Lease Assignment When Selling a Leasehold Childcare Centre

You and your buyer can agree on every number and still not have a deal. When you sell a leasehold childcare centre, someone who never signed your contract of sale sits at the table with a veto: the landlord. Their signature on a deed of consent to assignment is what turns an agreed price into a settled one — and the process of getting it is the single most underestimated step in a leasehold sale.

Assigning the lease means transferring it from you (the assignor) to your buyer (the assignee), so the buyer steps into your shoes for the remainder of the term. Almost every childcare lease requires the landlord’s consent before that can happen. Manage that consent well and it is a three-to-six-week administrative task running quietly in the background. Manage it badly and it becomes the thing that delays your settlement, resets your personal exposure, or gives a nervous buyer a reason to walk.

The Landlord Holds a Gate, Not a Blank Cheque

The starting point in most Australian jurisdictions is a fair one for sellers: a landlord may require consent to an assignment, but they cannot unreasonably withhold it. The catch is that “reasonable” is judged objectively — not by how the landlord feels about your buyer, but by whether a defined ground actually exists.

Where the lease is a retail lease, the grounds are set out in statute and are deliberately narrow. Under the Retail Leases Act 1994 (NSW), a landlord may withhold consent if the proposed tenant intends to change the use of the premises, if the incoming tenant has financial resources or business skills clearly inferior to yours, or if you have not followed the procedural steps the Act requires. Victoria’s Retail Leases Act 2003 works to the same logic — insufficient financial resources or business experience, or a proposed change of use. Queensland’s Retail Shop Leases Act 1994 lists a comparable set. The through-line across the states is that the landlord is protecting the covenant — the strength of the party who will now be paying the rent — not exercising a general right of approval over your exit.

That is the good news. The complication for childcare is that not every childcare lease is a retail lease. Many standalone, purpose-built centres sit on commercial (non-retail) leases, where the statutory protections above may not apply and the assignment clause in your own lease governs almost everything. So before you assume the 28-day clocks and “reasonable grounds” rules protect you, the first job is to read your lease and work out which regime you are actually under. Getting that wrong is how sellers discover, late, that their landlord has more discretion than they expected.

What You Have to Hand Over — and When

Consent is not a phone call; it is an evidence exercise. The landlord is entitled to ask for enough information to satisfy themselves that your buyer can carry the lease, and the assignment process in most states is built around you supplying it.

In practice, the landlord will want the incoming tenant’s financial position — company accounts or personal financial statements, evidence of funds, and details of their childcare operating experience. In retail-lease states you will typically also need to give the buyer a disclosure statement before the assignment, and the buyer gives one in return. In New South Wales this exchange protects you from ongoing liability only if it is done properly and on time (the Act requires the assignor’s disclosure statement be given to the buyer at least seven clear days before the assignment). Skip a step and you can lose a protection you were entitled to.

The practical failure here is not refusal — it is drift. Sellers gather the buyer’s financials slowly, submit a partial request, and the statutory response clock never starts because the landlord has not received “all the information reasonably required.” The centre changes hands on paper while consent sits in limbo. Treat the consent pack like part of due diligence: assemble it in full, submit it once, and start the clock cleanly. This runs alongside — but is separate from — the regulator’s transfer of the service approval, which is its own critical-path item; the two need to move in parallel, not one after the other.

The Clock Is Real, and It Is Not the Same in Every State

Timing is where consent quietly reshapes a settlement date. The statutory response periods are specific to each jurisdiction, so tie the number to the state your centre is in — do not carry a Sydney timeframe into a Brisbane deal.

In New South Wales, once the landlord has received all the information they reasonably require, they must respond to a retail assignment request within 28 days. In Queensland, the Retail Shop Leases Act 1994 goes further: if the tenant has met its obligations and the landlord fails to consent or refuse within 42 days, consent is deemed to have been given. Queensland also changed its treatment of commercial (non-retail) leases from 1 August 2025 under the Property Law Act 2023 (Qld), which now requires a landlord to respond in writing within one month of receiving the information needed to assess the request. Victoria’s regime sets its own expectation that landlords deal with requests promptly. Verify the current period for your state and lease type at the time you sell — these are statutory dates, and they move.

