Commercial leases appear in two different contexts in a transactional practice, and both matter. The first — covered separately under the Contracts section of this site — is a business owner negotiating a lease directly with a landlord. The second context, addressed here, is what happens to a commercial lease when a business is being bought or sold.

In many business transactions, the lease is one of the most valuable assets being transferred. A restaurant, retail location, medical practice, or service business that has operated from the same location for years may have a lease with favorable terms — below-market rent, a long remaining term, renewal options — that represents real economic value. Whether that lease can be assigned to a buyer, and under what conditions, is a question that must be answered early in the transaction. Most commercial leases require landlord consent for assignment. Some landlords will consent readily. Others will use the transfer as an opportunity to renegotiate terms, demand a personal guarantee from the new owner, or in some cases, refuse consent entirely.

The handling of the lease is often one of the most sensitive and time-consuming parts of a business sale. It requires careful coordination between the purchase agreement, the assignment and assumption documents, and the landlord’s requirements. The timeline matters too — landlord approval processes can take longer than anticipated, and a deal that is otherwise ready to close can stall waiting on a lease assignment. Understanding the lease assignment provisions before the letter of intent is signed, not after, allows both buyer and seller to plan accordingly. A transactional attorney who handles business sales regularly knows to put the lease question on the table early.