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Landord trying to say lease isn't valid...HELP!!!!

 
 
Reply Mon 6 Dec, 2004 07:29 pm
We live in Texas have a problem that we need help with ASAP. We have leased the same commercial property for five years now. When we orginally moved in, we had a three year lease, with an option to renew for another three years at the end of it. By the time the first three years were up, the property had been sold to another landlord. When the lease was almost due - 3 months prior to the end - we let the new owner know that we wanted to renew for another three years. We did this verbally and in writing - our bad though, we can't find a copy of the written notice for renewal. The landlord told us to run off the previous three year lease until she could get a new one drawn up. She never did this. In the past few months, she sold the building, and didn't let us know. We found out when the new owner came in to introduce himself to us and to look at the building. Prior to that, he had only been on the other half of the property. And yes, he had already purchased the property. It gets even better here, on the day the newest owner came to introduce himself, I had been to see what I believed at the time to be our landlord, and she wanted the rent. I told her I would have it to her the next day when it was due. She didn't push the matter. Later that day, the new owner came in wanting the rent, saying he had owned the building for about a week at that time. We have not seen the previous owner since, and have heard that she moved approx 50 miles away.
The new owner seemed nice enough at the time, and we have had our rent to him on time ever since he took over. Then a few days ago, he had someone come and tell us that we had 30 days to move out, nothing has been given to us in writing at this time, and our rent goes from the first to the first. Also according to our lease, we still have another year left at the same rent, etc.
When we called his secretary to find out what was going on, she had no clue, and asked if we could send a copy of the lease to her by fax. We did this and for two days kept in contact with her on the matter. Today, I called and she told me that her boss would be here today to talk to us. We're not open on Mondays, and finally did track him down at another place he owns.
When we talked to him, he said that he was told that there was no lease on the property and since the copy that we sent to him wasn't signed - it clearly states "COPY" along with the lawyer's name that drew it up all over it -then it wasn't valid. However, he has decided to "be nice" and let us keep the property for the remainder of the lease term if we agree to pay an extra $100 per month. We did not agree to this, and are trying to set up an appt with our attorney to look everything over. He also says that since he knew nothing about the lease, he is not liable for the security deposit, or the last months rent we paid, as clearly stated in the lease, along with the fact that he now claims the lease isn't valid, etc.
Can someone please help and advise us on what we can and can't do to get him to hold to the lease? Is our lease valid, or as he claims, is it no good? We are at a loss here, as to move to another location will require funds we do not have at this time.
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Type: Discussion • Score: 2 • Views: 1,434 • Replies: 15
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realjohnboy
 
  1  
Reply Mon 6 Dec, 2004 08:26 pm
Hi, ready. Welcome to A2K but I'm afraid your situation may be a bit too complicated for us to resolve (but I do think, based on my reading, that you have a good case). You mentioned that you have an attorney. Obviously, you should get his or her guidance immediately. Good luck and please let us know how it turns out.
0 Replies
 
timberlandko
 
  1  
Reply Mon 6 Dec, 2004 08:33 pm
Not an expert opinion here by any means - but absent valid supportive documentation with which to corroborate your claim, there might not be any claim for you to make. I think the best advice is to hand the matter over to your attorney, provide whatever you are able of what he requests, hope for the best, and get busy on commin' up with a plan B in case things really don't work out for you in this matter.
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Montana
 
  1  
Reply Mon 6 Dec, 2004 08:34 pm
The only thing I can tell you is that you need to see a lawyer ASAP. My heart goes out to you and I hope it all works out in your favor.

Best wishes.
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readytoscream
 
  1  
Reply Mon 6 Dec, 2004 09:49 pm
Thanks for the welcome and the advice. We really are at a loss here. Since I last posted, the new landlord has been to look at the other side of this property. It seems I was wrong in my earlier post. When we had talked to him earlier, he had talked about converting both spaces into one large retail space. We talked to him about the major renovation this would take, etc. I mentioned that it would hard with one side being a stand alone heater and one small refrigerated ac unit, while our side is central heat and air. He told me no, he had been told that both sides were central. I replied that they may have updated it without us knowing, as we don't rent the other side, but I really believed that it wasn't central.
He had told us to get back to him around 5 this evening as he was going to look into other buildings in the area that he could rent to suit his needs better without renovations. This is when he had brought up paying an extra $100 a month, so that way we could help offset the cost of where he was possibly looking to rent.
Anyway, a little after 5, my husband went and talked to him, and found out that the building he had been looking at was already taken. At that time, the new landlord - keep in mind he has owned this property since October - said he and one of his employees was going to go look at the other side. It turns out that he had never been in it. The guy had bought the whole thing site unseen, and had taken the previous owner at her word on it all. (I know, not real smart). My husband asked if he could go with him over there, and was invited along.
When they got to the backroom, the new owner (from here on I will call him Mr. J to make it easier!!) saw what he thought was a central heat unit, which my husband then pointed out only heated the backroom, to which the new owner agreed. They then found a large vent in the front, to which the new owner thought might lead to a central air unit, which in fact only leads to a refrigerated unit on the roof.
The employee of Mr. J who was there then decided that half of the unit may well be large enough to support the dollar store she was trying to talk him into putting in. (still not sure on that one, we are a small town of around 15,000 and already have two)
Mr. J told my husband that he was going to have to do some more research and let us know........
We still plan on talking to an attorney Wednesday afternoon, and in the meantime plan on getting ahold of the original owner to get all that they may still have.
On the second owner (not Mr. J - the one in the middle- confusing, I know)
Texas law states that both verbal and written changes, etc can be made to the lease if both parties agree. So, since it was both written and verbal when we extended, then isn't the extension legal? We already know that she will not stand behind her word to the new owner, and we can't find our copy of the letter agreeing to extend.
Thanks again!!!
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timberlandko
 
