What happens if you are a small business leasing space, and your landlord sells the property? Will you need to find commercial property for a new storefront or office? Most likely the answer is no. However, the lease you sign will be the controlling document, so it is best to read through it once again. In the meantime, here are several common questions and answers to address the issues.
If my landlord sells, can I be kicked out?
It depends upon the lease.
- If the lease expired and defaulted to a month-to-month tenancy, then your landlord can give you notice to move out. If you wish to stay, open up dialogue with the new owner to renegotiate the lease. Or, if you are unhappy with the space, this may be the time to find commercial property that better suits your needs.
- If the lease contained clauses with reasons for which the owner can evict you, those clauses will still apply with the new landlord. Generally, these clauses are titled “Right to Terminate or Early Termination.” Read them carefully, adhere to the contract and continue to pay rent on time.
- In addition, some leases contain clauses that specify termination of the contract is not an option if the building sells. Vice versa, some leases specify that a new owner may terminate the contract.
Am I required to sign a new contract with the new owner?
- No, no one can force you into a contract. If you have a valid lease, it transfers to the new owner. At the same time, the new landlord may suggest signing a longer lease by offering a short-term rental discount. If this happens, be sure to read the contract closely. It can be common for a new owner to insert rental increases for renewals terms. Just understand, you are not required to sign a new lease.
Will I get my security deposit back?
- Perhaps. In most cases, the security deposit transfers to the new owner and will be returned to you as long as the terms of the lease have been met. In some instances, the former owner may return the security deposit to you instead of to the new owner, in which case, you would need to give the security deposit to the new landlord as per the lease.
So, as a tenant, you may not see any big changes simply because the owner sells. Existing leases remain in effect. Continue to pay the rent and relax.
If you have additional questions, please contact us at Menlo Commercial Real Estate.