Landlord consent

When a business sale depends on a lease staying in place, the landlord’s approval may be a condition of closing. Whether the landlord can say no, and on what grounds, comes from the lease and the province’s law, and the two provinces below differ.

Ontario

Section 23(1) of the Commercial Tenancies Act deems a covenant against assigning or underletting without consent to carry 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, section 23(2) lets a Superior Court judge, on the application of the tenant, assignee or sub-tenant, determine whether it is unreasonably withheld and, if it is, permit the assignment or sub-lease.

Quebec

Under the Civil Code of Québec, the lessee must give notice of the intended assignee’s name and address and obtain the lessor’s consent (art. 1870). The lessor may not refuse without a serious reason, and if it refuses it must inform the lessee of its reasons within 15 days after receiving the notice, or it is deemed to have consented (art. 1871). It may not exact any payment beyond reasonable expenses resulting from the assignment (art. 1872). Éducaloi notes that, unlike a residential lease, a commercial lease can stop a tenant from subletting or assigning, so the lease’s wording matters too. Other provinces apply their own law and the lease’s wording.

See how landlord consent to a lease assignment works in a business purchase and lease assignment.