When Your Landlord Won't Sign: Selling a Business, Lease Assignments and the Limits of a Landlord's "No"

For many small business owners, the single most valuable thing they own is not the stock on the shelves or the equipment out the back – it is the lease. The right to occupy premises, often in a hard-won location, can be the difference between a business that sells for a healthy figure and one that cannot be sold at all. So what happens when you find a buyer, sign a contract, line up the finance and your landlord simply refuses to engage?

That was the predicament at the centre of a recent decision of the Supreme Court of New South Wales, Watski Pty Ltd v Roughstone Pty Ltd [2026] NSWSC 614. The case is a useful reminder that a landlord does not have an unlimited right to stand in the way of a sale and that the law gives tenants real tools when consent is unreasonably withheld.

You usually cannot transfer a lease on your own

When you sell a business that operates from leased premises, the lease almost always has to be transferred to the buyer. In legal terms this is an assignment of the lease. Most commercial leases prohibit the tenant from assigning without the landlord’s consent and for good reason. The landlord is entitled to know who is taking over as tenant and whether that person can pay the rent and look after the property.

The catch, from a landlord’s perspective, is that the law does not let them use that consent as a weapon. In New South Wales, section 133B of the Conveyancing Act 1919 (NSW) provides that where a lease requires the landlord’s consent to an assignment, that consent is not to be unreasonably withheld. A landlord can ask sensible questions and impose reasonable conditions, but they cannot simply refuse or, as in this case, refuse to engage at all without a proper basis.

A second, related issue often arises at the same time. Buyers of small businesses frequently need finance, and a lender will commonly want security over the lease itself by way of a mortgage of lease. That, too, usually requires the landlord’s consent. So a tenant trying to sell can find itself needing the landlord to say “yes” twice over.

The facts: a caravan park, a sale, and a silent landlord

Watski Pty Ltd owned and operated a caravan park business known as “Big4Barham” at Barham, near the Murray River in the Western Riverina region of New South Wales. Watski did not own the land - it occupied the site under a registered lease from the landlord, Roughstone Pty Ltd.

The relationship between the two companies was already strained. The original lease ran from February 2020 and expired in September 2024. When Watski tried to exercise its option to renew, Roughstone disputed the validity of the renewal, and Watski had to take the matter to court. In July 2025, the Court declared that Watski had validly exercised its option and was entitled to a new lease. When Roughstone refused to sign the renewed lease, the Court ordered that the Registrar in Equity sign it on Roughstone’s behalf. The renewed lease was ultimately registered in October 2025.

In the meantime, Watski had decided to sell the caravan park business. It first offered Roughstone a right of first refusal to buy the business itself, but Roughstone did not engage and that offer lapsed. In March 2025, Watski signed a Sale of Business Agreement with Camp Crusty Operations Pty Ltd, an experienced caravan park operator from Victoria. As part of that sale, Watski agreed to transfer the renewed lease to Camp Crusty.

There was just one problem: settlement of the sale was conditional on the landlord consenting to the transfer of the lease and Roughstone never gave that consent. To complicate matters further, Camp Crusty was borrowing the purchase funds from the National Australia Bank, which required a mortgage over the lease as security. That mortgage also needed Roughstone’s consent. Camp Crusty wrote to Roughstone seeking it. Again, nothing came back.

By the time the matter reached the Court in May 2026, Roughstone had taken no active part in the proceedings at all. It did not file a defence, did not appear at the hearing, and offered no explanation for its silence despite being properly notified by both email and post.

The issues before the Court

With the landlord absent, the Court had to decide three questions:

1. Had Roughstone unreasonably withheld its consent to the transfer (assignment) of the lease to Camp Crusty, contrary to section 133B of the Conveyancing Act 1919?
2. Had Roughstone unreasonably withheld its consent to the mortgage of lease required by Camp Crusty’s bank, given the lease itself contained a clause requiring consent that was “not to be unreasonably withheld or delayed”?
3. If the answer to those questions was “yes”, what practical order could the Court make to get the documents signed when the landlord plainly would not cooperate?

The arguments

Because Roughstone chose not to appear, there was no competing case put to the Court. That is itself an important point: a landlord who ignores proceedings does not stop them - the Court simply proceeds without them and decides the matter on the evidence before it.

The plaintiffs’ case, presented through their counsel, was straightforward. The tenant bears the legal onus of proving that consent was unreasonably withheld. To discharge that onus, Watski and Camp Crusty pointed to the evidence that the proposed buyer was an established and experienced caravan park operator, backed by a reputable lender. On the correspondence in evidence, there was simply no proper reason on the table for the landlord’s refusal. In effect, the landlord had not articulated any basis for saying no,it had just gone quiet.

The Court’s reasoning and decision

The Court accepted the plaintiffs’ submissions. On the assignment question, His Honour confirmed that while the onus lay on the tenant to prove the refusal was unreasonable, he was “comfortably satisfied” that this onus had been met. The intended assignee was an established operator with the support of a reputable lender, and nothing in the dealings between the parties disclosed any proper basis for the landlord’s refusal to consent to either the assignment or the mortgage.

The picture on the mortgage of lease was much the same. The lease expressly allowed the tenant to mortgage its interest with the landlord’s consent, not to be unreasonably withheld or delayed. An appropriately drafted deed had been prepared and submitted to Roughstone, and again no consent was forthcoming. The Court found the mortgage document was appropriate and should be entered into.

The most practically significant part of the judgment concerned enforcement. Given how Roughstone had behaved both in the earlier lease-renewal proceedings and in these, the Court thought it “quite likely” the landlord would simply refuse to sign anything. To deal with that, the Court relied on section 94(1) of the Civil Procedure Act 2005 (NSW), which allows the Court to have documents executed by a court officer when a party refuses. His Honour ordered that if Roughstone did not sign the deed of covenant, the transfer documents and the mortgage of lease within 14 days, the Registrar in Equity would sign them in the landlord’s name and on its behalf. Roughstone was also ordered to pay the plaintiffs’ costs.

In short: the landlord’s silence achieved nothing except delay and a costs order. The sale could proceed.

The lessons for small business owners

This case is a caravan park dispute, but the principles reach into almost every small business sale where premises are leased. A few practical takeaways stand out.

Your lease can make or break the sale. If your business depends on its location, the ability to transfer the lease is not a formality, it is central to the deal. Read your lease early and understand exactly what your landlord’s consent rights are before you go to market.

A landlord cannot say “no” for no reason. Section 133B means consent to an assignment cannot be unreasonably withheld, and many leases say the same about mortgages and other dealings. A landlord who stonewalls, delays or refuses without a proper basis is exposed and may end up paying your legal costs.

The onus is on you, so build the evidence. The tenant has to prove unreasonableness. Present the strongest possible buyer: financial capacity, relevant experience, references and a reputable lender. Keep a clear written record of every request for consent and every (non-)response. That paper trail is what wins these cases.

Don’t forget the finance leg. If your buyer is borrowing, their bank will likely need a mortgage of the lease, which is a separate consent requirement. Anticipate it and prepare the documentation up front.

Make your contract work for you. A well-drafted Sale of Business Agreement should deal squarely with what happens if landlord consent is delayed or refused, including timeframes, conditions and exit rights so you are not left stranded mid-sale.

Silence is not a stalemate. As Watski shows, an uncooperative landlord cannot indefinitely block a legitimate sale. The Court can declare the refusal unreasonable and even direct a court officer to sign the documents. But litigation is slow and costly, and Watski had to go to court twice. Early, well-structured advice is almost always cheaper than a courtroom.