This post originally appeared on tBL member blog SVN Southland Commercial Blog and is republished with permission. Find out how to syndicate your content with theBrokerList.
So what happens when your landlord sells the building you rent space in? Will you have to move out? The short answer is “probably not, but maybe.” Before you pack your bags, read your lease. Chances are, you won’t even know you have a new landlord – aside from the tacky new paint color scheme in the lobby. Below are answers to a few common questions that will help you know where you stand.
Can I be kicked out if my landlord sells?
No, but possibly yes. It depends on your lease:
- If your lease has expired and you are a month-to-month tenant, the answer is yes. If you don’t have a lease, the answer is yes. You can be given an eviction notice unless you have a lease protecting your right to occupy your space. This doesn’t necessarily mean the new landlord is planning to kick you out. Try to negotiate a new lease before assuming you’ll get the boot.
- If your lease allowed your former landlord to kick you out, the new one can do the same. Read your lease to understand your rights as a tenant. Look for sections entitled “Right to Terminate or Early Termination” to know if you or the landlord has the right to end the lease before it expires. Also, make sure you continue to pay your rent or your new landlord can evict you, with or without the Right to Terminate clause.
- Finally, look for sections regarding termination to be sure that there is not an option for termination if the building sells. It isn’t common but there may be a clause allowing your new landlord to terminate your lease after the purchase of the building. If the lease does not address the sale of the building, your lease remains the same with the new landlord.
Do I have to sign a new lease with the new landlord?
No, but you can if you want. Since your current lease transfers to the new landlord, you shouldn’t need to sign a new lease. The new landlord may, for example, try to entice you to sign a lease with a longer term by offering a temporary rent discount. Be sure to read it closely – it is common for the new landlord to include rent increases for renewal terms. Feel comfortable negotiating and understand that you are not obligated to start a new lease as your previous lease remains in effect until expiration.
Will the new landlord give my security deposit back?
Maybe or maybe not. Someone has to give you your security deposit back. Most likely, the security deposit will transfer along with your lease from the former landlord to the new landlord and will be refunded at the end of your lease as long as you meet all the terms of the lease. In some cases, your former landlord may choose to give the security deposit back to you, rather than pass it on to the new landlord.
In summary, not a lot changes for you as a tenant when you get a new landlord through a building purchase. When the new owner bought the building, the existing leases came with the building. Your lease, if you have one, is still in effect. Anything that is allowed in your lease will remain allowed until your lease expires.
If you have found this blog post helpful, you may also be interested in reading another post of mine, called Commercial Real Estate Lease Basics: Cutting the Confusion, or you can click here to browse through all of my blog posts.
About Stephanie Gilbert – Stephanie has been working in commercial real estate since 2003. Although she has done a variety of deals, her focus and passion, when it comes to commercial real estate, is leasing and selling office space, primarily in the Pensacola, Florida area. If you would like to contact her, you can call her at 850-434-7500, or email her at [email protected] You can follow her on Twitter at @.
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