If I sell commercial property that I own, will new owner be bound to the lease I have with a current tenant?
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If I sell commercial property that I own, will new owner be bound to the lease I have with a current tenant?
I have commercial property with an auto dealership located on the property. I own both. I currently have a tenant in the dealership, but have another individual wanting to purchase the property. Will the new property owner be obligated to the lease I currently have with the tenant?
Asked on December 19, 2011 under Real Estate Law, Alabama
Answers:
FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
Good question. If any real property is being sold with a term lease (as opposed to a month-to-month lease) the new owner of the purchased property will acquire the property subject to a tenant in place.
This is why it is always best for the owner of the property being sold to disclose the tenancy in place and provide an estoppel certificate to the buyer filled out by the seller and the tenant who is occupying the property being purchased. That way there is no misunderstandings as to any lease issues.
In many situations, the seller attempts to buy out the tenant as part of the transaction where the property is sold to a third party.
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