Expert: Jessica Bryan - 7/1/2004

Question
My parents just recently bought a house and closed on it the end of May '04.  Before closing we knew that the property included a lease with a current tennant in a morton building (approx. value: $50,000) for a farmer to store his farm equiptment or anything he wants, but didn't know he had it for up to 10 years longer by renewing each year. We do not have the option to terminate the lease. The lease was made between the current tennant and the previous owner of the house and the lease gets inherited to the new owners of the house (us) and we're obligated and binded to the terms of the lease. We do not want the lease at all. We do not have access to the building at all for the time the tennant is leasing the building, which might be up to 10 years. The lease also says the tennant is only to pay $100/year to the house owner's for the use of the $50,000 building which is ricoculous. The property came with 10 acres of land and that building is on the land. We paid for that building because it was included in the price of the house and we are paying taxes on the building and that land. We were working with an attorney and tried to get rid of the lease before closing, but that was not possible.  How would it be possible to terminate the lease and get full ownership of the building?  Thanks, Tim

Answer
Dear Tim;
Since I have not got a copy of the lease and the terms therein it is difficult to tell you what the loopholes and/or qualifiers may be.  Since you said that you are working with an attorney it is he who is better qualified to look over the lease to find any way out.  Most leases do have contingiencies built in.  Even if there is a lease that goes with the land and a new owner, there are certain things that would cause the lease to be terminated.  My suggestion is to look over the lease carefully and see if there is a loophole.  Perhaps you will need to change attorneys.  If the lease is perhaps a simple one done by agreement with both parties and not one that has been drawn up by an attorney, you will have an easier time breaking the lease.  However, I have dealt with many, many attorneys in my career and most will tell you that there isn't a contract around that can't be broken!

If you choose to get rid of the tenants, why not just raise their rent?  If you raise it high enough they will terminate the lease themselves.  (I doubt that the lease doesn't have some provision for increase in the lease amount.) There are some good websites that might be able to help you understand some of the issues involved in breaking a lease.  There is also free legal advice available on the web. You can start with a website mostly focused on tenants rights, but it will help you see some of the things you can do as well--by working backwards: http://www.movinghints.com/breaking_a_lease.htm

I wish you lots of luck with this and hope that you can resolve this quickly.

Sincerely,
Jessica Bryan
Managing Broker
House to Home Realty Services