Expert: Stephen A. Cross, CCIM - 12/27/2010

Question
I recently decided to sell my business and have a buyer who has agreed to a price. The buyer has gone as far as to have contracts drawn up by his attorney but wants to make sure that he can have the lease reassigned. Unfortunately there is bad blood between the landlord and my self and he is trying to prevent the sale. The buyer has excellent credit and has a significant amount of business experience. The buyer has agreed to multiple demands by the landlord who just told the buyer (after a month) of conversations) that he does not want the lease to transfer... he told the buyer to let me go bankrupt and then he would rent to the buyer. I am not in danger of going bankrupt. I have other business opportunities in front of me and wish to move on them. Following is the clause in my lease which i feel pertains to this question:

5. Tenant is expressly granted the right to transfer this lease to a new similar business if the current business is sold. The Landlord must be informed, and must approve the transfer of the lease. Tenant shall provide written notification to the Landlord of any such transfer ninety (90) days prior to the effective date of such assignment.

The lease is signed by me personally and is not in the name of the business. It was countersigned by the prior Landlord of the property who subsequently sold to the current Landlord. The current Landlord assumed the lease at closing and has not signed the lease. He is unhappy with the terms and wants more money. The prospective purchaser of my business has agreed to an increase in rent for the duration of the lease. But now the landlord says that he would rather run me out of business and than look to rent the property to the same buyer so that I will get no money from the sale.

Do I have any recourse? My buyer is extremely frustrated and will not hang around much longer. He also has other opportunities.

Answer
Seth:

The current owner assumed all of the terms of your lease when he acquired the property.  Because you have the right to sell (transfer) the business, the landlord may be in violation of a legal concept generally referred to as "unreasonably withholding his consent".   

Further, by withholding his timely consent of the transfer he may he liable (to you) for monetary damages for "tortuous interference".      

I suggest you speak to an experienced real estate attorney about these concepts.

Best wishes.

Steve
Stephen A. Cross, CCIM