You’re selling your business and the lease has to go with it

The problem

Business sales often stall on the lease. If the landlord refuses consent to an assignment, the sale can fall apart. A short term left on the lease can scare off a buyer or their lender.

And if you don’t ask for a release, you may still be on the hook for the lease, and your personal guarantee, after you’ve sold.

What I do about it

I read the assignment clause and the term early, before a buyer is chosen. Then I prepare a complete package for the landlord, ask for consent and your release together, and negotiate a renewal or extension if the buyer needs more term.

What your landlord and buyer want

The landlord wants a new tenant who’ll pay and run the space properly, so they want to see the buyer’s experience and finances. The buyer wants enough term to make the purchase work and a landlord who won’t change the deal.

Where everybody wins

A full package sent early gives the landlord confidence, the buyer gets the term they need, and you walk away released. Everybody gets what they came for, and the sale closes.

Why the lease matters so much

A buyer of a café, clinic or shop is often paying for the location as much as the business. If the lease can’t be assigned, or only has a year left, the business is worth less. Buyers and their lenders will ask about term, renewal options and the assignment clause early.

The three things to sort out

1. Whether the lease can be assigned Read the assignment clause. Most need landlord consent, and many say consent can’t be unreasonably withheld. Some add conditions, such as financial statements or a new guarantee from the buyer.
2. Whether there’s enough term If the buyer needs more years, negotiating an extension or a new renewal option before the sale can add real value.
3. Whether you’ll be released In most cases your liability as the original tenant survives an assignment. If the buyer stops paying, the landlord may come after you or your guarantors. Ask for a written release as part of the landlord’s consent. More in assignment and sublease.

What I do

I review the lease, put together the package the landlord needs to consider the buyer, deal with the landlord or their agent on consent and release, and keep the timeline in step with your business sale. Your lawyer handles the legal documents, and your accountant handles the tax side.

On this part I’m acting on the lease for you as the tenant. If you’d also like help with the sale itself, have a look at selling your business.

If your buyer doesn’t want the space, a negotiated lease surrender with the landlord may be the cleaner exit.

Questions people ask

Am I still liable after I assign my commercial lease?

Usually, yes. Unless the landlord signs a release, the original tenant and any guarantors can remain liable if the new tenant defaults. That’s why a release is one of the most valuable things to ask for.

How long does landlord consent to an assignment take?

Many leases set a response period, often a few weeks after the landlord gets complete information. Incomplete packages are the most common cause of delay.