Are lease contracts transferrable?

June 4, 2009 6:00 AM

The owners of my apartment building have turned control of the building over from the extremely reputable apartment management company that I signed a lease with to a much less reputable company. Am I legally bound to continue honoring the lease? (Arlington County, VA)

All the information I currently have was from this letter that was slipped under my door Monday:

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Dear Resident:

I am delighted to inform you that the owners of [apartment building] have selected [new management company] to assume management responsibilities for the property effective June 1, 2009.

[New management company]'s expertise is in managing quality rental communities in the Washington, Baltimore, Philadelphia, and Boston metropolitan areas. Our commitment to the owners of [apartment building] and to you as a resident is to make your stay in the community a pleasant and comfortable one.

Please submit your June 1, 2009 monthly rental payment directly to the management office. Your check should be made payable to [apartment building].

Should you have any questions, please contact the Leasing Office staff members.

We are looking forward to meeting you and are proud to have the pleasure of serving you.

Sincerely,
[New management company's president]

posted by charmston to law & government (7 comments total)

Check your lease. It's almost certainly with the owner, not the management company, which means, unfortunately, that as far as the lease is concerned, the requirements on you - and your landlord - are unchanged.
posted by Tomorrowful at 6:25 AM on June 4

Am I legally bound to continue honoring the lease?
Probably.

Is your lease actually with the management company or with the owners? In either case, there's probably a "we reserve the right to change anything we want on this contract" clause somewhere in the papers you signed. This would include a transfer to a new management company.

It's a bit like when BoA bought Countrywide. I still have to pay my mortgage. But now I send the check to BoA.
posted by Thorzdad at 6:28 AM on June 4

Seconding the advice to check your lease. It also depends on how VA law handles these sorts of matters. I'd check the landlord-tenant act as well.
posted by reenum at 7:10 AM on June 4

Unless your lease has a specific provision allowing you to terminate upon a change in control I am almost certain that you are still bound to its original term.
posted by caddis at 7:21 AM on June 4

Here's the Virginia Landlord-Tenant Law FAQ; it also contains some contact information for legal aid and other people who might be able to help. However, I don't think you'll really be able to do anything, absent an early termination clause in your contract, or some definable way in which the new management company is not living up to its obligations. I doubt that the fact that it is "much less reputable" is going to give you an out.

However if they let the condition of the property decline substantially, or if they're unresponsive to repair requests or something else that makes a material difference to your use of the property, maybe you could come up with some argument for breaking the lease. Seems like it's premature at this point, though.
posted by Kadin2048 at 7:39 AM on June 4

I went through this. I signed a lease with a really good management company. Halfway through it, the absentee landlords decided they were going to take it over, which meant no longer do or pay for any of the repairs they were supposed to.

I was stuck with it. Your state laws may vary.
posted by bradbane at 11:38 AM on June 4

Am I legally bound to continue honoring the lease?

Simple answer: Until they break it, yes.

I am a landlord, but I am not your landlord (or even in your state). But states probably universally have a transferability clause. This is actually primarily for the protection of the tenant, as landlords are probably more generally interested in, say, kicking people out so they can charge higher rents.

This is Wisconsin's:

704.09 Transferability; effect of assignment or transfer; remedies. (1) Transferability of interest of tenant or landlord. A tenant under a tenancy at will or any periodic tenancy less than year-to-year may not assign or sublease except with the agreement or consent of the landlord. The interest of any other tenant or the interest of any landlord may be transferred except as the lease expressly restricts power to transfer. A lease restriction on transfer is construed to apply only to voluntary transfer unless there is an express restriction on transfer by operation of law.

(2) Effect of transfer on liability of transferor. In the absence of an express release or a contrary provision in the lease, transfer or consent to transfer does not relieve the transferring party of any contractual obligations under the lease, except in the special situation governed by s. 704.25 (5) .

(3) Covenants which apply to transferee. All covenants and provisions in a lease which are not either expressly or by necessary implication personal to the original parties are enforceable by or against the successors in interest of any party to the lease. However, a successor in interest is liable in damages, or entitled to recover damages, only for a breach which occurs during the period when the successor holds his or her interest, unless the successor has by contract assumed greater liability; a personal representative may also recover damages for a breach for which the personal representative's decedent could have recovered.

(4) Same procedural remedies. The remedies available between the original landlord and tenant are also available to or against any successor in interest to either party.

(5) Consent as affecting subsequent transfers. If a lease restricts transfer, consent to a transfer or waiver of a breach of the restriction is not a consent or waiver as to any subsequent transfers.

Your state laws almost certainly vary to some degree, but the basic principle will remain the same. An apartment building whose leases all break when sold is not an apartment building that is very attractive to an investor, because she will then have to spend time and money filling empty apartments, and thus is not very valuable to a seller.

The one exception is sales through foreclosure, which typically terminates a lease at some point between the mortgage default and the sheriff's sale.

Now, you may well suspect that your building will now be managed less effectively, but until they actually mess up to where you can invoke constructive eviction, you have to honor your lease. Most of the time, I would expect very little to change between now and the end of your lease, just because change is pretty slow. The roof doesn't leak now, but a new management company isn't going to suddenly make it leak. The only thing that could change quickly is the new company leasing to a bad tenant, especially right next to you. But if nobody moves, that isn't going to happen either.
posted by dhartung at 10:53 PM on June 4