This recent Norton Rose Fulbright blog addresses the sometimes thorny issues associated with the need to obtain landlord consents in stock or asset purchase transactions. Here’s an excerpt:
In share purchase transactions, attention must be paid to change of control provisions, which may or not be considered a transfer or assignment under the terms of the lease. If the transaction falls under the definition of transfer / assignment, or change of control, landlord consent will likely be required.
That being said, what if it is not clear on the face of the lease whether the transaction is such that landlord consent is required? Similarly, if it is not clear whether consent is required, should a landlord consent request be sent in any event?
The urge must be resisted to provide landlord consent requests where landlord consent is not required under the terms of the lease. Providing a landlord consent where one is not required under the terms of the lease may suggest to the landlord that their consent is required, and could end up providing the landlord with more rights than they were originally granted under the terms of the lease. Furthermore, the landlord may object to the terms of the consent or transaction, but having provided them with same, it may be difficult to take such agreement back without wasting client time and money on an issue that was not an issue to begin with.
The blog also addresses interpretive issues associated with covenants from the landlord not to “unreasonably withhold” consent to a proposed assignment, and says that consent issues need to be surfaced & a strategy for resolving them mapped out early on in the transaction.
– John Jenkins