When a property with an existing lease is sold, the buyer takes title

When a property with an existing lease is sold, the buyer takes title

• A. Free of any lease.
• B. Subject to the existing lease.
• C. With the option to cancel the lease.
• D. Only if the tenant agrees to vacate.

Answer: (B)

Leases are encumbrances that run with the land. When ownership changes hands, the new owner becomes the landlord and must honor the existing lease under its original terms. So the buyer takes title subject to the lease: the tenant stays in possession, paying rent and enjoying the rights and restrictions laid out in the lease, exactly as before. The lease continues to bind the property and transfers to the new owner, who now enforces it and receives the rent. If vacant possession is desired, that would require negotiating a termination or waiting for the lease to expire; a sale doesn’t automatically cancel the lease.

Leases are encumbrances that run with the land. When ownership changes hands, the new owner becomes the landlord and must honor the existing lease under its original terms. So the buyer takes title subject to the lease: the tenant stays in possession, paying rent and enjoying the rights and restrictions laid out in the lease, exactly as before. The lease continues to bind the property and transfers to the new owner, who now enforces it and receives the rent. If vacant possession is desired, that would require negotiating a termination or waiting for the lease to expire; a sale doesn’t automatically cancel the lease.