Can I leave a commercial lease if the property has been sold?

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Can I leave a commercial lease if the property has been sold?

I am in a year-to-year lease (for 3 years and am in the third year). The building in which I have an office has been foreclosed on and the bank assumed the payments. The bank recently sold the office building to a realtor last month. I have not used my office much in the last 6 months and would love to get out of it if I can. Do I have any legal options for terminating the lease due to the foreclosure and/or sale of the property in which my office is contained?

Asked on January 31, 2011 under Real Estate Law, Virginia

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

I would strongly suggest that you bring your lease to an attorney in your area to review on your behalf.  There can be at least two or three different scenarios here and you need to figure out which applies according to your state law.  Now, there is a saying that applies as the basic rule for commercial leases in foreclosure: "first in time, first in right." In other words, if the mortgage was recorded before the lease was signed, the general rule is that the lease is wiped out. This allows the new owner of the property to do with it as they please -- typically sell it, lease it to the current occupants or lease it to someone else. The new owner can evict the current tenant (even if the tenant has fully complied with their lease), but typically must get court permission to do so.

But some leases contain what are known as subordination, non-disturbance and attornment clauses. An attornment clause in your lease would mean that you agreed to remain as a tenant with a new landlord. The lease clause would even state what happens to your tenancy in the event of foreclosure. So you may have an out and never forget that the new landlord may want you out anyway so you should explore that option in a subtle manner.  Feel out the new owner and have the lease read by an attorney.  Good luck.


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