Foreclosure, Sale, Damage or Condemnation

Your lease might contain several clauses that affect your rights to the building. These issues are often addressed under Foreclosure, Sale and Damage or Condemnation of Building clauses, and are designed to protect the landlord’s interest. 

These clauses stipulate that your rights as a tenant are subordinate to the rights of other persons and/or organizations with an interest in the property, such as a mortgage lender. This clause might also demand that the landlord has the right to assign your lease to a new owner in the event the building is sold. Your rights under the lease can also be terminated if the building is condemned, heavily damaged (fire, natural disaster, etc.) or foreclosed. 

These are general, standard provisions of commercial and industrial leases, and it is difficult to get landlords to remove or modify them. However, if you have a long-term lease for a major portion of the building, you might want to negotiate for a share of any condemnation award on the theory that you will suffer substantial monetary loss if such a situation arises. 

A condemnation award might include insurance money if the building is damaged, or money from a sale, if the property is sold due to an eminent domain purchase. An eminent domain sale occurs when the government (local, state or federal) seizes private property for public use such as a library, highway, new school, etc. In these situations, the government buys the land and/or building from the owner at market value.