Dr. Rabin ran a dental practice out of the same Ontario building for 44 years. In late 2020, ready to wind down, he found two buyers for the practice and asked his landlord to consent to assigning the lease to them, the same lease he’d been paying on for over four decades. Article 11.1 of that lease gave the landlord 15 days to respond and said consent could not be unreasonably withheld. The landlord let the 15 days pass without an answer.
That was the whole case. Not whether the buyers were creditworthy, not whether their business plan made sense, not whether the landlord had a legitimate concern about the new tenant. The Ontario Court of Appeal held that missing the response deadline was, on its own, unreasonable withholding, and Dr. Rabin’s sale went through over the landlord’s objection.[1]
The reasonableness standard everyone cites when negotiating an assignment clause does almost nothing by itself. What actually decides these disputes is procedure, and most leases are vague about the procedure.
1. “Reasonable” is a five-factor balancing test, and balancing tests are how landlords buy time. Courts applying the standard ask about the assignee’s creditworthiness, the landlord’s stated reasons, the specific lease terms at issue, the assignee’s financial position, and the general commercial context.[1] None of that resolves quickly. A landlord who wants to slow a sale down doesn’t need to refuse; asking for one more round of financials, or raising a use-restriction question that takes another two weeks to answer, accomplishes the same thing without ever triggering a reasonableness fight. Rabin’s landlord lost because the lease happened to specify a deadline. Most don’t.
2. The clause that bans “reasonable withholding” usually also authorizes the exact leverage that makes reasonableness beside the point. In multiple jurisdictions, courts have held it’s unreasonable for a landlord to withhold consent purely to extract an economic concession, like demanding a higher rent from the new tenant as the price of saying yes.[2] But that rule only stops a landlord from inventing leverage the lease doesn’t already give them. Plenty of leases hand it over on purpose: a transfer premium clause that splits any rent increase between old and new rent, or a recapture option that lets the landlord take the space back the moment a tenant asks to assign it, before any buyer is named.[3] Neither one requires the landlord to act unreasonably. Both get to the same result as a flat refusal.
3. Where the lease is silent, the default rule is not the same everywhere, and silence usually favors the landlord. California statute implies a reasonableness standard even when the lease doesn’t say so.[4] Plenty of other states don’t fill that gap the same way, and a lease that requires consent without ever using the words “not unreasonably withheld” can leave a landlord free to say no for any reason, or none. Tenants who assume reasonableness is the default because it’s the industry norm find out otherwise the day they need it.
None of this is theoretical for the seller. Buyers financing a Main Street acquisition through an SBA loan generally need the remaining lease term, including options, to cover the loan term, often ten years, or the deal doesn’t get financed at all. And the assignment approval itself, quoted at 10 to 15 business days in a clean case, routinely drags to 30, 45, or 60, with buyers getting nervous and some walking well before that.[5] One brokerage that works Main Street deals put it plainly: lease assignment derails more of their sales than financing does.[6]
What consent standards miss on both sides#
Every lease in a landlord’s portfolio, or a tenant’s footprint, answers “who has to agree, and by when” a little differently. Some say nothing about a deadline. Some pair a reasonableness standard with a transfer premium or recapture right that guts it. Some are silent enough that the answer depends on which state’s default rule fills the gap. Acrebase extracts the assignment and consent language from every lease across a portfolio, flags which ones lack a response deadline, and surfaces recapture or profit-sharing rights that sit next to a “not unreasonably withheld” promise and undercut it, with every flag traced back to the clause it came from.
It also applies a firm’s approved fallback language automatically, so a landlord’s standard deadline-and-factors language, or a tenant’s standard no-recapture, no-premium position, gets proposed the same way across every deal instead of depending on who happened to draft that particular lease, and its AI can flag when a counterparty’s assignment language departs from terms the firm has already fought over and settled.
If you are a tenant, negotiate a specific response deadline with a deemed-consent default if the landlord misses it, and get any transfer premium or recapture right removed or capped before you sign, not after you have a buyer and thirty days on the clock. If you are a landlord, know that a reasonableness standard without a stated deadline invites exactly the kind of foot-dragging that got the landlord in Rabin found unreasonable anyway; a clear, workable timeline protects you as much as it protects the tenant trying to sell.
Footnotes
[1] Rabin v. 2490918 Ontario Inc., 2023 ONCA 49 (Ont. C.A., Jan. 27, 2023) — Court of Appeal held a landlord’s failure to respond within the lease’s 15-day window was itself unreasonable withholding of consent to a lease assignment, applying a five-factor reasonableness test. https://www.loopstranixon.com/insights/publication/is-your-commercial-landlord-justified-in-withholding-consent-to-assign-your-lease
[2] Bean, Kinney & Korman, “Assignment and Consent Standards in Commercial Leases” — describes the established rule in multiple jurisdictions, including Washington, D.C., that a landlord may not withhold consent to an assignment solely to extract an economic concession, such as a higher rent from the incoming tenant. https://www.beankinney.com/article/assignment-and-consent-standards-in-commercial-leases/
[3] On recapture as an alternative to a consent fight, see the discussion of landlords reclaiming space rather than evaluating a proposed assignee in The recapture clause, and why it bypasses reasonableness entirely.
[4] Cal. Civ. Code § 1995.260 — where a lease requires landlord consent to a transfer but states no standard for granting or withholding it, the statute implies that consent may not be unreasonably withheld. https://www.lawinsider.com/clause/consent-not-to-be-unreasonably-withheld
[5] Indiana Equity Brokers, “Can a Landlord Kill Your Business Sale?” — cites 10-15 business days as a typical approval window that can extend to 30, 45, or 60 days, and notes SBA lenders generally require the remaining lease term to cover the loan term. https://indianaequitybrokers.com/can-a-landlord-kill-your-business-sale/
[6] South Florida Business Sales, “Lease Assignment When Selling a Business” — “Lease assignment when selling a business is the step that quietly derails more South Florida deals than financing ever does.” https://www.soflabusinesssales.com/lease-assignment-when-selling-business/
Acrebase is AI-powered contract intelligence for commercial real estate — clause extraction, risk flagging, and portfolio-wide search, plus tools for maintaining a consistent clause library and negotiation playbook across every deal a team runs. Learn more at acrebase.com, or get in touch about pricing.