- Purchase agreements typically include a set of closing conditions — items that must be satisfied (or waived) before either party is obligated to close.
- A well-drafted condition generally sets out: - What "obtaining consent" actually means — written, unconditional consent, or consent on terms the parties have pre-agreed to accept - A…
- A condition can be drafted: - For the buyer's exclusive benefit — meaning only the buyer can choose to waive it and proceed without consent, since the buyer is the one who needs the…
When a business's value depends on staying in its current location, the purchase agreement needs to say clearly what happens if the landlord doesn't cooperate. Leaving landlord consent as an informal understanding — "we'll sort it out before closing" — is how deals end up stuck at the closing table with no agreed plan B. A properly drafted landlord consent closing condition gives both sides a clear process and a clear exit if things don't go as planned.
Why This Belongs in the Purchase Agreement, Not Just the Lease Correspondence
Purchase agreements typically include a set of closing conditions — items that must be satisfied (or waived) before either party is obligated to close. Landlord consent to a lease assignment is a natural fit for one of these conditions whenever the leased premises matter to the value of the business being sold. Treating it only as something handled through separate correspondence with the landlord, outside the agreement, leaves both parties without a clear contractual answer if it doesn't come through in time.
What a Landlord Consent Condition Typically Addresses
A well-drafted condition generally sets out:
- What "obtaining consent" actually means — written, unconditional consent, or consent on terms the parties have pre-agreed to accept
- A deadline for obtaining consent, set before the overall closing date so there's time to react if it isn't met
- Who is responsible for pursuing it — usually the seller, since they hold the existing lease relationship, though buyers often want the right to participate directly in landlord communications and provide their own financial information
- An obligation to use reasonable efforts to obtain consent, rather than a vague best-efforts promise with no real content
Whose Condition Is It, and Who Can Waive It?
This matters more than it might seem. A condition can be drafted:
- For the buyer's exclusive benefit — meaning only the buyer can choose to waive it and proceed without consent, since the buyer is the one who needs the premises to run the business going forward
- As a mutual condition — where either party can rely on its non-satisfaction to walk away, which sellers sometimes want if they're also looking for a release from ongoing lease liability as part of the deal
Getting this labelled correctly in the agreement avoids a dispute later over who actually had the right to waive the condition and close anyway.
What Happens If Consent Isn't Obtained by Closing
Purchase agreements generally build in one or more of these outcomes, negotiated in advance rather than decided under pressure at closing:
- Extend the closing date to an agreed outside date, giving more time for the landlord to respond.
- Terminate the agreement, with the buyer's deposit returned, if consent still can't be obtained by the outside date.
- Waive the condition and close anyway — available where the party with the benefit of the condition is willing to accept the risk, though closing without consent can put the buyer in a position of technical default under the lease going forward.
- Use a holdback or escrow tied to resolving the lease issue post-closing, where the parties agree to proceed but set aside funds until the consent question is settled.
Drafting Checklist
- [ ] Define exactly what counts as "landlord's consent" for the condition to be satisfied
- [ ] Set a deadline for obtaining consent that is earlier than the overall closing date
- [ ] Identify who is responsible for making and following up on the request
- [ ] Confirm whether the buyer has a direct right to communicate with, or provide information to, the landlord
- [ ] Specify what happens if the deadline passes — extend, terminate, or waive
- [ ] Coordinate the timeline with any financing conditions that also depend on the lease being secured
Frequently asked questions
Can the buyer waive a landlord consent condition and close anyway?
If the condition is drafted for the buyer's exclusive benefit, generally yes — but doing so means accepting the risk of operating without formal landlord consent, which can expose the buyer to a lease default down the road. This is a decision to make with legal advice, not on the fly at the closing table.
What if the landlord agrees to consent but only with new conditions attached?
This is common — landlords often use the consent request as an opportunity to update terms, such as requiring a personal guarantee or an increased deposit. The purchase agreement should address whether the parties are obligated to accept reasonable landlord conditions or whether that itself can trigger the "consent not obtained" outcome.
Should the outside date for closing be different from the deadline to get landlord consent?
Generally yes — building in some buffer between the consent deadline and the overall outside date gives the parties room to react (extend, renegotiate, or terminate) rather than discovering a problem on the closing day itself.
Who pays if the landlord charges costs to review and process the consent?
This depends on what the lease itself says about the landlord's right to recover costs, and what the purchase agreement says about which party bears that expense. It's worth addressing explicitly rather than assuming.
This is a business purchase or sale question
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