Tenant Rights During a Commercial Property Sale
When a commercial property is sold in California, tenants often face uncertainty and concern about how the sale will impact their business operations and lease agreements. By carefully reviewing your lease agreement, staying informed about changes in ownership, and obtaining sound legal advice and representation, you can protect your interests and continue to operate your business successfully during and after the sale of your commercial property.
Key Elements in Your Commercial Lease Agreement as a Tenant
The first step in understanding your rights as a tenant during a commercial property sale is to review your lease agreement. This document outlines the terms and conditions of your tenancy, including your rights and obligations, and often contains specific clauses related to the sale of the property. Key aspects to review include:
- Lease Term and Renewal Options: Confirm the duration of your lease and any options for renewal. A new owner is generally obligated to honor the existing lease terms until they expire.
- Assignment and Subletting: Check if your lease allows you to assign or sublet your space to another tenant, which can provide flexibility if the new owner plans significant changes.
- Termination Clauses: Some leases include early termination clauses that can be activated under certain conditions, such as the sale of the property. Understand the circumstances under which your lease can be terminated.
Notification of Sale
In California, commercial tenants are generally not required to be notified in advance of a property sale. However, once the sale is completed, the new owner must inform tenants of the change in ownership and provide contact information for the new landlord. Tenants should receive notice of where to send rent payments and any changes in property management or maintenance procedures.
Continuity of Lease Terms
Under California law, a new property owner is generally required to honor the terms of existing leases. This means that your lease agreement, including rent, lease duration, and other conditions, remains in effect despite the change in ownership. The new owner cannot unilaterally alter the lease terms or increase the rent until the lease expires or comes up for renewal.
Security Deposits
When a commercial property is sold, the outgoing owner must transfer any security deposits to the new owner. The new owner is then responsible for returning the security deposit to the tenant at the end of the lease, subject to any deductions for damages or unpaid rent as specified in the lease agreement.
Right to “Quiet Enjoyment”
Commercial tenants have the right to “quiet enjoyment” of their leased premises, meaning they can conduct their business without undue interference. This right persists through a change in property ownership. The new owner must respect the terms of your lease and cannot disrupt your business operations or access your leased space without proper notice, except in emergencies.
California law provides several protections for commercial tenants. If you believe your rights are being violated during a property sale, consider consulting with a commercial real estate attorney who can help you understand your legal options and advocate on your behalf. Additionally, organizations like the California Department of Real Estate and local tenant advocacy groups can provide valuable information and support.
How a Skilled California Real Estate Lawyer Can Protect Tenant Rights?
Injunctions and Temporary Restraining Orders
In urgent situations where the new owner’s actions threaten immediate harm to your business, an attorney can seek injunctive relief. This may involve:
- Temporary Restraining Orders (TROs): Requesting a court order to temporarily halt the new owner’s actions, such as evicting you or disrupting your business operations.
- Permanent Injunctions: Seeking a long-term court order to prevent ongoing or future violations of your lease or legal rights.
Protecting Your Security Deposit
If the outgoing owner fails to transfer your security deposit to the new owner, or if the new owner unlawfully withholds your deposit, you can take legal action to recover these funds. An attorney can assist by:
- Demand Letters: Send formal demand letters to the outgoing and new owners requesting the return of your security deposit.
- Litigation: Filing a lawsuit to recover the deposit and any additional damages if the owners fail to comply.
Filing a Complaint
If the new owner violates your lease agreement or infringes upon your legal rights, your lawyer may file a formal complaint. This process can vary depending on the nature of the dispute:
- With Local Authorities: File a complaint with local housing or business regulatory agencies if the issue involves code violations or unlawful business practices.
- Small Claims Court: For smaller disputes involving limited monetary amounts, the attorney may file a claim in small claims court. This is suitable for recovering unpaid security deposits or minor lease violations.
Litigation, if Necessary
In more severe cases, litigation may be necessary to protect your rights and recover compensation. This involves:
- Filing a Lawsuit: Initiating legal action against the new owner for breach of contract, wrongful eviction, or other violations.
- Court Representation: Your attorney will represent you in court, presenting evidence, arguing your case, and seeking remedies such as damages, lease enforcement, or injunctions to prevent further violations.
- Damages and Compensation: If successful, the court may award you damages for financial losses incurred due to the new owner’s actions, including lost business income, relocation costs, and legal fees.
Get Legal Help from Highly-Rated Real Estate Lawyers in California
With many years of experience in commercial real estate law, the attorneys at Garmo & Garmo, LLP have successfully handled a wide range of cases, from lease negotiations to property disputes. We take the time to understand your specific situation and goals, developing customized legal strategies that align with your best interests. To request your free, no-obligation consultation, call us at 619-441-2500 or complete this online form.
