- A commercial lease is a contract between the landlord and a specific tenant.
- A landlord's assignment charge generally falls into one or more of these categories: - Legal review costs — having the landlord's own lawyer review the proposed assignment and prepare a…
- Ontario law does not assign this cost to one side or the other by default — it's a matter of negotiation between the buyer and seller, layered on top of whatever the lease itself says…
If the business you're buying or selling operates out of leased space, the landlord is not a bystander in the deal. Most commercial leases require the landlord's consent before the tenant's interest can be assigned to a new operator — and many landlords attach a fee to that consent. Neither side is usually surprised that a fee exists. What catches people off guard is not knowing roughly what it covers, who is expected to pay it, or when to raise it.
This article walks through why landlords charge to process an assignment, what the fee typically covers, and how to handle it in your purchase agreement so it doesn't become a last-minute surprise at closing.
Why Landlords Charge an Assignment Fee at All
A commercial lease is a contract between the landlord and a specific tenant. When that tenant is replaced by a new one through an assignment, the landlord is effectively agreeing to accept a different party as responsible for rent and lease obligations going forward. Reviewing that request — checking the incoming tenant's financial standing, updating lease records, and having a lawyer prepare or review the assignment paperwork — takes real time and often real legal cost on the landlord's side. Many landlords pass some or all of that cost on to the tenant requesting the assignment, rather than absorbing it themselves.
Whether a landlord is entitled to charge a fee, and how much, depends entirely on what the lease itself says. Some leases specify that the tenant will reimburse the landlord's "reasonable legal fees and administrative costs" in connection with an assignment. Others say nothing at all about a fee, in which case the landlord's ability to impose one is a matter of what the lease permits and how the parties negotiate it.
What the Fee Typically Covers
A landlord's assignment charge generally falls into one or more of these categories:
- Legal review costs — having the landlord's own lawyer review the proposed assignment and prepare a consent-to-assignment document or an amendment to the lease.
- Administrative processing — updating the landlord's records, insurance certificates, and tenant files to reflect the new tenant.
- Credit or financial review — assessing the incoming tenant's ability to meet the lease's ongoing obligations.
Because these costs vary by landlord, property manager, and the complexity of the specific lease, there is no standard figure you can assume going in. Ask the landlord (or have your lawyer ask) early in the process what its assignment fee practice is, and get it in writing before you rely on any number quoted informally.
Who Pays: Buyer or Seller?
Ontario law does not assign this cost to one side or the other by default — it's a matter of negotiation between the buyer and seller, layered on top of whatever the lease itself says about who is responsible for landlord consent costs. In practice, a few common approaches show up:
| Approach | How it typically works |
|---|---|
| Seller pays | Seller treats the assignment fee as a cost of getting the deal to close, since the seller needs the landlord's consent to complete the sale. |
| Buyer pays | Buyer treats it as a cost of stepping into the lease it wants to keep operating under. |
| Split or negotiated | Parties agree to share the fee, or fold it into broader closing-cost allocations in the purchase agreement. |
Whichever approach you agree to, put it in writing in the purchase agreement rather than leaving it to be sorted out after the landlord's invoice arrives.
Building This Into Your Timeline
Landlord consent is frequently a condition of closing in an asset purchase agreement where the lease is a key asset. That means the deal is structured so it doesn't close until the landlord has agreed to the assignment — on whatever terms, including fees, the landlord requires. A few practical steps help avoid last-minute friction:
- [ ] Pull the lease early and confirm what it says (if anything) about assignment consent and cost-reimbursement.
- [ ] Contact the landlord or its property manager well ahead of your target closing date to start the consent process.
- [ ] Ask for the landlord's assignment fee practice in writing, and address responsibility for it in the purchase agreement.
- [ ] Confirm what documentation the landlord will require about the buyer (see our companion article on landlord covenant review).
- [ ] Keep your lawyer looped in on landlord communications so consent language lines up with your purchase agreement's conditions.
Frequently asked questions
Can a landlord refuse to consent to an assignment just to avoid the paperwork?
Under the Commercial Tenancies Act, where a lease restricts assignment without the landlord's consent, that consent generally cannot be unreasonably withheld — unless the lease's own wording says otherwise. Wanting to avoid administrative work is unlikely, on its own, to justify an outright refusal, but the specific lease language always needs to be reviewed.
Is the assignment fee the same as first and last month's rent or a security deposit?
No. An assignment fee compensates the landlord for the cost of processing the change in tenant; it's separate from rent, deposits, or any other ongoing lease obligation the new tenant assumes.
What if the lease says nothing about an assignment fee?
Then the landlord's ability to charge one is less clear-cut, and it becomes a point to negotiate directly with the landlord (or push back on) rather than something the lease automatically authorizes. This is exactly the kind of clause your lawyer should flag during lease review.
Can we negotiate the fee down?
Sometimes. Landlords who want the deal to proceed smoothly — particularly where the incoming tenant is a strong covenant — are often open to discussing the amount, especially if it's framed as reimbursement for actual costs rather than a fixed charge.
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