Most restaurants sell with the space rented, so the deal usually stands or falls on the landlord consenting to a lease assignment. Where a lease requires consent, s.23 of Ontario’s Commercial Tenancies Act generally deems that consent is not to be unreasonably withheld — unless the lease expressly says otherwise. Read the lease before you list, not after.
Why does the lease matter so much when you sell a restaurant?
Because in most restaurant sales, the buyer is not buying a building. They are buying equipment, leaseholds, goodwill and — above all — the right to keep trading from your location. That right lives in your lease, and it depends on a third party who is not at the table: your landlord.
A restaurant with a loyal following at a specific corner is worth what it is worth largely because of that corner. If the buyer cannot step into your tenancy on terms they can live with, there may be no deal to do at all.
So the professional sequence is simple: the lease review comes first — before a listing, before a price conversation, before anything becomes public.
Can my landlord refuse consent to a lease assignment?
The general rule in Ontario is that consent cannot be unreasonably withheld — but that rule is subject to your lease’s own wording, and you should have your lawyer confirm how it applies to you.
Here is where the rule comes from. Under s.23 of the Commercial Tenancies Act, where a commercial lease contains a covenant against assigning or subletting without the landlord’s licence or consent, that covenant is deemed to be subject to a proviso that the licence or consent is not to be unreasonably withheld — unless the lease contains an express provision to the contrary. That last clause is the part sellers miss. The parties can contract out of the protection, and commercial leases drafted by landlords’ lawyers sometimes do exactly that.
In other words: do not assume you have the benefit of the “not unreasonably withheld” standard. Your lease might instead let the landlord withhold consent in its sole discretion, or attach conditions that change the economics of your sale. Only a careful read of the actual document — by a lawyer — answers the question.
Am I still on the hook after the lease is assigned?
Quite possibly, yes. Assigning a lease is not the same as walking away from it. Many commercial leases keep the original tenant liable even after an assignment — meaning that if the buyer stops paying rent two years from now, the landlord may come looking for you.
It is one of the most important points to negotiate, and one of the least negotiated, because sellers rarely know it exists until a lawyer flags it. The professional approach: ask for a release from the landlord as a condition of the assignment. If a full release is not achievable, the fallback is an indemnity from the buyer, so a future default is theirs to answer for, not yours.
Neither happens by default. They happen because someone asked early, while there was still leverage in the deal.
Which lease clauses should I review before I list?
Here is the checklist I work through with sellers and their lawyers at the start. Each clause can change the price, structure or feasibility of the sale.
| Clause | What to look for | Why it matters to your sale |
|---|---|---|
| Assignment & consent triggers | What exactly requires consent: assignment, sublet, licence, change of control | Determines whether the landlord has a say — including on a share sale |
| Standard for consent | Is consent “not to be unreasonably withheld”, or has the lease contracted out of s.23? | Sets how much room a landlord has to say no or attach conditions |
| Continuing liability | Does the original tenant stay liable after assignment? | Without a release or indemnity, the buyer’s future default can become your problem |
| Deposit treatment | What happens to your deposit on assignment — returned to you, credited to the buyer, or topped up | Real money at closing; it should be dealt with in the agreement, not assumed |
| Landlord’s costs | Who pays the landlord’s legal and administrative costs of reviewing the assignment | Often the tenant — budget for it and decide who bears it in the offer |
| Remaining term & renewals | Years left on the term, and whether renewal options survive assignment | A short remaining term with no options hurts value; buyers pay for runway |
| Demolition / redevelopment | Any landlord right to terminate for demolition or redevelopment | Can undermine the entire premise of the sale — buyers and their lenders will find it |
Nothing here is exotic. It is simply what a serious buyer’s lawyer will ask within days of signing a confidentiality agreement — the seller should know the answers first.
How does the remaining term affect what a buyer will pay?
Directly, and more than most sellers expect. A buyer taking over a restaurant needs years to recover their investment. If your lease has little term left and no renewal options — or options that do not survive an assignment — the buyer is building on ground that could disappear. That uncertainty comes straight off the price, or returns as a condition that the landlord grant a new or extended term.
