- Every other closing condition in a typical business sale is largely within the buyer's and seller's own control — arranging financing, finalizing due diligence, preparing closing documents.
- Make Landlord Consent an Express Condition Precedent Rather than assuming consent will arrive in time, the purchase agreement should state plainly that closing is conditional on…
Buyers and sellers agree on a closing date, book their accountants, arrange financing — and then the deal sits waiting on one signature that neither of them controls: the landlord's consent to assign the lease. Landlord consent is one of the most common reasons a business sale closing gets pushed back, and it's rarely because anyone did anything wrong. It's simply a third party, on its own schedule, standing between a signed purchase agreement and a completed sale.
This article looks at why landlord consent creates timeline risk and how a well-drafted purchase agreement manages it, rather than just hoping it resolves in time.
Why This Particular Step Is Hard to Predict
Every other closing condition in a typical business sale is largely within the buyer's and seller's own control — arranging financing, finalizing due diligence, preparing closing documents. Landlord consent is different because a third party who isn't a party to your purchase agreement has to act, on its own internal process, before you can close.
Landlords vary widely in how quickly they respond: some sign off within days of a straightforward request, others require internal approvals, additional documentation, negotiated new lease terms, or a personal guarantee before consenting — and there is no fixed legal timeline requiring a landlord to respond by any particular date. This is precisely why the deal timeline needs to build in room for this step rather than treating it as a formality that will simply happen on schedule.
Structuring the Purchase Agreement to Absorb the Delay
1. Make Landlord Consent an Express Condition Precedent
Rather than assuming consent will arrive in time, the purchase agreement should state plainly that closing is conditional on receiving the landlord's written consent (and, where relevant, an estoppel certificate) by a stated date — with a mechanism for what happens if it doesn't arrive.
2. Build in an Extension Mechanism
A common approach is to give either party (or the buyer alone) the right to extend the closing date by a defined period, or a limited number of times, specifically to allow more time for landlord consent — rather than the deal automatically falling apart the moment the original date passes.
3. Decide Who Can Walk Away, and When
Purchase agreements typically specify what happens if consent still hasn't been obtained after any extension: the deal may terminate without penalty to either side, or the buyer may be given the option to waive the condition and close anyway (accepting the risk of proceeding without formal consent, which is not generally advisable).
4. Start the Landlord Request the Day the Deal Is Signed — Not the Week Before Closing
The earlier the landlord is approached, the more room there is to negotiate any conditions the landlord attaches, and the less likely a delay becomes a crisis rather than a manageable timing issue.
A Realistic Way to Sequence It
| Step | What to Do |
|---|---|
| 1 | Flag the landlord consent requirement while still negotiating the purchase agreement — don't leave it as an afterthought |
| 2 | Approach the landlord (often via the seller, who has the existing relationship) as soon as the deal is signed |
| 3 | Provide the landlord with whatever it reasonably needs to assess the incoming tenant — financial information, references, a personal guarantee if requested |
| 4 | Follow up proactively rather than waiting passively for a response |
| 5 | If the response is slow, use the purchase agreement's extension mechanism rather than letting the closing date lapse without a plan |
| 6 | Keep other closing workstreams (financing, remaining due diligence) moving in parallel so consent isn't the only open item at the end |
What Buyers and Sellers Each Risk From a Delay
For the seller, a delayed closing can mean carrying the business (and its costs) longer than planned, and can complicate personal or tax planning tied to a specific closing date.
For the buyer, a delay can mean financing commitments expiring or needing to be extended, and continued uncertainty about whether the deal will close at all if the landlord ultimately refuses consent.
Both sides generally benefit from addressing this risk directly in the agreement rather than leaving it unaddressed and hoping it resolves itself.
Does the Deal Structure Change the Risk?
In an asset sale where the lease is being assigned as one of the purchased assets, landlord consent is a live, necessary step with the timing risk described above.
In a share sale, the same corporate tenant continues to hold the lease, so there's typically no assignment for a landlord to consent to — though many leases contain a separate change-of-control clause treating a share sale the same way, so this needs to be checked against the specific lease rather than assumed.
Frequently asked questions
Can we just close and deal with landlord consent afterward?
This is generally not advisable. Occupying the space as the new tenant before an assignment is actually in place can put you in breach of the lease from the outset. Most purchase agreements are structured so that closing depends on consent being obtained first.
What if the landlord asks for something unreasonable to give consent?
Under the Commercial Tenancies Act, where a lease restricts assignment without consent, that restriction is deemed to include an implied condition that consent won't be unreasonably withheld — unless the lease itself says otherwise. What counts as "unreasonable" depends on the facts and the specific lease terms.
Should the purchase agreement specify a hard deadline for landlord consent?
Many do, paired with an extension mechanism, so both sides have clarity on what happens if the deadline passes rather than an open-ended wait. The right approach depends on your specific deal and risk tolerance.
Who typically pays if the landlord charges a fee to process the consent?
This is a negotiated point between buyer and seller, and many leases separately entitle the landlord to charge its own reasonable administrative or legal costs for processing the request.
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