Handing Over the Keys Doesn’t Hand Over the Risk

This is the part sellers are most often surprised by. In an ordinary assignment, the outgoing tenant — and any guarantors, which for a small childcare company usually means the director personally — can remain liable under the lease even after the buyer takes over. If the new operator stops paying rent in eighteen months, the landlord may still be able to come back to you.

Release from that continuing liability is not automatic. It depends on what the deed of consent says and, in retail-lease states, on whether the statutory disclosure process was followed correctly. Where you signed a personal guarantee or provided a bank guarantee at the start of the lease, landlords will usually release it — but generally only once the incoming tenant provides an equivalent replacement guarantee. That is a negotiation, not a formality, and it belongs in the deed of consent, not in a handshake.

Two things protect you. First, push for an express release of your (and your guarantors’) future obligations in the deed of consent, and for the return or replacement of any guarantee or security bond you lodged. Second, where the landlord insists on keeping you on the hook, get a comprehensive indemnity from the incoming tenant, so that if the landlord ever calls on you, you have a clear right to recover from the operator who actually defaulted. A leasehold sale is not truly finished until your name is off the covenant.

Consent Has a Price — but a Limited One

Landlords can recover their reasonable costs of dealing with the assignment: legal fees to prepare the deed of consent, and reasonable expenses of investigating the incoming tenant. What they cannot do, in the retail-lease states, is charge a fee simply for granting consent, or demand a premium or key-money as the price of saying yes — that is expressly prohibited under the retail leases legislation.

The reasonable-costs line still catches sellers out, because “reasonable” is not “unlimited.” A landlord’s solicitor billing a few hundred to a low-four-figure sum to draw a standard deed of consent is ordinary; a five-figure “consent fee” dressed up as costs is not, and you are entitled to question it. Clarify who pays these costs in your contract of sale — buyer, seller, or split — so it is not a surprise line item on settlement day.

Open the Consent Conversation Before You Sign Anything

The sellers who settle on time are the ones who treat landlord consent as the first task, not the last. Read the assignment clause before you go to market so you know the regime you are under; sound out the landlord early so a change of ownership is not a shock; line up a buyer whose covenant will clear consent cleanly; and write realistic consent timing into the contract. Do that, and the landlord’s signature is a formality you scheduled. Ignore it, and it becomes the deadline you are chasing.

Assignment sits alongside the other lease levers that decide what a leasehold centre is worth and how cleanly it sells — the strength of your option terms, your exposure under any make-good clause, and the difference between leasehold and freehold itself. For how the lease fits together as a whole, see our guide to what’s actually in a childcare lease, and for the wider exit, how to prepare your childcare centre for sale.

Selling a leasehold childcare centre and not sure how the landlord’s consent will play out? Talk to ChildcareLink before you go to market — we manage the consent process as part of the sale. Visit childcarelink.com.au or contact our team directly.

Sources

• NSW Small Business Commissioner — Transferring your lease; Retail Leases Act 1994 (NSW), ss 39–41 (grounds, process, 28-day response, key-money prohibition)
• Victorian Small Business Commission — Transfer of a retail lease premises; Retail Leases Act 2003 (Vic)
• Retail Shop Leases Act 1994 (Qld), s 45 (42-day deemed consent); Property Law Act 2023 (Qld), commenced 1 August 2025 (one-month response for commercial leases)
• General Australian commercial-leasing commentary on assignor continuing liability, guarantee release, and deeds of consent (concepts only)

Disclaimer: The information provided in this article is for general informational purposes only and does not constitute financial, legal, or professional advice. ChildcareLink recommends seeking independent professional advice tailored to your specific circumstances before making any business or investment decisions.