Legal Question in Business Law in Alabama

leasing prior to purchasing property

If a first party is in negotiation to purchase a property, is it legal for that first party to lease to a second party before the first party has closed on the property?


Asked on 11/01/97, 5:14 pm

2 Answers from Attorneys

Gerald Hershenson Law Office of Gerald M. Hershenson

Leasing Property Before Neogiations Complete

If there is no written contract signed, thereis no legal obligation to complete negotiations.In that event a seller can lease the propertywithout legal consequences. If the property issold, it would be subject to lease. If therewas a written agreement or option agreement theresult could be different.

I am not an attorney in your jurisdiction and I suggest you seek the advice of local legal counsel.

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Answered on 11/02/97, 3:11 pm

It's not illegal but unless properly documented, it could be unwise.

The sale isn't over until the fat lady sings. Your lease had better have an out in case the saledoesn't go through or even gets delayed -- title problems,for example, can delay a sale without letting the partiesoff the hook.

You might want to disclose the P & S status to the potentiallessor; presumably they can't steal the deal from you anyway.(The downside is that you may not want them knowing how littleyou paid ...)

Anyway, it's legal but do it carefully so nothing can backfire onyou. You need an out for the lease in case troubles arise.

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Answered on 11/07/97, 12:33 am


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