When a pharmacy is sold, the landlord usually has to agree before the lease can move to the buyer. The landlord is entitled to ask who the buyer is, whether they can pay the rent and how they plan to run the store. Where the lease says consent will not be unreasonably withheld, the landlord needs a real reason to say no, but the landlord does not have to say yes, and the tenant who claims a refusal was unreasonable has to prove it. Silence, a new rent demand or a right to take the premises back can each stop a sale that everyone else has agreed to.
At PharmacyBroker.ca the landlord’s consent is the step we watch most closely between a firm letter of intent and closing, because it is the one approval nobody on the deal controls. This is article 4 in our Lease is Everything series. Article 3 covered the four ways a lease changes hands and what each province’s statute does when the lease is silent. This one is about the request itself: what the landlord can ask for, how it goes wrong, what the courts have said, and what the purchase agreement should say.
What a consent request is
A consent request is the tenant asking the landlord, in the form the lease requires, to approve a specific transfer: an assignment to a named buyer, a sublease, or a change of control of the tenant company. Most leases say the request must be in writing, identify the proposed transferee, and come with enough information for the landlord to decide. A chat with the property manager does not start the clock, and an email saying “sounds fine” is not consent.
What the landlord is entitled to see depends on the clause, but in the deals we work on the list is consistent: a business plan, the buyer’s resume, a credit check, references, personal or corporate financial statements, and guarantors. Depending on the buyer’s financials, the landlord may want a meeting before signing. Legal commentary on commercial assignments lists the same material: financial strength, guarantors, experience, reputation, proposed use, existing defaults, credit reports and financial statements, subject to the lease.
All of it is within the landlord’s rights, and buyers should not resist it. A pharmacist’s licence proves the buyer can run a dispensary. It does not prove they can pay the rent for the next ten or fifteen years, and the landlord is entitled to the documents that do. A buyer who argues about the package slows the answer, and a slow answer hurts both sides.
The consent package and when to send it
Tell the landlord as soon as there is a firm letter of intent and the purchase agreement is being drafted. Not at due diligence, and not when the lender asks for the estoppel certificate. The sooner the landlord has the package, the sooner the consent, the landlord waiver and the estoppel exist for the lender, and the lender will not fund without them. Our letter of intent guide covers how to make consent a condition at that stage.
Aim to have the signed consent in hand about four weeks before closing. That leaves time for the lawyers to settle the assignment and assumption agreement, for the lender to clear its conditions, and for the College filing to land on the same date. In our experience, when lease matters are still open inside those four weeks, the closing date moves.
How long the landlord takes is the question every seller asks, and the honest answer is that there is no reliable Canadian figure. We have not found a national survey of commercial consent times, and nothing pharmacy-specific. Some leases set a deadline. Quebec’s Civil Code has a 15-day default, covered below. Everywhere else a reasonable time depends on the facts. Plan on weeks, not days.
What goes in the package, so the landlord has nothing left to ask for:
The buyer’s legal identity. The exact entity that will be the tenant, its owners, and who will sign the guarantee. A request in the wrong name has to be made twice.
Experience and the plan. A short resume and a business plan that shows how the buyer will run the pharmacy, keep the staff and keep the patients.
Financial capacity. Personal financial statements, the financing commitment or a lender’s letter, and the equity going in, sent through an agreed secure process rather than as email attachments.
Proposed use and closing date. Confirm the use stays within the permitted use clause, flag anything new (compounding that needs ventilation, or an opioid agonist treatment program, both of which some landlords and some municipalities resist), and give the target closing date.
What you need back. The consent, the assumption agreement, the estoppel certificate and landlord waiver for the lender, and the release of the seller if the lease allows one. Landlords move faster when they can see the finish line.
Before it goes in, find out who at the landlord actually has authority to approve, and whether the landlord’s own mortgage lender has to consent too. Both can add weeks if they surface late.
