Renters' Forum

When Building Changes Hands, New Owner Is Bound by Old Lease

By Robert Griswold, Steven R. Kellman and James McKinley
Saturday, October 20, 2007

Q: My roommates and I signed a lease on a townhouse in August 2005. Our lease said that after 12 months, we would be on a month-to-month rental agreement at the same rental rate. We learned last week that our landlord had sold the property to another owner several months ago. Are both sides bound to the same lease terms, or are we technically living here without a lease? Could we be thrown out without notice or have the rent raised?

A: Property manager Griswold replies: After a property changes ownership, the new owner is bound by the terms of the lease in place unless there is specific language that states otherwise. So if your rental property came under new ownership before your lease expired in August 2006, the new owner could not change the terms of your fixed-rate lease and had to honor it until it expired. However, now that the 12-month lease has expired, the new owner can raise your rent as long as he or she complies with state law and gives you proper written notice.

Rather than wait and worry, contact your new landlord and offer to sign a new lease. The new owner may want a reasonable rate increase, but you would have the peace of mind of knowing you have a fixed rent. If the landlord intends to own the property as a rental, he will be glad to have a long-term tenant on a lease. This may work out fine for you and your new landlord.

As a housing manager for a large military installation, I am involved in service members' leasing of community rental properties. The apartment owners require credit reports for both military member and spouse. Recently, two military members with spouses born in Japan were charged double the security deposit. The larger security deposit was because there was no credit history for the spouse. The local apartment association advises us that the larger deposit is appropriate if all applicants without credit history are treated the same. Is this disparate treatment?

Steven Kellman, an attorney for tenants, replies:

It is surprising to many people that certain examples of discrimination are perfectly legal. It may also come as a surprise to others that many things actually amount to illegal discrimination. Characteristics we have that are part of who we are make up the protections against illegal discrimination, including race, religion, national origin, gender, disability, etc. These are things we have little to no control over.

The things we do control put us in classes that generally are not protected. These include things such as earning an income, paying bills on time, being sued for eviction, being convicted of crimes, etc. The things we do also include building a good or bad credit history. Of course, we can also have no credit history. A landlord is entitled to rely on our credit history, or lack thereof, in making renting decisions, including doubling the deposit in the case of bad or no credit. This is a legal form of discrimination as long as the decision-making rules are applied to everyone equally.

For foreign-born applicants who may not have a credit history in this country, there are things that can be done. For example, they could obtain evidence of their good credit from abroad and keep it in a file to present to a landlord. This could include letters of reference or other documents that would be helpful in assessing the creditworthiness of an individual.

This column on issues confronting tenants and landlords is written by property manager Robert Griswold and San Diego lawyers Steven R. Kellman, director of the Tenants Legal Center, and James McKinley, member of the Moffitt & Associates law firm, which represents landlords. E-mail your questions to Griswold at Questions should be brief and cannot be answered individually.

Copyright 2007 Inman News Features

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