Good afternoon. I am located in Alabama. Just recently purchased a new commercial building occupied by 2x tenants. The previous owner had a signed lease with the following agreement of:
1“In the event of a foreclosure, sale, or transfer of Premises…This lease shall remain in full force and effect, and Tenant’s rights and obligations hereunder shall not be disturbed or modified, except as provided in this Lease.”
I want to know if it possible to modify/change these terms? I have a few concerns: 1) tenants monthly rent is low below the market and 2) no deposit was collected which also was written into the lease months before property was sold that it was not required. I am not agreeing to the above terms and wanted to get some feedback. Please advise?
Hey Gerard, the lease agreement should have the lease schedule which shows the amount it will increase each year. You'll have to adhere to that because the lease agreement is a legally binding contract. However, once their lease is up you can renew at a higher amount to current market or decide to move in a new tenant at current market rate. Figure out when the lease expires and start preparing now for what your options will be. As far as other items, you can always discuss with the tenants if they will adhere to modifications and get them to sign an Amendment or Addendum depending on what the changes are. But both parties will have to agree to any terms made that change the original agreement. Hope that helps! Feel free to check out my page for more.
So what about the former owner not collecting a deposit. Is there a state landlord/tenant law where a deposit is required to be collected that will supersede the transfering lease?