November 8, 2024
Generally, the answer is yes. Under California law, the terms of any existing leases, including the lease duration and rental amount, at the time of the new ownership must remain in effect unless certain exceptions apply. State laws may vary on this topic, so it is important to review your state’s specific regulations.
As a tenant, it is wise to review the lease upon the sale of a commercial building. Most leases account for this change and speak of the subsequent events to occur after the sale of the property. Unless an express term in the contract allows for a termination of the lease upon a sale or the lease expires, the tenant can continue to occupy the property and enjoy all their rights afforded to them prior to ensure their business is not negatively impacted. The new owner cannot evict a tenant, raise the rent, or implement other changes that do not align with the terms of the existing lease. Therefore, it is important to review the terms of the lease with the aid of an experienced attorney to fully understand your rights and obligations.
Advanced Notice Requirements
Landlords are typically not required to provide their tenants with notice of a potential sale. However, the buyer of the property is obligated to provide tenants with a written notice of the completion of the sale and the contact information of the new landlord such as their name, phone number and/or email, in addition to the procedure to pay rent and other fees.
Potential Negotiations with the New Owner
Even though the new owner was not a signer of the original lease, they essentially step into the shoes of the named landlord in the lease at the time they take ownership of the commercial property. Any and all terms that have not expired must be upheld by the new owner. The new owner may try to negotiate some terms with the current tenants; however, no terms are modified and enforceable unless the parties execute a new contract.
When the lease terms expire, the new landlord has the right to enforce a new lease with different terms. For instance, the rent can be increased to market rate, some or all expired leases may not be renewed, or the property may be used for different purposes. In any case, it is vital to thoroughly review your lease terms or any subsequent modifications prior to signing. One of our attorneys at DY LAW can assist you with the review of any type of lease. Contact us at (714) 386-7755 or by email at admin@dylawcorp.com.
All information provided is strictly educational and does not constitute legal advice. Any past or previous results do not guarantee future outcomes as results may vary. Please note that, while this article accurately describes applicable law on the subject covered at the time of its writing, the law can continue to develop with the passage of time. Care should be taken to verify that the law described herein has not changed. For legal advice, please consult with a licensed attorney.
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