  1  
Reply Mon 6 Dec, 2004 09:57 pm
Well, not to sound too gloomy here, but you say you do not have a signed original of the modified agreement, so unless there were witnesses - preferably not relatives or employees of or principals in your business, and more than one - to any verbal agreement, and they are willing to sign affidavits and/or testify under oath, any verbal agreement you may have or have had with someone not likely to abide by that verbal agreement is worth about as much as the paper it was written on.
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readytoscream
 
  1  
Reply Mon 6 Dec, 2004 10:04 pm
Believe me, I understand that it's better to look at the bad side, so that way if things go good, it's a surprise, but if they go bad, it's not....
The wording of the first lease on the option to extend is as follows:
4. Lessor agrees that Lessee shall have and is hereby granted an option to extend the time of the lease for a period of three (3) years for the sum of $500.00 per month, such extended term to begin upon the expiration of this lease. All other covenants and provisions of this lease shall apply to such extended term. It is further provided that if Lessee is in default beyind any grace period herein provided in the performance of any of the terms and provisions of this lease, the option shall be and become null and void. If Lessee shall elect to exercise such option, they shall do so by giving to Lessor notice in writing of their intention to do not later than 90 days prior to the expiration of the term of this lease. (We did this)

Is there anything we can do about not being notified of the sale of the property until after it was already done?
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Steppenwolf
 
  1  
Reply Mon 6 Dec, 2004 10:58 pm
Re: your last statement about the option and how you gave written notice about your intention to exercise that option. Does a written copy of that still exist? And did your landlord reply? At all? Perhaps some casual correspondence?

Edit: Ah wait, I just read your post a couple of posts ago. Hmmm...
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readytoscream
 
  1  
Reply Tue 7 Dec, 2004 12:15 am
(To keep everything straight and hopefully stops some confusion - even I'm beginning to feel that way trying to keep it all straight - I will be referring to all involved owners as follows:
Ms. S : original owner that we signed lease with
Ms. L : bought property from Ms. S and extended our lease
Mr. J : current new owner)

Unfortunately, no we haven't been able to find anything on it. We were (we thought) on pretty friendly terms with the previous owner. In the past, she had always let us know if she was thinking about selling, and/or if someone may be coming by to look at the property. We had reminded her several times to get the lease drawn up to show that it had been extended, and as you know from previous posts, that did not happen. We weren't worried about it, as the last time we had discussed the matter, she had told us that she wouldn't be selling until after the lease was up, or at least close to the time it was to come due.

That is why this has come as such a shock and we are having to dig for all the paperwork that we may have had. Realize that most of it hasn't been touched in two or more years.

I know that we once had a copy of the letter to extend, I don't know what happened to the hard copy, and our computer crashed a few months back and we lost all saved documents. The previous owner, Ms. L, had the original.

As for a signed copy of the lease, we do have one, it's just trying to remember where we put it. As for the original of that, Ms. S had that when she sold it to Ms. L. Tomorrow I am going to go through all of our filing cabinets, etc to try and find it. I think that may help.

Even though the last time we talked to Mr. J things sounded like they would be fine, I know better. It's been our luck for awhile now that if it can go wrong, it will, and especially with us. Smile
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Magus
 
  1  
Reply Tue 7 Dec, 2004 01:49 am
I would continue to pay as per the previous agreement (no extra$100) and begin preparations to re-locate.
Find another place.
You don't want to continue doing business with his extortionate ilk anyway... not unless the location has been lucrative enough to help you absorb the costs. Has it been?
(Is this particular location crucial to your enterprise, and do you stand to lose a significant portion of your clientele/customer base by relocating?)
If you stand still for a screwing-over right now, you'll have established a business relationship that does not bode well for the future.

Let HIM sue YOU... it won't be worth the $300 plus time and court costs.

