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Sale of a property during a lease and dealing with a new owner
Q: The owner of my house is trying to sell it. We signed a one year lease, which is up on March 1st. What does Oregon law say about the landlord honoring that lease? Does he have to honor the lease?
Q: I am renting a house in Winder, GA. The house has just been sold. Yesterday, Nov. 4th, I received a letter from the new owner telling me that effective Jan 1 the rent will go up by 250.00. My lease does not expire until February 28th. Can she ignore the lease agreement?
Q: After signing a year's lease in June 2000, can our landlord serve us an eviction notice giving us thirty days to leave due to the sale of the house. (There is nothing in the lease about sale and nothing was verbally said to us.)
A: Here are three similar situations that renters of houses or very small (2-4 units) complexes run into more often than renters in large complexes. What happens when the owner wants to sell or sells your rental and you have a lease with several months left on it? Can the old owner evict you before he sells? Can the new owner evict you after she buys? Can the new owner raise your rent?
First, let's dispense with the easy one. Unless your written lease specifically permits it, the original owner can't give you notice to vacate in the middle of the lease term just because the owner wants to sell the house. You promised to stay the length of the lease, and he promised to rent it to you that for that term.
Any provision specifically permitting him to do so must be written into the lease. (My own lease, which is a standard form, does not include any provision for ending the lease early if my landlord sells. I doubt that many standard lease forms include this provision.) If the owner verbally told you he could terminate the lease early if he sold the rental, that's not sufficient.
Second, the new owner can't give you notice to vacate in the middle of your lease. Because he probably knew about the lease before he bought it, he bought it with the obligation to fulfill the lease. Even if the old owner didn't tell him about the lease, the law presumes he knows or should have known. Real estate lawyers call this "constructive notice."
Constructive notice means that, in purchasing the house, he should have learned that someone other than the owner lived there. When he learned this, he should have asked the owner about any rental or lease agreements. If he didn't, he doesn't have any excuse, and has to follow them anyway.
Finally, for the same reason he can't kick you out, the new owner can't raise your rent in the middle of the lease either. He had constructive notice of the lease and should have inquired about its terms. Regardless of whether he did, as the new owner, he's obligated to live up to the lease agreement you signed with the prior owner, including the monthly rental amount.
How can you head off potential problems? If the owner brings a potential buyer through the house or unit when you're there, take the opportunity to casually mention that you have a lease. The new owner will most likely inquire about its terms at that point. So, both you and the new owner know going into the relationship what its terms are.
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About Phil Rhodes
Phil Rhodes is an experienced commercial credit attorney in Northern California with his own practice, emphasizing bankruptcy, real estate finance, and other consumer and small business credit issues. Phil is also a happy renter, now on his sixth successful landlord-tenant relationship. |
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Disclaimer
Information provided by Phil or Greg should not be construed as real estate or legal advice. State and local laws may vary, so please consult legal counsel in your area with respect to your individual situation.
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