Do Leases Transfer When You Sell? What Commercial Property Owners Must Know
If you own a commercial property with tenants in place, selling the asset involves more than just finding a buyer and signing paperwork. One of the most common questions we hear at Commercial GRP is:
“What happens to my tenants and their leases if I sell?”
The short answer: In most cases, the lease transfers to the new owner. But there’s more to it than that — and understanding how it works can help you sell smoothly, avoid legal pitfalls, and preserve the property’s value.
How Lease Transfers Typically Work
When you sell a commercial property that’s occupied, the leases don’t disappear — they remain legally binding agreements that transfer to the new owner. This is because the lease is tied to the property, not just the landlord’s name.
The new owner effectively “steps into your shoes” as the landlord, inheriting both:
- Rights – such as collecting rent and enforcing lease terms.
Obligations – such as maintaining the property, honoring lease rates, and providing services.
Key Factors That Influence the Transfer
1. Lease Type and Terms
Review the lease agreement before listing your property. Most commercial leases are assignable by law, but certain provisions can impact the sale, such as:
- Right of First Refusal (ROFR) – Tenant gets the first opportunity to buy before you sell.
- Termination Clauses – Rare, but some leases allow termination if the property sells.
- Approval Requirements – In some cases, tenant consent may be needed for transfer.
2. Communication With Tenants
While you’re not always required to notify tenants before closing, transparent communication can:
- Reduce uncertainty and maintain goodwill.
- Help ensure uninterrupted operations during the transition.
- Prevent rumors or misunderstandings about the sale.
3. Buyer Expectations
For investors, tenant leases are part of the value proposition. Strong, long-term tenants at market rents can make your property more attractive. On the flip side, short-term or below-market leases might impact pricing.
That’s why lease audits — reviewing all terms, rent rolls, and payment history — are a standard part of due diligence.
Why Leases Can Be a Selling Advantage
Selling with leases in place can be a major selling point:
- Income continuity – Buyers know they’ll start collecting rent immediately.
- Reduced vacancy risk – Occupied properties are less risky investments.
- Easier financing – Lenders often view leased properties more favorably.
Potential Challenges
- Undesirable lease terms – Below-market rents or burdensome landlord obligations can hurt value.
- Tenant instability – If tenants have a shaky business history, buyers may view the income stream as risky.
- Legal disputes – Active disagreements with tenants may deter buyers or lower offers.
Best Practices for Selling With Leases
- Organize your lease documents – Have signed copies, amendments, and rent payment histories ready.
- Address any issues early – Resolve disputes or deferred maintenance before marketing the property.
- Highlight tenant stability – Share positive tenant track records with potential buyers.
- Work with experienced commercial real estate professionals – Even if you sell directly, having an advisor who understands lease transfer laws can save time and money.
The Bottom Line
When you sell a leased commercial property, the leases almost always transfer to the buyer — along with both the benefits and responsibilities.
Handled correctly, those leases can make your property more valuable and appealing. But they can also complicate a sale if the terms aren’t favorable or the tenant relationship is strained.
At Commercial GRP, we specialize in helping owners sell leased industrial and commercial properties off-market — ensuring smooth lease transfers, maximum value, and minimal disruption to tenants.
Thinking about selling your property with tenants in place?
Contact Commercial GRP today to learn how we can guide you from listing to closing.
