What happens if a required third-party consent never arrives before closing?

If the consent is a closing condition, the agreement you signed answers most of the question. Read it for four things: whether the buyer may waive the condition, whether the closing date can be extended and how, whether either side can end the deal after a set date, and what each side owes if it does. BDC notes that when the binding purchase agreement is drafted, the focus shifts to closing conditions and other legal protections.

Work out who holds the consent

Delay is easier to manage once you know whether the consent sits with a landlord, a regulator or another counterparty. Each has its own source of authority. A landlord’s rights come from the lease and the provincial law behind it, while a regulator’s come from a licensing statute. Neither runs on your closing schedule.

A landlord’s consent in Ontario

Under s.23(1) of Ontario’s Commercial Tenancies Act, a covenant against assigning without licence or consent is deemed subject to a proviso that consent is not to be unreasonably withheld, unless the lease contains an express provision to the contrary. If the landlord refuses or neglects to consent, s.23(2) lets a judge of the Superior Court of Justice, on the tenant’s or assignee’s application, decide whether consent is unreasonably withheld. Other provinces have their own tenancy rules, so check the lease and the law where the premises sit.

A regulator’s approval

Nova Scotia is one example. Its government says a business that buys a licensed establishment needs to apply for approval to transfer the existing liquor licence to its name, and that club liquor licences are not transferable. Other provinces run their own regimes. Ask the regulator what the application needs and how long it expects to take, and ask your lawyer whether the business can change hands before approval.

Steps to take before the deadline

• Agree any extension of the closing date in writing, signed by both sides.
• If the buyer will waive the condition, record the waiver in writing.
• Keep a dated record of every request you made and every reply.
• Ask your lawyer whether the agreement lets either side terminate after a set date.