The practical move: before listing, find out where you stand on term and renewals, and ask your lawyer whether approaching the landlord for an extension — at the right moment, without tipping your hand — strengthens your position. Sometimes the most valuable pre-market step is not a renovation; it is securing lease runway.
What about demolition and redevelopment clauses?
Treat them as a headline issue, not fine print. A demolition or redevelopment clause gives the landlord a path to end the tenancy to make way for a new project. In parts of the GTA where redevelopment pressure is real — the Queensway corridor I work from is a good example — buyers are alert to this. A buyer who finds a demolition clause late in diligence does not just reprice; they often walk.
If your lease has one, know before the buyer does, and have a strategy: what the clause requires of the landlord, what notice you would get, and how to present it honestly.
How I help
Commercial and business sales — including restaurants — are part of my practice, alongside residential work across the GTA. My role is the confidential marketing and the negotiation: finding qualified buyers quietly, framing the lease position honestly, and keeping the deal moving. Your lawyer and accountant handle the legal and tax execution — and on a lease assignment, your lawyer’s read of the document is the one that counts.
The takeaway
Your lease is not paperwork that follows the sale — it is the asset being sold, or close to it. Read it first, with a lawyer. Know your consent triggers, your consent standard, your continuing liability, your deposit treatment, your remaining term and any demolition rights before a buyer ever hears your restaurant is for sale. Sellers who do this negotiate from knowledge; sellers who do not negotiate from surprise.
Thinking about selling your restaurant?
Send me a note about your situation — location, concept, rough timeline — and I will give you a straight read on how your lease position affects a sale, in a confidential, no-obligation conversation. No pitch, no obligation.
connect@jatindua.com · 437-987-1925 · Book a confidential consultation
Confidential. Reviewed personally and answered within 24 hours. I never share, sell or distribute your information.
Frequently asked questions
Do I need my landlord’s consent to sell my restaurant?
If the buyer is taking over your leased premises, almost certainly. Most commercial leases require the landlord’s consent to an assignment, and many extend the requirement to sublets and changes of control of a tenant corporation. Check the lease with your lawyer before listing — the consent triggers vary from lease to lease.
Can a landlord in Ontario unreasonably refuse consent to a lease assignment?
As a general rule, no. Where a lease requires consent to assign or sublet, s.23 of the Commercial Tenancies Act deems that consent is not to be unreasonably withheld. But the section applies unless the lease expressly provides otherwise — parties can contract out — so the answer always depends on your lease’s own wording. Have your lawyer confirm.
Am I still liable on the lease after I assign it to the buyer?
You may be. Many commercial leases keep the original tenant liable after assignment, so a future default by the buyer could come back to you. Ask your lawyer to negotiate a release from the landlord, or failing that an indemnity from the buyer.
Who pays the landlord’s costs of approving an assignment?
It depends on the lease, but tenant-pays wording is common — the lease may require the tenant to cover the landlord’s legal and administrative costs of reviewing the consent. Find out before you negotiate, and address in the agreement of purchase and sale who bears the cost.
Sources
- Commercial Tenancies Act, R.S.O. 1990, c. L.7 (e-Laws). Section 23, the deemed proviso that consent to assigning or subletting is not to be unreasonably withheld unless the lease expressly provides otherwise. Accessed 13 August 2026.
Related reading
- How to sell a restaurant in Ontario — the complete guide
- What is your restaurant actually worth? Valuation in Ontario
- The most expensive mistakes restaurant sellers make in Ontario
About the author — Jatin Dua
Jatin Dua is a licensed Realtor with RE/MAX Quantum Realty in Etobicoke, Toronto. Commercial and business sales — including restaurants — are part of his practice, alongside residential work across the GTA. Content on this page is checked against primary sources — the AGCO, ontario.ca and the CRA — before publishing.
Reach him at connect@jatindua.com or 437-987-1925.