OT: Real Estate Experts - Rental Agreements when Property Transferred

[Big 0]

For the all knowing board.

Does anyone know what happens when one signs a lease for an apartment and the property is sold and transferred to a new owner before the date the lease is supposed to commence?

This just happened to my daughter. She signed a year's lease for a new apartment and gave notice to her current landlord. Her lease is set to commence on 6/4/2017 and therefore she has not yet taken occupancy of the new apartment. Her new complex, which is only a year old, was just sold to a new real estate company and the property has been transferred. They actually have changed the name of the property. This happened quite suddenly.

Does the new owner have to honor her lease, even though it is not in force (not commenced) and she has not moved in yet to occupy the apartment? I know that if she was a current tenant with a valid lease, the new owner assumes that tenant and lease, since I know a little about landlord-tenant law since I have had rental property in the past and been a landlord. Hopefully her signed lease will be honored as it was a pretty good deal for that particular complex at the time, which was sort of the dead period for rentals. And yes I have read the lease. There really is not anything in it that addresses this particular situation.

The new landlord is Passco, a fairly large real estate company. I don't know anything about them or their reputation. Is anyone familiar with them?

 

[sluggo72]

For the all knowing board.

Does anyone know what happens when one signs a lease for an apartment and the property is sold and transferred to a new owner before the date the lease is supposed to commence?

This just happened to my daughter. She signed a year's lease for a new apartment and gave notice to her current landlord. Her lease is set to commence on 6/4/2014 and therefore she has not yet taken occupancy of the new apartment. Her new complex, which is only a year old, was just sold to a new real estate company and the property has been transferred. They actually have changed the name of the property. This happened quite suddenly.

Does the new owner have to honor her lease, even though it is not in force (not commenced) and she has not moved in yet to occupy the apartment? I know that if she was a current tenant with a valid lease, the new owner assumes that tenant and lease, since I know a little about landlord-tenant law since I have had rental property in the past and been a landlord. Hopefully her signed lease will be honored as it was a pretty good deal for that particular complex at the time, which was sort of the dead period for rentals. And yes I have read the lease. There really is not anything in it that addresses this particular situation.

The new landlord is Passco, a fairly large real estate company. I don't know anything about them or their reputation. Is anyone familiar with them?

Don't know but what u worried about if the lease starts in 6/4/14???

 

[BoulderFish]

For the all knowing board.

Does anyone know what happens when one signs a lease for an apartment and the property is sold and transferred to a new owner before the date the lease is supposed to commence?

This just happened to my daughter. She signed a year's lease for a new apartment and gave notice to her current landlord. Her lease is set to commence on 6/4/2014 and therefore she has not yet taken occupancy of the new apartment. Her new complex, which is only a year old, was just sold to a new real estate company and the property has been transferred. They actually have changed the name of the property. This happened quite suddenly.

Does the new owner have to honor her lease, even though it is not in force (not commenced) and she has not moved in yet to occupy the apartment? I know that if she was a current tenant with a valid lease, the new owner assumes that tenant and lease, since I know a little about landlord-tenant law since I have had rental property in the past and been a landlord. Hopefully her signed lease will be honored as it was a pretty good deal for that particular complex at the time, which was sort of the dead period for rentals. And yes I have read the lease. There really is not anything in it that addresses this particular situation.

The new landlord is Passco, a fairly large real estate company. I don't know anything about them or their reputation. Is anyone familiar with them?

I don't know for sure, but based on what I know about property law (which admittedly isn't a ton, but is probably more than average as I've had rentals for about 10 years now) I would suspect that in they eyes of the law, her lease is every bit as valid as it was the day before the property was purchased and/or transferred.

With that said, even if the lease agrement is still fully valid, it may be easy for the new company to break it if they want to.

Have you seen any indications that the new company won't be wanting to rent out the apartment?

 

[Big 0]

With that said, even if the lease agrement is still fully valid, it may be easy for the new company to break it if they want to.

Have you seen any indications that the new company won't be wanting to rent out the apartment?

The main worry is that they will not honor the lease she signed and if she does want the apartment, they will allow her to sign a new lease, but with an increase in the monthly rent amount.

 

[androcles]

...did she give any deposit with the new lease?...
...a fully executed agreement/contract requires an offer, an acceptance and a consideration (deposit or first month's rent)...
... fully executed agreements transfer directly to the new owners...

 

[LafayetteBear]

That is a somewhat rare situation, but the answer is pretty straightforward. Your daughter does not have occupancy of the leased premises, but she has an enforceable contract (i.e., the lease), assuming she has performed whatever obligations she has to date. You said she has signed the new lease. Has her landlord signed it? Has she performed whatever obligations she has under the lease to date (probably paying a security deposit and first month's rent)?

My initial impulse was to opine that her contract would be binding upon the purchaser if the current owner in fact concludes a sale of the property. But I don't think this would be the case here, since the tenant's occupancy and possession of the leased premises is usually what gives the purchaser notice of the existence of the lease, and she does not have occupancy or possession. What she has is a contract signed with the current owner, and she has no "privity of contract" (legalese for a direct contractual relationship) with the purchaser. You could consider giving written notice to the purchaser (if youj know who that is) of her signed lease, and perhaps that might induce the new owner to honor your lease. You don't see this situation very often.

Sometimes, landlords insert a "delivery of possession" clause in the lease with verbiage to protect the landlord in case he or she cannot deliver possession to the tenant on time. (This could happen if the prior tenant fails to move out on time, or trashes the premises.) The normal verbiage says that the rent abates for the period of the delay in possession, and that if the delay in delivering possession extends beyond the scheduled date of occupancy by a sufficient number of days (e.g., 60 to 90 days), either party has the right to terminate the lease.

