- If the business operates from leased premises, the lease is a separate contract that generally needs its own handling, distinct from the purchase agreement itself.
- Insurance policies are written around a specific insured and a specific set of facts about the business and its ownership.
- If the seller’s assets are subject to existing financing, a registered security interest under Ontario’s Personal Property Security Act likely sits against some or all of those assets.
A business sale involves plenty of parties beyond the buyer and seller, and three of them can genuinely stop a closing in its tracks if they’re notified too late: the landlord, the insurer, and any lender or secured creditor. Some of these notices are driven by contract or statute; others are simply good practice that protects both sides. Getting the order and timing of landlord, insurer, and lender notice right is part of what keeps a closing on schedule.
Landlord: Assigning or Ending the Lease
If the business operates from leased premises, the lease is a separate contract that generally needs its own handling, distinct from the purchase agreement itself. Most commercial leases restrict assignment without the landlord’s consent. Under Ontario’s Commercial Tenancies Act, where a lease contains a covenant against assignment without consent, that consent is deemed not to be unreasonably withheld unless the lease expressly provides otherwise. That deemed proviso is a useful backstop, but the lease’s actual wording controls first, so it needs to be reviewed early, not requested at the last minute.
Landlords often use a lease assignment request as an opportunity to review the buyer’s financial standing, request updated insurance certificates, or seek other conditions before consenting, which is one more reason to start this conversation well before the target closing date.
Insurer: Protecting Coverage Through the Transition
Insurance policies are written around a specific insured and a specific set of facts about the business and its ownership. A change of ownership is generally the kind of material change an insurer expects to be told about, and failing to notify can put coverage at risk exactly when it might matter most, during a transition, when unfamiliar processes and new staff can increase the chance of something going wrong. Practical steps include:
- Notifying the insurer of the closing date and new ownership or entity details
- Confirming whether the existing policy can continue for the buyer or needs to be replaced
- Requesting updated certificates of insurance if the landlord or a lender requires proof as a condition of consent
- Reviewing coverage gaps for the specific transition period around closing
Lender / Secured Creditor: Discharging or Assigning Security
If the seller’s assets are subject to existing financing, a registered security interest under Ontario’s Personal Property Security Act likely sits against some or all of those assets. That security interest generally needs to be dealt with at closing, either discharged using sale proceeds, or, in less common structures, expressly assumed by the buyer with the lender’s agreement. As of mid-2026, discharging a PPSA registration is free, while a search to confirm what’s registered costs $8 online or by certificate, figures worth confirming before you rely on them.
If the buyer is financing the purchase itself, its own lender will typically want confirmation that existing liens against the purchased assets are cleared, and may require its own security to be registered at or immediately after closing.
What Happens If You Skip One
| Party Skipped | Typical Risk |
|---|---|
| Landlord | Lease assignment challenged or delayed; possible default under the lease terms |
| Insurer | Coverage denied or void at the moment it’s needed, during the transition |
| Lender / secured creditor | Undischarged lien surfaces after closing, clouding the buyer’s title to purchased assets |
A Closing-Week Notice Checklist
- [ ] Landlord notified and consent to assignment requested, with lease terms reviewed for conditions
- [ ] Updated certificate of insurance ready if the landlord requires one
- [ ] Insurer notified of the ownership change and closing date
- [ ] PPSA search run against the seller’s assets to confirm what’s currently registered
- [ ] Arrangements confirmed for discharging any existing security interests at or before closing
- [ ] Buyer’s own lender, if any, confirmed on title and security requirements before closing
Frequently asked questions
Can a landlord simply refuse to consent to a lease assignment?
It depends on the specific lease wording. Where the lease restricts assignment without consent and doesn’t say otherwise, Ontario law generally deems that consent not to be unreasonably withheld, but "unreasonable" is a legal standard applied to the specific facts, not a guarantee of automatic approval.
Who is responsible for discharging an existing PPSA registration — the buyer or the seller?
This is typically negotiated in the purchase agreement, but as a practical matter, sellers usually arrange for registered security interests against the purchased assets to be discharged using sale proceeds at or before closing, since the buyer generally won’t accept assets encumbered by someone else’s lien.
Does a share purchase require the same landlord and lender notices as an asset purchase?
Not always in the same way. In a share purchase, the corporation that holds the lease and owes the lender doesn’t change, so an assignment in the technical sense may not be needed. However, many leases and loan agreements include change-of-control clauses that are triggered by a share sale too, so these documents still need to be reviewed.
What if the seller’s insurance already lapsed before closing?
This is a red flag worth raising immediately with your lawyer. A lapse can indicate broader issues and creates real exposure for the seller in particular during that gap, and it should be addressed before, not after, closing.
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