Ten ways consent derails a sale
The research behind this series pulled the ways a lease stops a sale into one table. Here it is in plain language, with what we do about each.
| What happens | What it does to the sale | What to do |
|---|---|---|
| Silence or slow processing | The financing commitment, lease condition or outside date expires before anything is signed | Find the right notice address and decision-maker, send a complete package, record receipt, build extension mechanics into the agreement |
| New rent or new lease demanded | Higher rent cuts the buyer’s cash flow; a new form can add demolition, relocation or guarantee exposure | Separate what the lease permits from what the landlord now wants; model every change before agreeing |
| Recapture or termination | The landlord takes the premises back when the request is made | Read the clause before asking; negotiate its removal or a right to withdraw the request |
| Change of control caught | A share sale, holding company sale or reorganisation falls inside the lease’s definition of a transfer | Map the whole corporate transaction against the clause, not just the name on the lease |
| Not enough term left | Consent is available but the buyer still has too little secure occupancy for its lender | Treat an extension or replacement lease as a separate deliverable with agreed economics |
| Covenant-strength refusal | The buyer’s company has little capital, weak credit, thin experience or an unconvincing plan | Explain the equity, financing, experience and security package in the first submission |
| Deposit and guarantee demands | Cash needed at closing rises, or the seller cannot get the release they expected | Negotiate security and releases early |
| Existing default | Arrears, unapproved alterations, use breaches or missing insurance give the landlord a defensible reason to refuse | Get the landlord’s position before marketing, cure what is real, document what is disputed |
| Lost options or rights | The buyer gets the current term but loses a renewal option, exclusive use or signage right | List every right that must survive in the consent and assumption agreement |
| Wrong tenant entity | The company being sold is not the one on the lease | Reconcile entities and prior assignments before choosing asset or share structure |
Nobody has measured how often each of these happens in Canadian pharmacy sales, and we will not pretend to. In our own experience, slow answers and new demands account for most of the lease trouble we see, and the outright refusals we have seen were for creditworthiness and similar reasons the lease allowed.
What “consent not unreasonably withheld” means
Most pharmacy leases say the landlord’s consent to an assignment “shall not be unreasonably withheld”. Several provinces read that into the clause by statute unless the lease says otherwise; article 3 has the province-by-province table. The words do less than sellers hope.
The Ontario courts have set out the framework most often. A landlord acting reasonably looks at the lease wording, the information it had when it decided, the reasons it gave at the time, the proposed tenant’s finances and risk of default, market circumstances and the economic effect on the landlord. The tenant who alleges an unreasonable refusal carries the burden of proving it. The court does not simply substitute the outcome the tenant wanted.
In practice, three reasons for a refusal tend to hold up: a buyer who cannot show the means to pay, a use the lease does not permit, and an unresolved material default. Three responses tend to be vulnerable: saying nothing, demanding a concession that has nothing to do with the transfer, and using the request to get rid of a tenant the landlord would rather not have. Each ground needs evidence and a connection to the lease, and none of this is a national checklist.
What the courts have actually said
These are the cases we point sellers and buyers to, in plain language with the limits that matter. None of them makes a rule for your lease, and most turned on the wording in front of the court.
Rabin v. 2490918 Ontario Inc., 2023, Ontario Court of Appeal. A dentist selling the practice asked the landlord to consent to assigning the lease. The lease gave the landlord 15 days to respond. The landlord missed the deadline, then asked for a demolition clause that would let it end the lease on 24 months’ notice, then made late and excessive information demands. The court ordered relief equivalent to consent. The lesson: a landlord cannot use the request to rewrite the lease. The limit: the 15 days came from that lease, not from Ontario’s statute, which has no general deadline.
Tabriz Persian Cuisine Inc. v. Highrise Property Group Inc., 2022, Ontario Court of Appeal. A restaurant tenant found buyers three times. The landlord refused until an unauthorised patio was removed, and also wanted the tenant to drop separate litigation. The refusal was upheld, because fixing the patio breach was a legitimate primary concern on those facts, though the court did not accept that one good reason cures every bad one. The lesson: clean up your defaults before you list.
