Landlord won't consent to lease assignment? What to do while your sale waits

You’ve found a buyer, agreed a price and signed the sale contract. Then the landlord goes quiet. Without consent to assign the lease the buyer has no premises, and a business that can’t trade from its premises isn’t worth what they offered. Everything downstream, including your settlement date and whatever you’ve committed against the proceeds, is now waiting on a sign-off you don’t control.

Think of the landlord’s consent as a hold point on the drawing: no later work can be certified until it’s signed off. This guide sets out how long that hold point can legally last, what you can do to move it, and how to carry your commitments across the span if it doesn’t move.

How long does a landlord have to consent to a lease assignment?

For a retail lease the answer is a fixed clock, but only once your request is properly made.

In Victoria, the Small Business Commission’s guidance says that if the tenant has met its obligations, the landlord is considered to have agreed to the transfer unless it gives written notice of consent or refusal within 28 days of the request. NSW commentary describes the same 28-day deemed-consent rule under section 41 of the Retail Leases Act 1994, with the clock running from the later of the request and the tenant complying with the information requirements. Other states and territories set their own periods, so confirm yours with your lawyer.

Two things catch sellers out:

• The clock only starts on a compliant request. In Victoria that means a written request that includes information on the buyer’s financial resources and business experience, plus the disclosure steps below. If the request was thin, the landlord can say the 28 days never began.
• A commercial (non-retail) lease has no statutory clock. Industrial units and larger tenancies usually sit outside the retail leases legislation, so your assignment clause and general law decide how long the landlord can take and on what grounds.

What makes a consent request “properly made”?

Before counting days, check the paperwork. The Victorian requirements, as the VSBC sets them out, are:

1. Give the buyer a copy of the disclosure statement you received when you entered the lease, and tell them about any changes you know of. Failing to do so is an offence.
2. Ask the landlord for a new disclosure statement dated no more than three months before your request. The landlord must provide it within 14 days. If it doesn’t, you aren’t required to give the buyer one.
3. Make the consent request in writing, with details of the buyer’s financial resources and business experience.
4. For the sale of an ongoing business, give the buyer three years of business records.

In NSW, the assignor’s disclosure statement has its own prescribed form, published by the NSW Small Business Commission. A tidy pack, sent early and with proof of delivery, is the cheapest way to shorten this hold point.

Can a landlord refuse consent?

Yes, but a retail landlord can’t simply say no. The Victorian grounds listed by the VSBC are:

• the buyer intends a use the lease doesn’t permit;
• the landlord reasonably considers the buyer lacks the financial resources or business experience to meet the lease obligations;
• the tenant hasn’t complied with the lease’s reasonable assignment provisions; or
• for a business sale, the tenant hasn’t provided three years of business records to the buyer.

NSW commentary describes a list of specific grounds too (broadly the buyer’s financial resources or retail skills compared with yours, and non-compliance with the procedure), rather than a general “unreasonable” test. Most refusals in practice are about the buyer’s finances. That’s useful, because it tells you what to fix: bring a stronger financial picture for the buyer, offer a larger bond or a bank guarantee, or have a guarantor step in.

If the lease isn’t a retail lease, a clause saying consent isn’t to be unreasonably withheld is common, but the contract wording controls. Get your lawyer to read the clause before you argue about it.

What do you do when the landlord says no, or says nothing?

Work the steps in order. Each is cheaper than the next.

1. Check the request. Was it compliant, in writing, and can you prove when it was sent? If not, fix it and resend.
2. Ask what the objection is. A landlord who names a specific concern, such as the buyer’s trading history, has handed you the list of things to fix.
3. Offer the usual cures. A bond lifted by bank guarantee, a personal guarantee from the buyer, or a short rent-in-advance period. In the VSBC’s own example, a refusal over the buyer’s finances settled at mediation with the landlord consenting after the security rose from one to six months’ rent by bank guarantee, paid for by the current tenant.
4. Go to the commissioner. The Victorian Small Business Commission mediates between the landlord, the current tenant and the buyer. In NSW, the Small Business Commission runs mediation for retail lease disputes, and a court application generally needs a certificate from the Commissioner first. Mediation is usually quicker than court.
5. Take legal advice on the sale contract. Most business sale contracts make the lease assignment a condition, with a long-stop date. Your lawyer should tell you when each side can walk away, and whether a landlord’s unreasonable refusal exposes it to a claim.

Don’t tell the buyer the lease is “fine” until you have the consent in writing. And don’t let the long-stop date run out without a written extension signed by both sides.

What does the delay cost, and who carries it?

The money consequence is simple: your proceeds land later than planned, and whatever you’ve committed against them doesn’t move. Here’s the span for an illustrative sale (an example, not a client).

	Plan	Landlord slips 4 weeks
Contract signed	Day 0	Day 0
Consent request sent	Day 7	Day 7
Deemed-consent date (28 days)	Day 35	Day 35, but refused on Day 33
Mediation and revised consent	n/a	Day 33 to Day 61
Settlement	Day 45	Day 73
Net proceeds to you	$380k	$380k
Next commitment due (deposit on a new site)	Day 50	Day 50
Gap to carry	None	23 days

The net figure is what’s left after debts, employee entitlements, agent fees and tax; it doesn’t change. What changes is the span: 23 days with a $380k hole in it. If the deposit on your next premises is due on Day 50 and you’ve planned around Day 45, the slow case leaves you short for just over three weeks.

You can model your own version in the bridging calculator: enter the commitment date, a realistic proceeds date and the net exit, and it shows the peak debt and end debt.

If you’re staring at a commitment that falls before the landlord’s decision, see if a short bridge could cover the gap.

How do you fund the gap?

In rough order of cost and complexity:

• Move the commitment. If your deposit or lease start is negotiable, ask for a later date. A week’s movement can cost nothing.
• Use your own cash flow. If the business keeps trading until settlement, you may be able to carry a small gap on trading cash.
• A short bridging loan. The sale becomes the exit: the loan is repaid from the proceeds when the contract settles. Lenders look hard at whether the exit is signed off, and a stalled consent is exactly the question they’ll ask. Our page on business sale proceeds sets out what evidence helps, and settlement delayed covers a bridge when the date slips.
• A term with room. Where the exit date is uncertain, ask whether the structure allows an extension, as in our page on bridging loan extensions, rather than a hard date that expires before the landlord decides.

Be honest with yourself on one point: a bridge isn’t the right answer if the consent is genuinely unlikely, for example where the buyer clearly can’t meet the landlord’s tests. Then the exit isn’t a delayed sale, it’s a different sale, and borrowing against it only adds cost. Fix the lease problem first or find another buyer.

A checklist for this week

• Confirm the lease type (retail or commercial) and read the assignment clause.
• Check your consent request: written, complete, delivered, dated.
• Ask the landlord for a current disclosure statement if you haven’t.
• Ask the landlord in writing what, specifically, it needs.
• Line up a bond or guarantee offer through the buyer.
• Check the contract’s long-stop date and get any extension in writing.
• List every commitment that falls before the new settlement date, with the date and amount.

Keeping your next move on track

A landlord hold-up is frustrating because the money is, for practical purposes, already yours and the next step is already booked. If you’ve got a commitment landing before the lease consent does, we’d like to look at the span with you.

Enquiring takes about 60 seconds and won’t touch your credit file, so there’s no cost to finding out where you stand. We don’t send your details to a pile of lenders. A real person reads your situation and calls you. Please fill in the form accurately, with the sale contract date, the consent position and the commitment you need to meet, so we can match the right option first time.

Check your options while the sale waits →