How to Break a Commercial Lease for Foreclosure
A commercial lease provides fewer rights for the tenant in a foreclosure. Generally, whether or not the lease is broken depends on the dates that the lease and the mortgage were signed. If the mortgage contract was signed before the lease, a foreclosure automatically ends the commercial lease. If the lease was signed first, then foreclosure does not break the commercial lease. In such a case, the new owner of the commercial rental property may be able to break the lease using one of several methods.
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Instructions
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Review the lease agreement for any clause that addresses foreclosure. For example, subordination, non-disturbance and attornment clauses may allow the tenant to remain in the commercial rental property, even after a foreclosure sale and a new owner takes over. The lease may detail legitimate reasons that the leaseholder can use to evict the tenant and break the lease.
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Negotiate with the tenant. He may be willing to relocate if his business is expanding and he needs a bigger space, or even if his business is not doing well and he needs to downsize.
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Offer the tenant money to vacate the property. If you provide enough monetary compensation for the tenant's moving costs, he may be willing to end the lease and find another commercial rental property for his business.
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Review the lease to determine if there is a legitimate reason to evict the tenant and end the lease. For example, the tenant may have missed paying the rent or may have violated another clause of the lease. If such a condition exists, you have the right to evict the tenant by bringing legal action against him.
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Consult an attorney for advice if the tenant does not agree to break the lease. Laws governing commercial leases are complex and vary by state. An attorney who is familiar with the laws in your state may be able to find a way for you to safely break the lease.
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