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Ask Barrister Your Own Question
Barrister
Barrister, Lawyer
Category: Real Estate Law
Satisfied Customers: 37853
Experience:  16 years real estate, Realtor. Landlord 26 years
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I have a commercial tenant that has a couple of term lease

Customer Question

Hi I have a commercial tenant that has a couple of long term lease options. We are looking to sell the building and the possible new owner wants to tear down the building. Because of those lease options can we sell with no liability? Will new owner be able to move forward with his plan?
Submitted: 1 year ago.
Category: Real Estate Law
Expert:  Barrister replied 1 year ago.

Hello and welcome! My name is ***** ***** I am a licensed attorney who will try my very best to help with your situation or get you to someone who can. There may be a slight delay in my responses as I research statutes or ordinances and type out an answer or reply, but rest assured, I am working on your question.

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Because of those lease options can we sell with no liability? Will new owner be able to move forward with his plan?

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As long as you disclose the lease options, then you have no liability. But the new owner would take the property subject to any existing contractual obligations that you entered into with the tenant. A sale doesn't cancel out any prior contracts. If they want the tenant out, they would have to buy out their options and existing lease if the tenant would agree to sell. Otherwise the new landlord is just stuck with that tenant until their lease and options finally expire.

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As an aside, in addition to being an attorney, I have also been a landlord for over 26 years...

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thanks

Barrister

Customer: replied 1 year ago.
even if they are currently only in a signed lease until 2017 the new owner would have to honor the lease options?
Expert:  Barrister replied 1 year ago.

Correct. A sale doesn't cancel any existing leases unless the lease specifically states it will or this is a foreclosure sale where any subordinate interests to the mortgage are extinguished.

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That is the blessing and curse of long term leases with options...it fixes the parties' respective rights for a long time.

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thanks

Barrister