If the lease does NOT say that, then your daughter probably has a pretty good claim for damages. Before signing a lease for another rental property, your daughter would be well advised to seek written confirmation from this landlord that he cannot or will not deliver possession of the premises on 6/4/17, when you said the lease commences. If you cannot get that written confirmation, send the landlord a letter advising that you have requested but not received a reply, are reserving the right to sue for breach of the lease, and will be signing a new lease for other rental premises.

You should probably consult an attorney who is licensed in the state where the property is located. This should be a really easy question for an attorney to answer, and you should probably be able to get someone to give you with a free initial consultation.

 

[LafayetteBear]

Never mind, Accidental double post.

 

[Lion8286]

There should be a provision in your daughter's lease to address the situation. Assuming it's a typical lease. There to protect both your daughter and the new owner.

 

[Big 0]

Thanks LayfayetteBear for your answer. The sale of the property has concluded and the purchaser has taken possession of the apartment complex, and you are correct in that my daughter is not currently occupying or has taken possession of the apartment unit spelled out in the lease that she had signed with the previous owner. All she has is a contract signed with the previous owner and although she has fulfilled all of her obligations under the contract that were needed to be executed before being permitted to take possession (e.g. deposits), she does not have privity of contact with the new owner (I actually knew what that meant although I am definitely not an attorney or pretend to be).

And there is a delivery of possession clause in the contract, so it does not look like she would have a claim for damages if the new landlord decides they cannot deliver possession to her at the date specified in the lease agreement for whatever reason. Hopefully we will find out more information tomorrow.

My daughter did not know the apartment complex was now in the possession of a new owner until late in the day on Saturday when she tried to access the secure web portal for the complex and found out that the portal didn't exist anymore. She did an internet search for the apartment complex and discovered it had been sold in a newspaper article about it, with nary a word or correspondence from the previous owner about any sale or change in ownership.

She also does not have access to the new portal for the complex which goes by a totally different name now. Unfortunately for her she did not keep a hard copy or digital copy of her signed lease because "you can always access it on the portal." Since I come from a less trusting and old school generation, I have a digital copy of the lease with her signature on it before it was returned for the landlords signature, as I wanted to review it for her to make sure there wasn't anything unusual in the agreement. And that could be a major sticking point as the copy signed by both parties was on the secure web portal that doesn't exist anymore.

 

[smaturin]

It's no big deal. These transactions take months to close. If there were plans for the property other than to continue to run it as apartments, the old and new owners would have addressed it during their negotiations and not signed new leases once they signed their PA

 

[Mr. Potter]

For the all knowing board.

Does anyone know what happens when one signs a lease for an apartment and the property is sold and transferred to a new owner before the date the lease is supposed to commence?

This just happened to my daughter. She signed a year's lease for a new apartment and gave notice to her current landlord. Her lease is set to commence on 6/4/2017 and therefore she has not yet taken occupancy of the new apartment. Her new complex, which is only a year old, was just sold to a new real estate company and the property has been transferred. They actually have changed the name of the property. This happened quite suddenly.

Does the new owner have to honor her lease, even though it is not in force (not commenced) and she has not moved in yet to occupy the apartment? I know that if she was a current tenant with a valid lease, the new owner assumes that tenant and lease, since I know a little about landlord-tenant law since I have had rental property in the past and been a landlord. Hopefully her signed lease will be honored as it was a pretty good deal for that particular complex at the time, which was sort of the dead period for rentals. And yes I have read the lease. There really is not anything in it that addresses this particular situation.

The new landlord is Passco, a fairly large real estate company. I don't know anything about them or their reputation. Is anyone familiar with them?

Look to the lease language there should be a clause that addresses this situation. If not and your in the PA feel free to call my law office for a short discussion. No Charge.

Just send me your email address

 

[LafayetteBear]

Big O: If I were you (or your daughter), I would forget about trying to assert any legal claims for the reasons noted below. If your daughter still wants to live in the subject premises, I would advise her to contact the new landlord, explain the situation, and see if the new landlord will voluntarily honor the lease she signed. If not, I would counsel her to simply look for a new rental.

Thanks LayfayetteBear for your answer. The sale of the property has concluded and the purchaser has taken possession of the apartment complex, and you are correct in that my daughter is not currently occupying or has taken possession of the apartment unit spelled out in the lease that she had signed with the previous owner. If the new owner has already closed escrow on its purchase, and your daughter has not taken possession of the subject premises or otherwise notified the new owner (prior to the close of escrow) that she had a signed lease, then I think she has no recourse at all. The new owner is not bound by a lease someone else signed, and of which it had no knowledge.

And there is a delivery of possession clause in the contract, so it does not look like she would have a claim for damages if the new landlord decides they cannot deliver possession to her at the date specified in the lease agreement for whatever reason. Hopefully we will find out more information tomorrow. You did not say what the specific verbiage of this "delivery of possession" clause says but, aside from the fact that it probably limits the landlord's liability for damages, it would only be enforceable against the former landlord in any event. Better to focus your time and energy on making new rental arrangements.

Unfortunately for her she did not keep a hard copy or digital copy of her signed lease because "you can always access it on the portal." And that could be a major sticking point as the copy signed by both parties was on the secure web portal that doesn't exist anymore. This is a good life lesson for your daughter; that she needs to reduce important agreements to writing, get them signed by all parties, and keep the signed originals. This is particularly the case with contracts for the sale, purchase or leasing of real property. Those contracts cannot be enforced unless they are in writing and signed by the party against whom you seek to enforce them. That rule (a very old rule derived from English common law and known as the "Statute of Frauds," applies in all fifty states.