What Happens if a Commercial Property is Sold Mid-Lease?

After months of scouting Brevard County, you’ve finally found the perfect location for your business. You’ve negotiated the terms of your lease and you’re confident you can focus on the next phase of your business plan. But a few months down the road you receive a surprising letter. Your building is up for sale! Does this mean you’ll face eviction soon? Today we’re answering a few basic questions about the things you need to know when commercial real estate sells mid-lease.

What happens if a leased property is sold to another owner during the lease term?

The terms of your lease will determine what happens if the property is sold during your agreement. In most cases, it will be a seamless transition. The lease will carry over so you become the new landlord’s tenant.

Another possibility is that the lease will terminate and the new owner will compensate you based on the terms of the commercial property lease. This is only if the lease states that should the property be sold, the landlord has the right to terminate the lease agreement. This is one reason Ullian Realty recommends tenants have their attorney review their lease.

Here are some other possible impacts of the property being sold mid-lease, depending on the terms of your lease:

• Your new landlord may begin construction on the property to improve its design or function
• You may have to deal with a new property manager or other operational changes
• Your landlord may contact you to discuss other lease terms that might be of interest to both parties during the transition process
• If you decide to renew your lease, you may face higher rents as the new owner tries to boost profits 
• If the property’s owner is a large institutional investor, you may face higher property management fees

Here are some steps you can take if you are negatively impacted by the sale of the property you are leasing:

• You can potentially terminate your lease early, subject to negotiating a commercial lease buyout with your landlord
• You can potentially avoid a buyout, if subleasing your space to another tenant is allowed in the lease 
• Contact a real estate advisor who will help you understand the terms of your lease and any changes that may occur under your new landlord

Consult an Expert

If you decide not to renew your lease once your term is up, trust the experts at Ullian Realty to help you find your new space in Melbourne, FL. Our team will guide you in finding the best property for your needs. Contact us to learn more about how we help businesses find commercial property to lease in Brevard County.