Guide
Selling shares? Your landlord may still get a say
Read the change-of-control clause before you talk to buyers.
Selling the shares of your company can still need your landlord’s consent. Many leases treat a change in who controls the tenant as if the lease were being assigned.
General information only, not legal advice. Have your lawyer read your lease.
Why this catches owners out
In a share sale, the company that signed the lease stays the tenant. So it’s easy to assume the landlord has no say. But many commercial leases have a change-of-control clause. It says that selling a controlling interest in the tenant counts as an assignment, so you need the landlord’s consent. Lenders’ loan agreements often have the same kind of clause.
What to check, well before a sale
- Does the lease have a change-of-control clause, and what counts as a change?
- What does the landlord need to see, and how long do they have to answer?
- Can the landlord charge a fee, ask for a new guarantee or change the rent?
- Do your loan agreements or key contracts have similar clauses?
- If you assign the lease, will you stay on the hook? Often you will.
More on leases in a business sale: selling a business with a lease on camappleton.com.