Purchased commercial building, legally have honor current leases?

Question

Purchased a three unit commercial building, previous investor paid water and sewer. Leases are good until 2021. Am I obligated legally to honor those leases? Was going to charge for sewer and water.

Ronald Rohde · Answer

Its very clear in the leases whether they can be terminated by LL or upon sale. What state are you in?

Krisitna L. · Answer

Definitely read through the terms of the lease. If some of the terms are questionable, consult an attorney.  If you are bound to the lease, start writing down additional terms you would like amended in 2021 and consult a lawyer a few months before renewing the leases.

Here are a few things you may want to consider: Common Area Maintenance (CAM), repairs, parking, late fees, taxes, excessive use of CAM, insurance,  utilities, garbage, transfer of ownership  etc.

Bjorik Mutize · Answer

Yea. good news is you have built in income. Your broker didn't notify you of this?

Greg Dickerson · Answer

@Erik Marshall yes you have to honor the leases including all the terms.

Eric Weireter · Answer

@Erik Marshall You could always do an amendment to the leases, but your tenants are going to have to agree to it. More than likely, your tenants will want something in return (such as suite updates or lower price per sq. ft. rent)

You should read thoroughly through the leases. Most commercial leases charge water/sewer back to the tenant through CAM charges. Or if you purchased a NNN building that doesn't have the units separately metered, the tenants may pay for a portion of the water/sewer (pro-rata share) through their TICAM charges.