Question 17

The lease is assigned to the new owner.

When a commercial property is sold, the existing lease typically transfers to the new owner, allowing the tenant to continue occupying the property under the same terms.

A) The lease is assigned to the new owner.

This option is correct because, under most lease agreements, when a property is sold, the lease is automatically assigned to the new owner. This means that the new owner is obligated to honor the existing lease terms, and the tenant retains their rights to continue using the property as specified in the lease.

B) The lease expires and the tenant must move.

This option is incorrect because leases do not automatically expire upon the sale of the property. The existing lease remains in effect unless there is a specific clause that allows for termination upon sale, which is not standard practice.

C) The tenant and the new owner must negotiate a new lease.

This option is incorrect as well, as it implies that the lease is void upon sale. Typically, the tenant continues under the same lease terms without needing to renegotiate, unless both parties agree otherwise.

D) The new owner has the option of canceling the lease or accepting the lease.

This option is also incorrect because the new owner does not have the unilateral right to cancel the lease simply due to the sale. The lease agreement binds the new owner, and they are required to accept the lease unless specific conditions allow for cancellation.

Conclusion

The correct answer is that the lease is assigned to the new owner, ensuring continuity for the tenant under the existing terms. All other options fail to recognize the legal obligations that accompany lease agreements during property sales, which protect the rights of the tenant and enforce the lease's continuity.