T buys a building from N that is leased by S. What must T do regarding the lease?

T buys a building from N that is leased by S. What must T do regarding the lease?

• A. Cancel S's lease
• B. Negotiate a new lease with S
• C. Assume the lease and renegotiate terms
• D. Honor S's lease

Answer: (D)

When ownership changes hands, the lease stays in effect. A lease is a binding contract tied to the property, so the new owner becomes the landlord under the existing agreement and must honor its terms for the duration of the lease. This means S continues to occupy under the same rent, duration, and conditions that were agreed with N, unless the lease itself provides a way to change those terms or the lease ends. So the new owner cannot cancel the lease or unilaterally renegotiate its terms just because they bought the building. If the owner wants different terms, those would have to be negotiated with S at renewal or through a mutual agreement, but not as an automatic change upon purchase.

When ownership changes hands, the lease stays in effect. A lease is a binding contract tied to the property, so the new owner becomes the landlord under the existing agreement and must honor its terms for the duration of the lease. This means S continues to occupy under the same rent, duration, and conditions that were agreed with N, unless the lease itself provides a way to change those terms or the lease ends.

So the new owner cannot cancel the lease or unilaterally renegotiate its terms just because they bought the building. If the owner wants different terms, those would have to be negotiated with S at renewal or through a mutual agreement, but not as an automatic change upon purchase.