‘Purchase does not terminate lease’ explained

One of the best-known rules of tenancy law is widely known as the rule that “purchase does not terminate tenancy.” This rule is laid down in Article 7:226 of the Civil Code, which regulates the transfer of a lease when a property is sold. In more legal terms, this provision means that when a leased property is sold, the tenant’s contractual rights remain valid in relation to the landlord’s legal successors. The aim is to ensure that the tenant’s right to enjoy the leased property is not lost. An investor who purchases leased real estate becomes the new landlord of the existing tenant.

Transfer of ownership

Through the purchase and transfer of real estate, the related lease agreement is automatically transferred from the seller/former landlord to the investor/new landlord. The investor thus becomes a direct party to a lease agreement that he did not conclude himself.

Exceptions

Not all clauses in the lease agreement are automatically transferred to the subsequent acquirer/new landlord by operation of law. Whether the agreements made between the landlord and tenant will be transferred to the new owner depends on the content of the relevant provision and the accompanying circumstances of the case. Please note: in most cases, only the core provisions of the lease agreement are transferred to the new landlord. If, for example, the lease agreement also includes a purchase option, this will in principle not be transferred to the new landlord. If the tenant wishes to retain the purchase option, they must enter into a new agreement for this. Does the tenant make use of a certain facility free of charge (e.g., parking space or storage space)? In that case, this use is not included in the rent and the new landlord is not bound by that agreement.

Furthermore, only the rights and obligations that become due after the moment of transfer are transferred to the subsequent acquirer. Suppose the transfer takes place on January 1, 2026. In that case, the rental periods up to and including December 31, 2025, are not transferred. If the tenant has not paid part of the rent before January 1, 2026, the old landlord must collect it. Do the parties want to arrange this differently? Then the old landlord must assign the rent claim to the new landlord. The tenant must be notified of this assignment.

Investors

For real estate investors, it is essential to know how lease agreements can be terminated and what the consequences are when purchasing a leased property. Therefore, always ensure thorough due diligence: examine the existing lease agreement and agreements made with tenants when purchasing rental property. Be alert to ongoing disputes or payment arrears.

Advice

Are you planning to purchase a residential or commercial property that is currently let and would you like to know which clauses you are bound by and which you are not? Do you have questions about the sale of a let property or do you have other legal questions about tenancy law? Our specialist lawyers will be happy to assist you.

Questions?

Do you have any questions regarding this article or other legal questions about Tenancy law? Our specialized attorneys are happy to assist you. You can contact them by phone and / or e-mail.