A pharmacy lease changes hands in one of four ways when the pharmacy is sold. The seller assigns the existing lease to the buyer. The seller subleases the premises to the buyer and stays on the head lease. The buyer purchases the shares of the tenant company, so the lease never moves at all. Or the landlord ends the old lease and signs a new one with the buyer. Each route needs a different kind of landlord approval, leaves a different person liable for the rent, and lands differently on the price.
At PharmacyBroker.ca we see all four, and the route is rarely a free choice. It is decided by two documents: the purchase agreement, which says whether this is an asset sale or a share sale, and the lease itself, which says what the landlord can demand when either happens. This is article 3 in our Lease is Everything series: what each route does to the seller, the buyer and the landlord, and the order to do things in so the landlord, the lender and the College all land on the same closing date.
Four routes, one question
Behind all four routes sits the same question: after closing, who has the right to occupy the premises, and who does the landlord look to for the rent?
| Route | What moves | Seller | Buyer | Landlord |
|---|---|---|---|---|
| Assignment | The lease transfers to the buyer for the rest of the term | Hands over the lease, stays liable unless released | Steps into the existing lease and rent | Consents, usually after reviewing the buyer |
| Sublease | The seller stays the tenant and rents to the buyer | Stays on the head lease, collects rent from the buyer | Gets occupancy only, within the head lease | Consents; the tenant is still the seller |
| Share sale (change of control) | Nothing moves; the tenant company’s owners change | Sells the company with its lease inside | Owns the company, its lease and its history | Consent needed only if the lease treats a change of control as a transfer, and many do |
| New lease | The old lease is surrendered, the buyer signs a fresh one | Usually a clean exit with a release | Negotiates every term, often at today’s rent | Sets new rent, guarantor and terms |
Assignment: the usual route in an asset sale
In most asset sales the lease is assigned. The seller, the buyer and the landlord sign an assignment and assumption agreement, or the landlord signs a separate consent. From closing, the buyer holds the tenant’s rights and carries the tenant’s obligations, and the term, the options and the rent schedule carry on as written.
Almost every commercial lease requires the landlord’s consent to an assignment, and what the landlord can do with that consent depends on the clause. Where the lease gives it the right, the landlord can confirm who the buyer is, review the buyer’s financials and credit, and ask for guarantors. Where it does not, the usual outcome in the deals we work on is that the current leaseholder stays on as indemnifier for the buyer. Article 4, when the landlord says no, or says nothing, covers what landlords can ask for and what happens when the answer is slow or negative.
Two things to check in the assignment itself.
Do the options come with it? Some leases grant renewal options to the named tenant personally and let them fall away on assignment. If the buyer’s bank is counting those options toward the amortization, and most will, the lease is shorter than it looks.
Does the request ask for anything new? A right to transfer today’s lease is not a right to improve it. In a BC case from 2021, a tenant bundled a longer term into its assignment request, and the court accepted that this took the request outside the landlord’s promise to act reasonably. If the buyer needs an extension, run it as a separate negotiation and start it earlier.
Sublease: fine for the bank, with strings attached
A sublease happens when the seller keeps the head lease and rents the premises to the buyer. In pharmacy it usually means a pharmacy inside a medical clinic that holds the lease, or a seller who holds a larger unit and is only selling the pharmacy part of it.
For financing, a sublease is workable. Every lender we have worked with tests a sublease the way it tests a lease: the remaining term, including solid options, has to cover the amortization. A ten-year sublease under a twelve-year head lease is fine. The lender will want the head lease, the sublease and the head landlord’s consent.
The strings are operational. A subtenant can never have more than the head tenant has, and usually has less. In our experience a pharmacy that subleases from a medical clinic is tied to the clinic’s hours: when the clinic closes, the pharmacy closes. Signage, access, parking, deliveries and permitted use are whatever the head lease allows, filtered through what the head tenant passes on. The renewal is often in the head tenant’s hands. And if the head tenant defaults, the subtenant can lose the premises through no fault of its own unless the head landlord has signed a non-disturbance agreement.
If you are looking at a pharmacy for sale that occupies under a sublease, ask for both documents on day one. The head lease decides how long you are really there.
Share sale: the lease stays put, so read it anyway
Share sales have become more common in the deals we work on, and the reason is tax. In 2026 the lifetime capital gains exemption shelters up to $1,275,000 of gain on qualifying small business shares, and it is only available when the seller sells shares, not assets. Asset sales favour buyers and still happen often, and many buyers do not mind either. Our guide to asset sales versus share sales covers the tax and liability trade-offs; this section is only about the lease.
In a share sale the tenant company does not change, so the lease is not assigned and nothing is signed with the landlord. That is why sellers like it, and why the lease has to be read before the structure is chosen.
