Legal Question in Real Estate Law in California
Lease options when building changes owners
In an office building that I manage, a lease has several options for additinal periods of one year at a time. The options are listed as ''personal and not assignable or transferable''. This was intended to limit rights of a new tenant under the existing lease if tenant sold her business. Now the owner of the building is selling and the tenant wonders if this ''options are personal'' phrase may be construed to apply to the new owner, who then would not be responsible for offering any of the established options. Is this the case, or may the tenant rely on the new owner to uphold lease option periods established by former owner, presuming, of course, that her lease is not in default at the time each option is scheduled to be offered?
4 Answers from Attorneys
Re: Lease options when building changes owners
The language would restrict the beneficiary of the options, i.e. the tenant, from transfering the benefits to a new tenant, only.
Re: Lease options when building changes owners
The options will be binding upon the new owner.
Re: Lease options when building changes owners
The terms and conditions/options, etc., would likely be binding on the new owner.
Re: Lease options when building changes owners
This is a very simple question with somewhat of a simple answer. The clause should be interpreted to apply to the tenant only am not the landlord. But you raise an interesting point in that it might be considered ambiguous, especially if the new landlord does not wish to honor that clause in the lease. Then numbers of factors apply which are very technical applicable to the ambiguity, if at all, and against whom it should be construed. I would expect that this issue should not, but at least you are aware of it. When the lease is transferred with the building it is binding upon the new owner. In certain circumstances even under California law in the lease or a memorandum of lease should be recorded in the county in which the properties located. This will assure that all the terms and conditions of lease will be binding upon the new owner. If the new owner claims that it is not binding in some way that again will have to be litigated. More likely than not this should not happen. If you have any further questions or wish to consult with me I am in the San Francisco Bay Area at 925 -- 945 -- 6000.
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