Tradedge Inc. v. Tri-Novo Group Inc., 2009, Ontario Court of Appeal. The court upheld a finding that the landlord withheld consent to extract higher rent, and that this was unreasonable on the facts. It expressly declined to say a rent-increase request can never be reasonable. The lesson: holding consent hostage for money is weak ground. The limit: a landlord asking for revised terms is not automatically unreasonable.
550 Capital Corp. v. David S. Cheetham Architect Ltd., 2009, Alberta Court of Appeal. The lease promised reasonable consent but also let the landlord terminate when the tenant asked to assign, with no way to withdraw the request. The court found the termination right irreconcilable with the promise of reasonable consent in that lease. The lesson: a recapture clause can gut the consent promise. The limit: the decision does not invalidate all recapture clauses. It also shows that incorporating or reorganising a business can be a real transfer under a lease even when the same people stay behind the counter.
Jens Hans Investments Co. v. Bridger, 2004, British Columbia Court of Appeal. A tenant proposed subtenants more than once and the landlord repeatedly failed to respond. The court treated the repeated silence as unreasonable withholding under the lease, and in that case the change in risk discharged the indemnifier. The lesson: silence is not a safe position for a landlord. The limit: do not stop paying rent or assume a guarantee is gone without a legal opinion.
Persica Consulting Inc. v. Wescana Properties Inc., 2021, British Columbia Supreme Court. The tenant’s claim that consent was unreasonably refused was dismissed. Counsel for the landlord reports that bundling the assignment request with a request for a longer term took it outside the landlord’s promise to act reasonably. The lesson for buyers: a right to transfer today’s lease is not a right to improve it. Negotiate an extension separately, and start earlier.
This is general information, not legal advice. Have your lawyer read your lease.
When the landlord asks for more
The consent request is the one moment in a lease when the landlord has something the tenant badly needs, and some landlords use it. In our experience the renegotiation attempts come mostly from individual landlords. Large corporate landlords have lease managers who price any new rent to the forward-looking market and move on; they are, if anything, a bit easier to deal with. Many private landlords are excellent too, and they usually move faster because one person decides. A private landlord is simply more likely to see the request as an opening.
Expect a private landlord to ask the buyer to cover its legal costs for reviewing the package and preparing the consent. That is normal and not worth a fight. Institutional landlords have in-house legal and usually do not ask.
A request for higher rent, a new guarantee or a new lease is different, and Tradedge is the reference point: holding consent for money was unreasonable on those facts, but a rent request is not always unreasonable. If the lease already lets the landlord share in assignment profit, demand updated security or set financial thresholds for an assignee, those terms were bargained for. If the demand is new, and appears only because the seller needs consent, that is a question for your lawyer.
Whatever the landlord asks for, do the arithmetic first. On our standard example, $30,000 a year of extra rent on $300,000 of normalized EBITDA takes about $150,000 off the value of the pharmacy at a 5 times multiple. The question is who pays for it, the buyer in rent or the seller in price, and that belongs in the purchase agreement, not in a phone call the week before closing.
Recapture clauses
A recapture clause lets the landlord respond to a consent request by ending the lease or taking the premises back, rather than approving the transfer. In a pharmacy sale it means the act of asking can cost the buyer the location.
Termination rights exist in pharmacy leases as they do elsewhere. In the leases we see, they are usually tied to things the tenant controls: illegal activity, loss of the pharmacy’s good standing with the College, or closure of the pharmacy. A recapture right triggered by an assignment request also exists, and it is exactly the clause a seller discovers too late.
Read for it before anyone asks for consent. If it is there, negotiate before the request, not after: ask the landlord to remove it, to confirm in writing that it will not be exercised for this transfer, or at least to agree that the tenant can withdraw the request and keep the tenancy if the landlord elects to recapture. The Alberta decision above is the reason landlords sometimes agree.
When the landlord says nothing
True silence, a landlord who simply does not respond, is rare in our experience. Slow is common; silent is not. When it does happen, the instinct is to keep sending friendly reminders. Do not. Involve your lawyer early, because the steps that protect you have to be done properly.
