Selling the Family Store: A Lease Assignment Standoff

The situation

Maricel worked shifts as a grocery clerk. Her sister Grace worked full-time as an early childhood educator. Neither of them had planned to run a store. But when their parents retired from the small variety shop they had operated in St. Thomas for over a decade, the sisters took it over rather than see it close. For four years they ran it around their day jobs — Maricel most weekday mornings before her shift, Grace on evenings and weekends — treating it as a side project that kept the family's name on the door.

It stopped being a side project sometime in year three. Word got around, a few wholesale accounts came in, and the store's annual revenue climbed to roughly $100,000. That was enough to make it a real business with real value, and also enough to make it exhausting to run alongside two other jobs. When a buyer named Kajan approached them wanting to purchase the business outright — inventory, goodwill, and the right to operate from the same location — the sisters were ready to say yes.

The store operated under a commercial lease their parents had signed nine years earlier, with roughly five years left on the term. Like most commercial leases, it did not let the tenant hand the space to someone else automatically. It required the landlord's consent to assign the lease to a new tenant. That single clause turned what should have been a straightforward sale into a three-way negotiation.

The problem

Commercial leases are contracts between a landlord and a specific tenant, and most include an assignment clause governing what happens if that tenant wants to transfer its rights to someone else — typically because the business is being sold. The clause in the sisters' lease was fairly standard: assignment required the landlord's prior written consent, which could not be unreasonably withheld, and the landlord was entitled to review the proposed assignee's financial position before deciding.

The landlord was not refusing outright. He was willing to consent to Kajan taking over the lease — but only on new terms he introduced during the review period. He wanted a modest increase to the monthly rent, which was arguably within his rights to negotiate as a condition of consent. More troubling, he wanted Maricel and Grace to remain personally liable as guarantors of the lease for its full remaining five-year term, even after they had sold the business and had no further control over how Kajan operated it.

That last demand was the real obstacle. An assignment does not automatically release the original tenant from the lease unless the landlord agrees to a full release. Landlords often ask outgoing tenants to guarantee the new tenant's performance for some period, because it gives them a second source of recovery if the new tenant defaults. But an open-ended guarantee spanning the full remaining term meant that if Kajan fell behind on rent two or three years down the road, Maricel and Grace — who by then would have no ownership stake and no say in the business — could still be pursued personally for the shortfall. Neither sister was willing to sign a sale agreement that left that exposure hanging over them indefinitely, and the deal with Kajan was at risk of falling through entirely.

What we did

1. Reviewed the lease's actual assignment language before responding to the landlord. Our team confirmed what the clause required — consent not unreasonably withheld, and a right to review the assignee's financials — and, just as importantly, what it did not require. Nothing in the lease obligated Maricel and Grace to remain guarantors after a properly consented assignment; that condition was the landlord's opening position, not a contractual entitlement.
2. Assembled a credible financial package for Kajan. A landlord's demand for an extended personal guarantee often reflects genuine uncertainty about the incoming tenant's ability to pay, not just leverage-seeking. We worked with Kajan to put together financial statements, a short business plan for the store, and references, giving the landlord an evidence-based reason to see the assignment as low-risk rather than relying on a long guarantee as insurance.
3. Reframed the rent increase as the landlord's legitimate ask and separated it from the guarantee question. Treating every landlord demand as one indivisible ultimatum tends to stall negotiations. We advised the sisters to accept a modest, defined rent increase — something within normal renewal-market movement — while pushing back specifically and only on the open-ended guarantee, so the landlord could see he was getting a real concession rather than blanket resistance.
4. Proposed a capped, time-limited guarantee instead of a flat refusal. Rather than insisting on a full release the landlord was unlikely to accept outright, we drafted a counterproposal: Maricel and Grace would guarantee Kajan's rent obligations for a limited period after closing, with the guarantee automatically expiring once Kajan demonstrated a clean payment record, rather than running for the balance of the lease term.
5. Negotiated the release trigger and documented it precisely. A guarantee that is supposed to expire is only useful if the trigger for its expiry is unambiguous. We negotiated specific language tying the release to on-time rent payment over a defined stretch of months, with no discretion left to either side to argue later about whether the condition had been met.
6. Coordinated the assignment consent with the closing of the business sale. The landlord's written consent, the amended lease terms, and the closing of the sale to Kajan all needed to land in the right order — consent secured before the sisters were contractually bound to close, and the guarantee terms locked into the assignment documents themselves rather than left as a separate informal understanding.

The outcome

The landlord agreed to consent to the assignment on the revised terms. Rent increased modestly going forward — a real cost to Kajan's new venture, and one the sisters had to accept as the price of getting the deal done at all. Maricel and Grace signed a guarantee, but one capped at eighteen months rather than the five years the landlord had originally sought, with automatic release once Kajan showed a consistent record of on-time payment.

It was not the clean exit either sister had hoped for. They would have preferred no guarantee at all, and for the better part of a year and a half after the sale closed, part of their attention stayed on whether Kajan's rent cheques were clearing — a lingering tie to a business they no longer owned. But it was a workable compromise. The sale to Kajan closed on schedule, the sisters received the proceeds from the business they had kept alive after their parents retired, and their exposure had a defined end date instead of stretching across years they would have no control over. Eighteen months later, with Kajan's payment record clean, the guarantee lapsed exactly as the agreement specified, and the sisters' connection to the lease ended for good.

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