The Often-Overlooked Importance of Leases

By Michael D. Rubin, CEO & Founder · Updated September 2026 · 739 words

Leases get overlooked because they look routine, yet a single clause can force a business to move, raise its costs sharply or hand the landlord a veto over the sale. Buyers and sellers spend weeks on earnings and structure, then discover in the final days that the landlord has not consented or the lease ends sooner than anyone noticed. Reading the lease early prevents that.

Location drives both visibility and profit for many businesses, and moving is disruptive and costly. That puts the lease near the top of any review list, not at the bottom. Savvy sellers raise a favorable lease early as a selling point; careful buyers ask about it before they fall in love with the company.

The clauses to read first

• Term and renewal options. How many years remain, and whether renewal is the tenant's choice or the landlord's.
• Assignment and change of control. Whether a sale, including a sale of shares, needs landlord consent, and on what standard.
• Rent increases. Fixed steps, inflation adjustments or market resets at renewal.
• Pass-through costs. Taxes, insurance, maintenance and common-area charges paid on top of base rent.
• Personal guarantees. Who guaranteed the lease, and whether the landlord will expect the buyer to replace that guarantee.
• Relocation, redevelopment or early termination rights that let the landlord move or end the tenancy.
• Use clause. Whether the lease permits what the business does today and what the buyer plans to add.

Where the surprises come from

Most lease problems in a sale follow a few patterns. The lease has little time left, no renewal option, and a landlord who wants a large increase. The landlord's consent is required and the landlord is slow, or asks for terms the buyer will not accept. The lease lets the landlord redevelop the property. Or the business has quietly outgrown what the use clause allows, and a new owner inherits the violation.

Each of these can be solved if found early. Found late, each can delay or end a deal. Lease consents are a recurring item on the list of why sales fail during due diligence, and almost always an avoidable one. Ask your attorney for a one-page summary of every lease early in the process.

Get the landlord on board early

Once a buyer is selected and the letter of intent is signed, the landlord conversation should begin during due diligence, step eight of our process, not in the final week. The seller usually makes the introduction, and the buyer provides whatever financial information the landlord asks for. Allow for the landlord's own timeline; some landlords need approval from their lender or ownership group, which adds weeks.

Many buyers and their lenders also ask for an estoppel certificate, a signed statement from the landlord confirming the lease terms, that rent is current and that no defaults exist. It protects the buyer from learning about a dispute after closing. Make landlord consent a condition of closing, so no one is committed to a business without a secure home.

Sellers: make the lease a selling point

A seller with a long, assignable lease on fair terms should say so early; it reassures buyers and lenders and removes a question from every buyer's list. A seller with a short or restrictive lease should deal with it before going to market, by negotiating an extension or adding assignment rights while the landlord still sees a reliable, long-standing tenant. Waiting until a buyer asks turns a fixable issue into a negotiating weakness.

Owner-held property and related-party leases

When the seller or a relative owns the building, the lease deserves extra scrutiny, because it was probably never negotiated at arm's length. The rent may sit above or below market, the term may be informal or month to month, and important clauses may be missing altogether. Buyers should expect a new, properly drafted lease as part of the deal, at a rent that reflects the market, so the company's earnings show what it will actually pay after closing. Sellers who own their property should prepare that lease before going to market.

How MDR & Associates handles leases in a sale

When MDR & Associates represents a seller, lease terms are reviewed before the company is marketed, so issues are raised early rather than discovered at closing, and buyers see the key terms in the information they receive. Buyers who want to see how our process works can start at our buyer page.

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Questions owners ask next

What is an estoppel certificate?

It is a signed statement from the landlord confirming the key facts of a lease: the rent, the term, any amendments, that rent is paid and that neither side is in default. Once signed, the landlord generally cannot later claim different facts against the buyer. Buyers and lenders often ask for one before closing.

What if the lease has only a year or two left?

Treat it as a risk to resolve before closing. Negotiate a new lease or an extension with the landlord, ideally with renewal options, before you commit. A lender may require a term that matches the loan. If the landlord will not commit, reflect the relocation risk in your price or reconsider the deal.