Leases: Key Considerations That Can Make or Break a Business

By Michael D. Rubin, CEO & Founder · Updated September 2026 · 714 words

When a business that leases its location is sold, the lease becomes one of the buyer's first concerns: how long it runs, whether the landlord must consent to the transfer, what it costs beyond base rent, and who remains personally liable afterward. A lease with those points settled helps a deal close. A lease with them unsettled can delay it or end it.

This matters from both sides of the table. Sellers should know what their lease allows before going to market, and buyers should read it as closely as the financial statements, because a company that depends on its site is only as secure as the right to stay there.

Transfer and consent

Most commercial leases require landlord consent to assign the lease to a new tenant. Many also treat a sale of the company's shares or membership interests as an assignment, so even a stock sale may need approval. Read the clause to see whether consent can be withheld for any reason or only a reasonable one, whether the landlord can charge a fee or raise the rent on transfer, and whether it can take the space back instead.

Landlords commonly ask for the buyer's financial statements and a new guarantee. Buyers and lenders often ask the landlord for an estoppel certificate, a signed confirmation of the lease terms and that no default exists. Build time for all of this into the closing schedule; landlords do not move at a deal's pace.

Sellers should not approach the landlord until a buyer is chosen and terms are agreed, since an early conversation can leak and invite renegotiation. Buyers should ask for the full lease, every amendment and any side letters, not just a summary.

Remaining term and options

A buyer paying for a location-dependent business wants to know it can stay. Many years remaining, or renewal options at the tenant's choice, count in the seller's favor. A lease ending soon with no option forces the buyer to negotiate a new one before closing, which hands the landlord leverage over the whole deal. Lenders financing the purchase also look at whether the lease runs long enough to support the loan.

For someone starting or buying a young business, the logic can reverse: a shorter first term with options limits exposure if the venture struggles.

If the term is short, a seller can sometimes negotiate an extension before going to market, which makes the business easier to sell and to finance.

Costs beyond the rent

Base rent is only part of the cost of a location, and unclear answers on the rest become disputes whose cost ends up in the price. Before closing, a buyer should know:

• How property taxes, insurance and common-area maintenance are passed through, and how they have changed
• Who pays for roof, structural, parking lot and HVAC repairs
• What happens after a fire, flood or storm, including whether rent stops and who rebuilds
• How and when rent increases, in fixed steps or by a formula
• Whether an exclusive-use clause keeps direct competitors out of the same center
• Whether any rent is past due, or any repairs the landlord has demanded remain open

Personal guarantees and owner-held real estate

Many leases for smaller companies carry a personal guarantee from the owner. A landlord usually cannot block the sale of the business, but it can decline to release the guarantee, leaving the seller liable for rent under a company they no longer control. Negotiate the release as part of the landlord's consent. Where the seller owns the building through a separate entity, the buyer will want a new market-rate lease signed at closing. Our article on whether real estate should be included in the sale price compares the options.

How MDR & Associates handles the lease

We review the lease at the start of an engagement, raise transfer and guarantee issues with your attorney early, and plan when to approach the landlord so the conversation neither leaks nor stalls the deal. Buyers can read about funding a purchase with a lease in place on our business financing page and review opportunities on buy a business. Sellers with a lease question can contact us confidentially.

Where the seller owns the building, we help set lease terms that the buyer and its lender will accept.

Where this fitsSell your business in Texas →

Questions owners ask next

What is an estoppel certificate?

A signed statement from the landlord confirming the lease's key terms, such as rent, expiration date and deposits, and that neither side is in default. Buyers and their lenders often ask for one before closing so they are not surprised by a claim the landlord makes later. Ask your attorney about requesting it early.

Can a landlord raise the rent because I am selling?

Only if the lease allows it. Some leases let the landlord adjust rent, charge a transfer fee or share in any payment for the lease when it is assigned. Others limit the landlord to reasonable consent. Your attorney should read the assignment clause before you go to market.