Selling a Physiotherapy Clinic: The Lease Clause That Nearly Sank It

The situation

Emily and Amalia had built their physiotherapy practice into a company with three treatment locations across the Hamilton-Niagara area, the largest and busiest of them operating out of a leased unit in Grimsby that also housed the corporation's head office. After twelve years, they had agreed in principle to sell the business outright to Paulo, an air traffic controller who had spent several years investing in healthcare service businesses on the side and wanted this one as his next full step away from shift work. The deal was structured as a share sale: Paulo's holding company would buy all of the issued shares of Emily and Amalia's corporation, taking over the business, its staff, its equipment, and its contracts exactly as they stood.

A share sale is different from an asset sale in one respect that matters enormously for a leased business: the corporation itself does not change. It keeps its name, its bank accounts, its supplier agreements, and its lease. What changes is who owns and controls it. On paper, the tenant named on the Grimsby lease would still be the same company after closing as before. In practice, every relationship the landlord had built with Emily and Amalia over a decade would be handed to someone they had never met.

The problem

The corporation's lease for the Grimsby unit still had roughly six years to run, with two further five-year renewal options. Buried in its assignment provisions was a clause common in commercial leases but easy to underestimate: it defined a transfer of a controlling interest in a corporate tenant as an assignment of the lease, requiring the landlord's prior written consent before it could happen. Emily and Amalia's lawyer at the time of signing had not flagged it as significant, and neither owner had thought about it again in the years since.

The clause surfaced when the landlord's property manager, doing routine diligence ahead of an upcoming rent review, noticed a change-of-signing-authority filing connected to the pending sale. The landlord's lawyer wrote promptly to say that consent to the change of control had not been requested, that none would be granted until it was, and that the landlord intended to treat the request as an opportunity to revisit the lease's economic terms.

This created real leverage on the landlord's side, and it arrived at an awkward moment. The agreement of purchase and sale between Emily, Amalia, and Paulo's company was conditional on all necessary third-party consents being obtained, including landlord consent, by a fixed date roughly six weeks out. Paulo's financing was itself conditional on the lease being confirmed in good standing and assignable. If landlord consent did not come through in time, either side could walk, and Paulo had made clear he was looking at another opportunity if this one stalled.

The landlord's opening position was steep: a rent increase of roughly 25 percent effective immediately rather than at the next scheduled review, a top-up to the security deposit equal to an additional three months' rent, and a shortened first renewal option. Taken together, the demands would have added tens of thousands of dollars a year to the clinic's occupancy cost and materially changed the economics Paulo had priced into his offer.

What we did

1. Reviewed the lease's actual consent standard. Many commercial leases that require consent to an assignment also state that such consent is not to be unreasonably withheld, conditioned, or delayed. This lease had that language. It did not entitle the landlord to demand better terms as the price of consent; it entitled the landlord to satisfy itself that the new controlling party could perform the tenant's obligations. That distinction became the foundation of the entire negotiation.
2. Assembled a consent package that answered the landlord's real question. Rather than argue principle first, we prepared a submission on Paulo's holding company showing its financial capacity, its business plan for continuing clinic operations without disruption, and confirmation that Emily and Amalia would remain involved through a short transition period. A landlord withholding consent to protect its building is on solid ground; a landlord withholding consent to renegotiate the deal is not, and giving the landlord confidence on the first point removed the pretext for the second.
3. Pushed back on the rent increase directly and in writing. We wrote to the landlord's lawyer setting out the reasonable-consent standard, noted that the lease already provided a scheduled mechanism for rent review, and made clear that an immediate, out-of-cycle increase tied to consent was not something the clause supported. This was not a threat of litigation; it was a plain statement of what the lease said, delivered early enough to reset the landlord's expectations before positions hardened.
4. Left room for the landlord to get something real. Refusing every demand outright tends to produce a standoff, not a signature. We proposed a modest, time-limited increase to the security deposit, justified as reasonable protection during the transition to a new controlling party, in exchange for consent proceeding without delay and without touching the rent schedule or the renewal options.
5. Kept both closings synchronized. Landlord consent, Paulo's financing condition, and the share purchase closing were all moving on related but separate timelines. We tracked each condition against the purchase agreement's fixed dates and flagged, a week ahead of the deadline, that an extension request would be needed if the landlord's response slipped further, so that nobody was caught negotiating an extension after a condition had already technically failed.
6. Documented the consent properly. Once terms were agreed, we prepared a formal consent and assignment agreement recording that the landlord consented to the change of control, that the corporation's obligations under the lease continued unchanged apart from the agreed deposit top-up, and that Emily and Amalia had no ongoing liability under the lease once the sale closed and the deposit adjustment took effect.

The outcome

The landlord agreed to a security deposit increase equal to roughly six weeks of rent, phased in over the following year, with no change to the base rent ahead of its already-scheduled review and no reduction to either renewal option. Consent was signed about four weeks after the landlord's first letter, comfortably inside the extended window built into the purchase agreement. The share sale closed on the revised date, with Paulo's holding company acquiring the corporation, its Grimsby lease, and its two other locations intact.

Emily and Amalia walked away from the closing table with the sale price they had negotiated, no lingering obligation on the lease, and a clean handover that let them step back from the practice on the timeline they had planned rather than one dictated by a landlord's leverage. For Paulo, the outcome mattered just as much on the other side: the clinic's occupancy cost stayed close to what he had underwritten when he made his offer, and he kept both renewal options that made the location worth having in the first place.

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