The change of control clause. Many commercial leases define a transfer to include a change in control of the tenant: a sale of a majority of the voting shares, a change in who controls the board, sometimes a change in the owner behind a holding company. Where that language exists, the share sale is treated as an assignment and needs the landlord’s consent, with the same review of the buyer. Where it does not, the landlord may be owed notice, or nothing. Thresholds matter: some clauses catch only a majority sale, others any new shareholder above a stated percentage.
Partial sales and new partners. This is the version that surprises owners. Bringing in a pharmacist partner at 30 percent, selling half the shares to a family member, or moving shares into a family trust can each be a change of control under a broad clause, even though the pharmacy, the staff and the sign are unchanged. An Alberta appeal case from 2009 is the warning: incorporating or reorganising a business can be a real transfer under the lease even when the same people stay behind the counter.
Arash has changed how he writes his own leases because of this. He now insists that the lease says in plain words that the pharmacy may be sold and that assignment should be as easy as possible, and that it states whether consent applies to a share sale, an asset sale and a partial sale, including whether the landlord needs to be told about a new partner. Most landlords accept this at the first signing. It is at the assignment, years later, that some push for more. Article 5, lease clauses that protect a future pharmacy sale, has the full list.
New lease: when the landlord says start over
Some landlords, asked to consent to an assignment, answer that they would rather sign a new lease with the buyer. Sometimes that helps: the old lease has three years left, the buyer wants ten, and a new lease is the cleanest way there. Sometimes it is a way to reopen the rent.
A new lease reopens everything: base rent, escalations, the guarantee, permitted use, exclusivity, demolition, relocation and termination rights. The seller usually walks away clean, with a surrender and release. The buyer pays for it in rent, and the seller pays for it in price.
Take our standard example: $3,000,000 in sales, $90,000 of base rent, $30,000 of additional rent and $300,000 of normalized EBITDA. Suppose the new lease lifts rent by $30,000 a year. Forward EBITDA drops to $270,000. At our usual 5 times multiple that is $150,000 off the value of the pharmacy, before the buyer’s bank re-runs debt service on the lower earnings. In our experience a new lease often means higher rent, and the arithmetic is that simple.
The protection against a forced new lease is the assignment clause in the original lease. If it says the landlord will consent to an assignment to a qualified buyer, and spells out what qualified means, the landlord has far less room to insist on a new document. If the clause is vague, or gives the landlord a right to terminate instead of consenting (a recapture clause), an assignment request can turn into a renegotiation. The assignment clause is settled on the day the first lease is signed, not on the day a buyer appears.
Who is actually on the lease
Before any route can be chosen, someone has to check whose name is on the lease. In the deals we see it is wrong less often than you might fear, but when it is, it is expensive. Three versions come up.
The owner’s personal name. The pharmacy started as a proprietorship, the owner incorporated later, and the lease was never assigned to the company. The company has paid the rent for years, but the tenant of record is a person. In a share sale the buyer gets a company that does not hold the lease. In an asset sale the assignor is the owner personally, not the seller in the purchase agreement. And a transfer may already have happened without consent.
A holding company. The holding company signed the lease and the operating company runs the pharmacy. A share sale of the operating company moves the pharmacy and leaves the lease behind, so the buyer still needs an assignment or sublease from the holding company, and the landlord’s consent to it, which is the step the share sale was meant to avoid.
Old indemnifiers. A former partner, a spouse or a parent signed as indemnifier when the lease was new. They are still liable, and they may need to sign the assignment or the release.
The fix is unglamorous: pull the lease with every amendment and renewal, pull the corporate registry, and match the tenant name to the licence holder and to the seller in the purchase agreement. A pharmacy for sale with a holding company on the lease is still saleable. It just needs the lease handled as its own step.
Two approvals that do not talk to each other
Landlord consent and College approval are separate, and neither produces the other. A landlord can consent to a buyer the College has not licensed. A College can license a new owner who has no right to occupy the premises. Both have to be in place for the same closing date, and a share sale can trigger both even though the lease never moves.
Plan around the lead times. BC asks for a change of direct owner application at least 30 days before the effective date; shareholder changes may instead be indirect-owner changes with their own notice. Alberta asks for at least 45 days for a change in owners or in major shareholders at 20 percent or more. Ontario treats a purchase as a new accreditation, also 45 days. Other provinces have their own windows, and some ask for the lease or sublease as part of the filing. These are minimum lead times, not processing promises.
Tell the landlord and file with the College in the same week. If one lands a few days or weeks behind the other, extend closing. In our experience that is a nuisance, not a problem. Closing with one approval missing is the problem.
