Selling a business that operates from a leased site
For many buyers and lenders, the lease can matter as much as the business. Here's what to check and when to talk to your landlord.
By This article covers legal matters. It's general information to help you ask better questions, not advice for your situation. Velaro isn't a law firm, registered tax agent or licensed financial adviser. Please check anything important with a qualified adviser before you act.
In short
- Remaining lease term matters to buyers and their lenders.
- Start landlord consent early. It can take weeks.
- Ask your solicitor about being released from any personal guarantee.
If your business runs from a workshop, yard, shop or car wash site you lease, the lease will be one of the first things a buyer looks at. A short remaining term, a difficult transfer clause or an unexpected rent review can slow a sale or even stop it. The good news is that most lease issues can be sorted out if you start early.
Know what your lease actually says
Find the signed lease and any variations. Note the remaining term, any options to renew, rent review dates and how reviews are calculated, and the clause about assigning or transferring the lease.
Many leases require the landlord's consent to assign, and some set conditions such as financial references or guarantees from the buyer.
Why remaining term matters
A buyer, and any bank lending to them, usually wants confidence that the business can stay at the site long enough to earn back the price. A lease with only a year left, and no option, raises that risk.
If your term is short, consider talking to your landlord about an extension or new option before a sale. Landlords are often happy to keep a reliable tenant.
Plan for landlord consent
Landlord consent to assign a lease can take several weeks, and sometimes longer. It often requires the landlord to review the buyer's financials and experience.
Mention this early in any sale so it runs alongside due diligence rather than holding up completion at the end.
Check for make-good and other obligations
Some leases require the tenant to restore the premises at the end of the lease, known as make-good. Be clear about whether that obligation passes to the buyer and what it might cost.
Also check for outstanding rent, disputed outgoings or anything else a buyer's solicitor might raise.
Get advice on your personal guarantee
Many owners personally guaranteed their lease years ago. When you sell and assign the lease, ask your solicitor whether you can be released from that guarantee, or whether it continues.
This is easy to overlook and important for your peace of mind in retirement.
Your checklist
What to do next
- Find your signed lease and any variations
- Note the term, options and rent review dates
- Read the assignment clause
- Consider asking your landlord about an extension
- Check make-good obligations
- Ask your solicitor about releasing your personal guarantee
Example
A car wash owner had 14 months left on his lease with no option. Before talking to buyers, he negotiated a new five-year option with his landlord. It took three months, and it made the business far easier for a buyer to finance.
An illustrative example, not a real client or transaction.
Questions owners ask
Can my landlord refuse to transfer the lease?+
It depends on your lease and the applicable retail or commercial leasing laws. Many leases say consent can't be unreasonably withheld. Your solicitor can advise on your specific lease.
Should I tell my landlord I'm selling?+
At the right time, yes. Some owners discuss an extension first as a normal tenancy matter, then raise the sale once there's a buyer.
Will I stay liable after I sell?+
Possibly, if a personal guarantee continues. Ask your solicitor about a release.
Sources and further reading
- Queensland Small Business Commissioner
- Australian Small Business and Family Enterprise Ombudsman
- business.gov.au: Sell your business
Information checked against these sources as at October 2026. Rules and thresholds can change, so check the current position with your adviser.
Important
This article is general information only. It doesn't take your personal circumstances into account and isn't financial, legal, tax, employment or valuation advice. Velaro Group is a buyer of businesses. It isn't a business broker, licensed financial adviser, registered tax agent or law firm, and it doesn't act for sellers. Please get advice from your own accountant, solicitor or financial adviser before making any decision. Read the full disclaimer.
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