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updated: 7/31/2011 12:48 PM

Law talk: Lease takes precedence

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Q. We rented a small house from a guy about a year and a half ago. We signed a one-year lease and when the year was up, we signed another one-year lease with a small increase in the rent. The current lease ends Dec. 15.

The owner now informs us he has sold the house and we need to get out by Aug. 15. This is a terrible situation for us as my wife is currently going through some medical procedures and she will need to be on bed rest for at least a few weeks. This would be a horrible time for us to have to move.

Does our lease give us any rights against the new owner, or are we out of luck because of the sale?

A. Presuming the lease is valid, the lease takes precedence over the change in ownership. You may retain possession of the property for the duration of the lease. My only concern would be that someone takes the position that the lease was not executed by an owner or with the owner's approval. The argument would then be that the party that executed the lease had no authority to do so and, accordingly, the lease is invalid. Given the length of time you have been tenants at the property, I believe this would be a very difficult argument to sell.

Even if the owner could establish the lease was invalid, the fact that you have retained possession of the property for the last year and a half entitles you to notice of termination. Such notice would not be valid until the last day of the month following the month notice was given. In other words, if notice was given to you on July 15, the lease could not be terminated until Aug. 30. However, as you describe your situation, I believe you are pretty safe through Dec. 15.

Q. I bought a rundown house a few months ago with the plan of fixing it up and selling it. I paid cash for the house. After putting about $30,000 into the house plus my labor, I tried to get a home-equity loan to finish the work. The loan was approved but my loan officer tells me there are building code violations recorded on the title that must be cleared off before the loan can go through.

I asked my attorney how this could be and he said the violations must have been recorded after we closed or they would have been on the title when I bought. Is this true, or did the attorney screw up and now he's trying to cover himself? Also, how can I get these violations off my title so I can get the loan?

A. Before closing, the seller provides the purchaser with a title commitment. The commitment indicates everything that is recorded against the property as of a certain date, usually a few weeks before closing. I assure you, if these violations were present on the commitment, not only would your attorney have raised the issue and not allowed you to close absent some resolution, your lender would not have funded the transaction.

What I can only presume occurred is that your seller had an ongoing problem with code violations before closing, a building code case was pending in housing court and he/she didn't tell anyone (check out the Real Estate Disclosure, which was probably attached to the contract). The seller then got lucky when nothing was recorded against the property until after the search date of the commitment.

You have at least three possible courses of action. The easiest and the one I would try first is to contact the building department of your village and request a reinspection. It's possible you have corrected all the violations and the village will enter an Order of Compliance, which should clear your title after it is recorded. Another option would be to file a claim with the title company that issued you your owner's policy. Finally, you could contact the seller's attorney, threaten a lawsuit for failure to disclose something that obviously should have been disclosed, and demand they get the problem resolved.

• Send your questions to attorney Tom Resnick, 345 N. Quentin Road, Palatine, IL 60067, by email to tdr100@hotmail.com or call (847) 359-8983.

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