Can a new owner change the terms of a commercial lease?

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Question:

I run a massage and skincare business. My building was just sold. I did not know it was for sale. I have a three-year lease, which mentions nothing about new owners or changes to the building. The new owner wants to raise my rent and paint the building to match his gas station. Obviously, this would not be good for my business. Any advice?

Answer:

Honor is on your side -- a weighty weight that just may tip the scales in your favor. When a building is sold, normally the new owners must honor the terms and conditions of existing leases. If your old landlord could not raise the rent until the three years went by, neither can the new ones.

However, if the building was sold at a foreclosure sale -- as is happening often these days -- and the mortgage or loan was recorded before your lease was signed, your lease may be wiped out by the foreclosure sale.

To find out where you stand, look at your lease and search for a clause that includes the terms "Nondisturbance," "Attornment," and "Subordination." These hairy legal terms describe an agreement between landlord and tenant that even if the mortgage or loan was recorded before the foreclosure sale, your lease will survive the sale. Making sense of these clauses can be difficult -- you may want to consult a lawyer.

Painting, however, is another story. Owners are usually free to do maintenance and refurbishing as they wish -- as long as the projects do not make it difficult or impossible for you to run your business. Let's hope the gas station is not puce.

To learn more about commercial leases, see Nolo's section on Business Space & Commercial Leases.

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