As long as you have a lease, your occupancy will generally remain unchanged when the property your business occupies changes hands. However, just because your rights under your lease generally remain the same doesn't mean that things won't change with your new landlord. You may also have to play a role during the sale process.
Leases and Sales
When a building changes hands, the new owner takes it subject to any existing agreements that aren't set to expire on the building's sale. As such, as long as your lease doesn't have a clause that allows the landlord to cancel it in the event of a sale, it should continue without change. Remember, though, that just as the new owner's responsibilities to you don't change, your responsibilities to the owner won't change, either. You'll have to continue following your obligations under the lease to continue enjoying your rights. Also, if you do not have a lease, the new owner will be able to change the terms of your occupancy relatively quickly.
During a sale of a retail property, the lender may require additional supporting paperwork from tenants, such as an estoppel certificate or a subordination agreement. An estoppel certificate is a document that certifies the terms of your lease. Subordination agreements put your interests behind those of the lender, allowing the lender to foreclose on the property if necessary. If your lease obligates you to sign these, and many do, you will have to execute them. However, it's a good idea to have an attorney review them before you sign. In addition, you should try to sign a "Subordination, Non-Disturbance and Attornment Agreement" with the lender. SNDAs go beyond regular subordination agreements by adding language that prevents the lender from evicting you or otherwise disturbing your rights under your lease in the event of foreclosure.
If the property sells as a part of a foreclosure, your lease is in jeopardy if you do not have a non-disturbance agreement and if you either signed a subordination agreement or moved into the property after the mortgage was issued. In these instances, your interest in the property would be behind that of the lender's. In the foreclosure proceedings, the lender would essentially take back all of the rights to the property, giving them the ability to invalidate your lease. This is why getting a non-disturbance agreement is so important.
Your New Landlord
Review your lease carefully to see what rights your new landlord will inherit. Clauses that may have seemed harmless with your previous landlord could become problems for you if your new landlord has different plans for the building. For example, a clause that allows the landlord to bill you for capital improvements to the building could prove expensive if the new owner plans to spruce up the property. Furthermore, if your lease has a short remaining life, you could end up having to renegotiate it with the new owner.
Steve Lander has been a writer since 1996, with experience in the fields of financial services, real estate and technology. His work has appeared in trade publications such as the "Minnesota Real Estate Journal" and "Minnesota Multi-Housing Association Advocate." Lander holds a Bachelor of Arts in political science from Columbia University.