the objection is well-founded or whether it's being used as a pretext.

Key takeaways

  • Covenant strength is a legitimate and central factor in most landlord consent decisions.
  • A vague, unsupported covenant objection is weaker ground than a documented concern.
  • Additional security — a guarantee, deposit, or co-signer — can sometimes address a genuine concern.
  • Ask what specifically is driving the objection before assuming the refusal is final.
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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