In the context of real property sale, what happens to an existing lease?

In the context of a real property sale, the correct understanding is that the lease is transferred and binding on the new owner. When a property that has an existing lease is sold, the new owner steps into the shoes of the previous owner regarding the lease agreement. This means that the lease remains in effect, and the new owner must honor the terms of that lease.

This principle is rooted in property law, which stipulates that leases typically run with the land. Therefore, the rights of the tenant under the lease remain intact even after a change in ownership. Tenants have the assurance that their lease is still valid, and they can continue to occupy the property according to the lease terms.

This transferability helps maintain stability in the tenant's occupancy and protects their rights, which can be particularly important in rental markets where tenants might otherwise fear sudden changes upon a sale.