It will probably take him at least 3 months to evict you, anyway.
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joefromchicago
 
  1  
Reply Tue 7 Dec, 2004 10:15 am
A new owner buys rental property subject to all existing leases. Thus, if you had a valid lease (i.e. the extension of your previous lease) at the time Mr. J. bought the property from Ms. L., then he can neither cancel the lease nor change its terms (including the monthly rent).

The question, of course, is whether or not you had a valid lease at the time of the sale. The lack of a written extension agreement is troublesome, and there might be a Statute of Frauds problem here if the lease extension was for more than one year (ask your lawyer more about this). Obviously, with the limited amount of information we have here, we can't tell whether the lease extension was valid or not.
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squinney
 
  1  
Reply Tue 7 Dec, 2004 11:23 am
Joe - Shouldn't there be something in the documentation of the sale indicating the current tenants, lease agreements, and rental income? Would this be something Ready could look up at the courthouse?
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joefromchicago
 
  1  
Reply Tue 7 Dec, 2004 11:43 am
Squinney: Excellent point. I don't know what the requirements are for recording a deed in Texas (I don't even know what they are in Illinois), but it's possible that the buyer must list current leases. It's worth checking into.
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squinney
 
  1  
Reply Tue 7 Dec, 2004 11:52 am
Perhaps there would be a valuation or appraisal that would contain the tenant / lease information since it was a commercial property, a copy of which should reside with the lady that just sold if not in the courthouse. Not sure if that would be recorded with the sale or could be obtained from the most recent seller.
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realjohnboy
 
  1  
Reply Tue 7 Dec, 2004 04:34 pm
One question I had was this: lets's say that your original three-year lease covered the period 2000-2001-2002. Whwn you renewed your lease for the next three-year period (2003-2004-2005), was the monthly rent the same or did it go up to a new rate?
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Debra Law
 
  1  
Reply Tue 21 Dec, 2004 06:18 am
option
joefromchicago wrote:
A new owner buys rental property subject to all existing leases. Thus, if you had a valid lease (i.e. the extension of your previous lease) at the time Mr. J. bought the property from Ms. L., then he can neither cancel the lease nor change its terms (including the monthly rent).

The question, of course, is whether or not you had a valid lease at the time of the sale. The lack of a written extension agreement is troublesome, and there might be a Statute of Frauds problem here if the lease extension was for more than one year (ask your lawyer more about this). Obviously, with the limited amount of information we have here, we can't tell whether the lease extension was valid or not.


The way I understand the situation is that the original three year lease contained an OPTION (so long as the lessee was not in default of any of the lease terms) wherein the lessee could give the lessor 90 days notice that the lessee was exercizing the option to extend the original term in the existing lease for another three years.

I don't believe that a new lease was necessary. The original lease is still valid for the extended term under the option contained therein. Even if both the lessee and the lessor have lost the notice wherein the lessee exercised the option, it would seem that their continued occupancy of the leased premises is strong evidence that they DID exercise their option. Unlike residential property wherein leases are converted to month to month -- a commercial enterprise requires stability in location and commercial leases are generally long-term because it is extremely costly to move a business.

Joe is correct: "A new owner buys rental property subject to all existing leases." Even if the past owner failed to inform the new owner of the existing lease -- the new owner had constructive notice of the existing lease BECAUSE the lessees were occupying the premises. It's not the lessees' fault that the new owner allegedly failed to make inquiries that a reasonably prudent buyer would make when purchasing commercial property. The new buyer is BOUND by the existing lease (as extended through the option clause) by the operation of law and he cannot claim ignorance of the lease as a reason to breach the contract.

Inasmuch as the OLD OWNER/LANDLORD (lessor) was asking the tenant (lessee) for the rent and the next day someone NEW shows up and asks for the rent and allegedly bought the place without inspecting the building -- I would be suspicious concerning the true ownership of the building.

I would certainly contact the county register of deeds office and find out WHO is listed as the owner of record for the commercial property . . .

I would also consider the practical ramifications of getting into a rent dispute with the true owner of the building. Sometimes principles are far more costly than what they are worth. Running a commercial enterprise requires stability in location -- a month to month lease is unacceptable if you have to pick up and move your entire business with only 30 days notice. An extra $100 a month -- $1200 a year -- might be worth the investment if the location is good. It may cost more than $1200 to relocate the business. It may cost more than $1200 in legal fees to enforce the existing lease (as extended by the option clause) or to defend a summary eviction action or to prosecute a wrongful eviction action. (BUT, if I wanted to MOVE the business, now would probably be the time to do so because the new owner is claiming he is not bound by any existing lease and wants to raise the rent.) However, I wouldn't agree to an increase in the monthly rental (from $500 a month to $600 a month) unless the new owner signs a long-term lease. (I wouldn't want to be held hostage to arbitrary renegotiations of the rent whenever the landlord has a whim.)

Lots of things to consider . . . CONSULT a local attorney.
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