Check the lease for the notice clause and use it: the right address, the right method, the right recipient. A request emailed to the property manager when the lease requires registered mail to the head office may not have started anything. Record receipt, and make sure the package is complete, so the landlord cannot later say it was waiting for information.
Where the lease requires reasonable consent, a landlord that does not respond at all is in a weak position. The BC Court of Appeal treated repeated silence as unreasonable withholding in the 2004 case above, and a failure to respond promptly can amount to the same thing in Ontario. Quebec sits apart: under the Civil Code the landlord has 15 days to refuse for a serious reason it states, and silence past that is deemed consent unless the lease changes the default. Elsewhere, where the statute gives a court route, as in Ontario and Manitoba, a court can authorise the assignment, though the time that takes is itself a problem for a deal with a closing date.
Which is why the real protection against silence is in the purchase agreement, not the courthouse. A lease condition with a deadline and an outside date decides what happens if the landlord never answers: whether the buyer can walk, whether the parties extend, and who carries the cost of the delay.
Physician-owned buildings
Medical buildings owned by the physicians who practise in them come up often in pharmacy sales, and we like them. The clinic and the pharmacy depend on each other, the relationship improves patient care, and both sides know it. A pharmacy for sale in a building like this is attractive to buyers, and rent is sometimes higher because of it. Exclusivity for the pharmacy in a large building is worth asking for.
For consent, expect the personal review to matter more than the credit review. Physician landlords want to know who the new pharmacist is, so expect to be asked for a meeting. The buyer’s lender will ask about the clinic’s own term and physician succession, because a landlord who is also the main prescriber is a concentration risk; our guide to pharmacies with medical clinics covers that side. One caution: rent must be ordinary local rent, unrelated to referrals, and in Ontario that is a regulatory rule on both the physician and the pharmacist side.
What the purchase agreement should say
The landlord’s answer is outside everyone’s control, so the purchase agreement has to say what happens either way. These are the terms we expect to see, starting in the letter of intent and carried into the definitive agreement.
The required lease result, stated exactly. Not “landlord consent” but what consent means for this deal: an assignment with the renewal options, exclusivity and signage rights intact, or change of control consent for a share sale, or an extension to a stated term, or a new lease on stated economics. If the buyer’s lender needs a specific remaining term, say so.
Who obtains it, and who helps. Usually the seller requests consent as the tenant, and the buyer must supply the package promptly and attend any meeting the landlord asks for. Write both obligations down, with dates.
The deadline and the outside date. A date by which consent must be in hand, and an outside date after which the condition is waived or the deal ends. Say who can waive it. A buyer whose bank will not fund without consent cannot sensibly waive it, so the outside date usually belongs to the buyer, with a right to extend by agreement.
What happens if consent arrives with new terms. This is the clause most often missing. If the landlord consents on condition of higher rent, a larger deposit, a new guarantee or a new lease form, does the buyer have to accept it, does the price adjust, or can either side walk? A pharmacy for sale at a price built on today’s rent is a different pharmacy at tomorrow’s rent. Say whose problem that is before it happens.
What the landlord documents must include. The consent, the assumption agreement, the estoppel certificate and landlord waiver for the lender, and the release of the seller and its guarantors if that is the deal. Article 6, you sold the pharmacy, are you still on the lease?, explains why consent and release are not the same document.
The clauses that prevent most of this are written years earlier, in the original lease. Arash now insists his own leases say in plain words that the pharmacy may be sold and what the landlord may ask of an assignee, so that consent is a formality rather than a negotiation. Article 5, lease clauses that protect a future pharmacy sale, has the full list.
Where this leaves you
The landlord is entitled to ask who is taking over the lease, and a well-prepared buyer should welcome the question. The problems come from a landlord who uses the request to rewrite the lease, or who takes too long. Both are manageable if the request goes in early, the package is complete, and the purchase agreement says what happens when the answer is no, late or conditional. Our sale process and timeline guide shows where consent sits in the wider schedule.
If you are thinking about selling, start with the lease and the consent clause. Our valuation calculator gives you a starting range in a few minutes, or request a valuation and we will read the lease alongside the numbers.