Can a British Columbia Landlord Refuse Consent to a Lease Assignment?

You have a buyer for your business, but your lease says you cannot assign it without the landlord's consent, and the landlord is hesitating or saying no. The sale may depend on the answer.

This article explains what British Columbia law does and does not say about a landlord's refusal, why the lease wording matters so much, and the options tenants commonly consider. It is general information, and a lawyer should read your lease before you act.

This article covers the law of British Columbia.

Start with your lease

For commercial premises, the assignment clause in your lease is where the answer usually begins. Some leases say consent may not be unreasonably withheld. Others say consent may be withheld in the landlord's discretion, and some say nothing about the standard at all. A few prohibit assignment altogether.

Residential tenancies fall under a different set of rules and do not apply to commercial premises, so do not rely on what you have heard about renting an apartment.

What the law says about refusal

The Commercial Tenancy Act has only one provision we are aware of on covenants against assigning or subletting: section 29(3), which deals with a trustee in bankruptcy. A covenant not to assign or sublet without the landlord's leave or consent does not apply to a trustee's transfer if the Supreme Court approves it, and the incoming party must give security of up to 3 months' rent. The Act does not set a general rule on when a landlord may refuse consent, so the lease terms and case law govern.

In other words, the question of whether a refusal must be reasonable is not answered by a simple statutory rule. It depends on the wording of your lease and on how courts have treated similar wording. A lawyer can tell you how that applies to your clause.

Reasons landlords often raise

Whether any of these is a proper ground for refusal depends on your lease and the circumstances. Do not assume that a reason that sounds fair or unfair to you will be treated that way.

Options if consent is denied

• Ask for the refusal and the reasons in writing, then see whether the concern can be addressed.
• Offer security, such as a deposit or guarantee from the buyer, and suggest the buyer meet the landlord directly.
• Negotiate a new lease between the landlord and the buyer, with your release from the old one.
• Check whether a share sale is possible, since the tenant company would stay the same. Many leases treat a change of control as an assignment, so read the clause first.
• Consider a sublease, remembering that the same covenant often covers subletting.
• If your business is a franchise, the franchisor's approval of the sale is a separate question from the landlord's consent. Under the Franchises Act, each party to a franchise agreement owes a duty of fair dealing, including acting in good faith and according to reasonable commercial standards when approving a transfer.
• Ask a lawyer whether the landlord's refusal can be challenged under your lease.

A trustee in bankruptcy has a separate route under section 29(3) of the Commercial Tenancy Act, but that applies only to the trustee's transfer with court approval.

What to do next

• Read the assignment, subletting and change-of-control clauses closely.
• Do not sign a binding sale without making landlord consent a condition.
• Keep all communications with the landlord in writing.
• Prepare a package about the buyer before you ask for consent.
• Pay attention to any response deadlines in the lease.
• Have a lawyer review the lease and any refusal before you decide to terminate, sue or walk away.

Frequently asked questions