When a rental property is sold during the term of the lease, the new owner takes the property "subject to" (discussed more below) the existing lease. This is true of a normal sale and a “short sale” because a short sale is still a sale of the rental property; the only difference is that, in a short sale, the lender has agreed to accept less than the full amount due on the existing loan, which does not affect the tenant in any way. As stated, the new owner takes the property “subject to” the existing lease, which means the new owner steps into the shoes of the former owner and is bound by the existing lease. The new owner must allow the tenant to stay until the end of a fixed term lease, but if the lease always was or has converted to a month-to-month lease, then the new owner may terminate tenancy by giving the tenant a 30-Day Notice of Termination. Of course, there is an exception; if the lease included a provision that the lease would terminate upon sale of the rental property, then the tenancy would terminate as provided in the lease.
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What if a residential tenant is renting a house that is the subject of a short sale?
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I am renting a house that they have sold, not sure if it was short sale or regular sale. My question is my lease is not up till March of 2017 I want to know do I have to stay here now that the house is sold. Do they have the right to sell my lease as well?
Response by Carlton C. Casler. Short-sale or regular sale, the answer is the same: yes, the owner may sell the property, but the sale is "subject to" your lease, meaning that the new owner becomes the landlord under the existing lease and must honor the terms of that lease. Both of you could agree to terminate the lease early, but the new owner cannot unilaterally terminate your lease.
Posted by: Holly Acevedo | August 10, 2016 at 05:37 PM