What your province says when the lease is silent
Most pharmacy leases spell out the consent process, and where they do, the lease wording usually governs. The default rule still matters when the clause is thin, when the landlord goes quiet, or when you are negotiating the clause in the first place. In plain language, here is what each province’s statute does to an ordinary commercial consent clause.
| Province | What the statute does |
|---|---|
| Saskatchewan | A consent clause is read as consent not to be unreasonably withheld, unless the lease expressly says otherwise |
| Manitoba | Same implied reasonableness for leases after 1931; a court can authorise the assignment if consent is unreasonably withheld |
| Ontario | Same implied reasonableness for leases after 1911, with a court route to an order standing in for consent; no general 15 day deadline |
| New Brunswick | Implied reasonableness, no fine for consent, reasonable expenses allowed, court route available |
| Prince Edward Island | Same as New Brunswick in substance |
| Newfoundland and Labrador | A short-form covenant not to assign is expanded by statute into written consent not arbitrarily or unreasonably withheld; a rule for short-form wording only |
| British Columbia | The Commercial Tenancy Act has no general reasonableness rule for ordinary assignments; the lease and the case law decide |
| Alberta | No commercial tenancies statute at all; the lease, contract law and the case law decide |
| Nova Scotia | We found no general consent rule in the statute; treat it like BC and Alberta |
| Quebec | Civil Code defaults, described below |
“Consent not unreasonably withheld” means the landlord needs a real reason connected to the lease: a buyer who cannot show the means to pay the rent, a use the lease does not permit, an unresolved default. It does not mean the landlord has to say yes, and the tenant carries the burden of showing a refusal was unreasonable.
Quebec is different. Under the Civil Code the tenant gives notice naming the proposed assignee or subtenant. The landlord has 15 days to refuse, must have a serious reason and must state it; silence past 15 days is deemed consent. The landlord can recover only reasonable expenses. And an assignment releases the original tenant, the reverse of the common-law position elsewhere. Commercial parties can change most of this by agreement and often do, so the signed lease still has to be read. We do not work in Quebec ourselves; this is the Code as written, not our experience.
One caution covers the whole table. Every one of these statutory rules gives way where the lease expressly says something else, which is why landlords write “in the landlord’s sole discretion” into consent clauses. This is general information, not legal advice. Have your lawyer read your lease.
Consent is not release
This is the point sellers most often miss, and it gets its own article: you sold the pharmacy, are you still on the lease? The short version belongs here because it changes which route you want.
In common-law Canada there are three documents: the landlord’s consent to the transfer, the buyer’s assumption of the lease, and the landlord’s release of the original tenant and any guarantors. Signing the first two does not get you the third. The Supreme Court of Canada confirmed in 2004 that an original tenant stayed liable on its covenant after assigning, even though the assignee later walked away from the lease. An indemnity from the buyer gives the seller a claim against the buyer; it does not stop the landlord coming to the seller first.
By route: an assignment without a release leaves the seller and guarantors exposed for the rest of the term. A sublease leaves the seller on the head lease by design. In a share sale, any personal guarantee the seller signed stays with the seller until the landlord lets it go. A new lease is the one route that normally gives the seller a clean break.
Our advice to sellers: ask for the release at closing, and do not agree to remain guarantor beyond the end of the current term, because nobody knows what the next several years hold for a business you no longer run.
The practical sequence
The order we follow in the deals we broker.
1. Before listing: know your route. Read the assignment and change of control clauses with your lawyer and confirm who the tenant is. Decide with your accountant whether you are heading for a share or asset sale, then check that the lease allows that route without a new lease. If it does not, talk to the landlord now, before there is a deadline.
2. At the letter of intent: fix the structure. The letter of intent should say whether the deal is a share or asset purchase and make landlord consent, or a new lease on agreed terms, a condition of closing. Buyers should ask for the lease at this stage, not during due diligence.
3. Firm LOI, SPA being drafted: tell the landlord. This is the moment. The sooner the landlord has the buyer’s package, the sooner the consent, waiver and estoppel certificate exist for the lender. Expect requests for a business plan, a resume, a credit check, references and guarantors, and sometimes a meeting with the buyer. All of it is within the landlord’s rights.
4. File with the College in the same week. BC’s 30 days and Alberta’s 45 run from a complete application. In a share sale, check whether the shareholder change needs its own notice.
5. Aim for consent about four weeks before closing. That gives the lender time to finish its conditions and the lawyers time to settle the assignment, assumption and release. In our experience, when lease matters are still open inside those four weeks, the closing date moves.
6. At closing: three documents, not one. Consent, assumption, release. If the release is not coming, the seller should know before signing and price it. Our sale process and timeline guide shows where these steps sit in the wider schedule.
Where this leaves you
The route your lease allows is already written in it. Sellers should know it before a buyer does, and buyers should read it before the financials.
Our valuation calculator gives you a starting range in a few minutes, with the lease term as one of the inputs. For a number built on your real figures and your actual lease, request a valuation, or book a consultation to talk through which route your pharmacy for sale should take.