Tenant's rights on Early Term Lease due to property sale
We have a commercial lease with 2 years remaining. The landlord has drafted an Option agreement to terminate the lease early. The proposal is for us to operate one more year then the landlord can elect to buyout. This situation arose out of the potential sale of the property. The sale is contingent on the buyer obtaining approvals to convert the property to condos.
The option is silent on details of the contingencies and related specifics that cause the buyout to go into effect. In addition it states that should the contingencies be met the landlord shall have the option to terminate.
We feel the contingincies & events that will trigger the buyout be detailed in the agreement and the above phrase changed to the landlord shall terminate upon meeting those contingincies. This allows a clear understanding of events and planning whether we operate for the 2nd year or not.
Is this correct thinking from our perspective? Also are there any other considerations that we as tenants should make sure are in this agreement? We feel that if we are asked to operate under the uncertainty of 1 or 2 years that we should as clear as possible. There is an existing documented lease that we operate under. This would be an addendum.
1 Answer from Attorneys
Re: Tenant's rights on Early Term Lease due to property sale
First, you clearly need an attorney to assist you in reviewing the proposal as well as negotiating language and terms before you agree to the proposal.
In general, however, you are quite correct. If there is anything you think is inadequately dealt with in the proposal, you should insist on whatever clarifying language may be necessary.
You apparently have an existing, valid lease, and you are--unless the existing lease requires you to accept changes, which would be unusual, to say the least--under no legal obligation to accept any changes to the terms, including the proposed option/early termination agreement.
Essentially, if you are not happy with the landlord's proposal for any reason, you have no obligation to agree to the proposal; nor do you have any obligation to make a counter-offer. You can simply say, "Thank you very much, but we'll stick with the existing agreement."
Obviously, you must perceive some benefit to yourself if you agree to the proposed "addendum". However, once the new deal is agreed to, then you will be obligated to it.
Therefore, if you feel more needs to be included in the addendum, then you should negotiate accordingly. If you can't come to an agreement on the terms of the addendum with the landlord, then you simply can stick with the existing agreement.
Regarding anything else that you should be trying to do, surely, you don't expect an attorney can provide an answer without reviewing the existing lease, the proposed addendum, and getting more information from you? I'll be happy to speak with you about retaining my services if that's something you want to discuss.
I strongly recommend that you consult with an attorney immediately so that you can explore your legal rights, obligations, and options. If you wish to discuss retaining my services, contact me at:
(*Licensed in New Jersey, Maryland, and Dist. of Columbia)
[Disclaimer: The above comments are not intended as nor should they be relied upon as "legal advice", which can only be obtained by personal consultation with a retained attorney; at which time the specific facts and circumstances of your case can be thoroughly evaluated. This reply is provided for general informational and educational purposes only, and does not create an attorney-client relationship with the responding attorney.]
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