I’m thinking of buying a strip mall - question
First time commercial buyer here, so forgive me if I’m ignorant.

I’m looking at purchasing a strip mall. If I buy it, do I have to honor the existing leases or do they all get to be renegotiated?


[{"id": "dzp0ycu", "text": "Honor the existing leases", "replies": [{"id": "dzp2oaf", "text": "Not so sure about that buddy. Look up \"dominance dumping\" in Real Estate Law. Also sometimes referred to as the inaugural \"sit and shit\" versus the traditional \"meet and greet\". ", "replies": [{"id": "dzp2scc", "text": "That sounds pretty rare. Most leases from what ive seen (canada) have a lein on the title of the property.", "replies": [{"id": "dzp2zce", "text": "Yeah, might be different in Canada. Where i'm from what I mentioned above is pretty much the norm. Whenever you move into a new place or their is a change in ownership, the rightful person will come over and land a nice and built up anal snail somewhere in your home to display dominance. Of course while the tenant is cleaning this up, he or she is too scared to question anything from now on in fear of another beached turd.", "replies": [{"id": "dzp4c7m", "text": "Wut?", "replies": [{"id": "dzpjkzz", "text": "Lol clear trolling", "replies": [], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "dzp16fw", "text": "Honor the existing leases.\n\nEven if you could renegotiate them, have fun finding tenants if you have a reputation of fucking over the ones you already had.", "replies": [], "depth": 1}, {"id": "dzp1xdw", "text": "I get that - do the right thing - and I would. I\u2019m a good guy.\n\nI\u2019m asking about legally. Legally does a new owner have to honor existing lease until the renewal date or dies the new owner have a right the change the lease just because they bought the strip mall?", "replies": [{"id": "dzp2g0s", "text": "The new owner has the right to change the lease only, and if only, he visits every tenants space within the first 2 weeks of purchase to lay a dominance dump. The dump can be anywhere within the space just as long as its visible, big, and intimidating. This will show them who's boss and renegotiating their deals in your favor is a slam dunk. \n\nPM me if you need tips on how to let loose a real steamer. ", "replies": [{"id": "dzp3dn1", "text": "HA \ud83d\ude02", "replies": [], "depth": 3}], "depth": 2}, {"id": "dzpedgp", "text": "At the risk of sounding like a jerk, if you don't know the answer to this question off the top of your head, you aren't ready to be purchasing investment real estate properties. I'd continue to use the internet, books, and networking as resources to learn more about how commercial real estate works. ", "replies": [{"id": "dzsi99d", "text": "&gt; At the risk of sounding like a jerk, if you don't know the answer to this question off the top of your head, you aren't ready to be purchasing investment real estate properties. \n\nYou're not being a jerk.  You are being realistic.", "replies": [], "depth": 3}], "depth": 2}, {"id": "dzpgszt", "text": "Have you ever owned commercial real estate before? If no, find a consultant to help you. \n\nAre you getting a loan? Then yes, you need SNDAs and Estopples. If you don\u2019t understand those terms, find a consultant to help you. \n\nAlso, if you plan on booting the existing tenants, you should only be paying the discounted cash flow of re-leasing the shopping center at the high end and the land value plus depreciated replacement cost of the improvements at the low end. If you don\u2019t understand how to do that, you guessed it, find a consultant to help you ", "replies": [{"id": "e4gav53", "text": "He could just go for copy of the lease and certified rent roll - but estoppel cert is the better due diligence.\n\nAlso to your last point - no seller is going to go for that discount unless they are having issues with some sort of pressure (tenant delinquency, interest rate hikes, building maintenance)", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "dzp3gxf", "text": "I have a jerk saying that\u2019s how it works. I\u2019m saying you have to honor the lease(s) until renewal. I just couldn\u2019t find it in writing. I thought there may be some real estate attorney or commercial broker that knows the law in Texas.", "replies": [{"id": "dzp4oc4", "text": "You\u2019ll find that 95% of the answers to questions regarding tenants is \u201cwhat does the lease say?\u201d. \n\nThe lease is a legal right to use the space for the specified term. If you try evict you\u2019re putting yourself at risk of being in violation of the lease and sued for damages. \n\n", "replies": [{"id": "e4gazlh", "text": "The answer is always in the leases.\n\nSome have the damnedest clauses too.\n\nI\u2019m working a syndicated tic deal with 135k sq feet 8 properties and 28 leases - I\u2019ve got 60 days of lease review due diligence built into the LOI - that\u2019s a lease every two days not accounting for weekends off -", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "dzp40d7", "text": "I believe you need to honor the leases. \n\nI'm curious why you are considering buying a strip mall? Why do you see this as a better investment than other types of commercial real estate?", "replies": [], "depth": 1}, {"id": "dzp4jbp", "text": "To be honest, if you\u2019re buying a strip mall, you shouldn\u2019t be asking this on Reddit. \n\nYou\u2019re inheriting multiple commercial leases. You should be able to afford a lawyer and you should already have one on deck at all times if you don\u2019t feel like having your pants sued off. \n\nThis is a very simple question, and the answer depends on your local laws and/or the circumstances of the purchase. You should not enter into this kind of commitment without knowing the answer with 100% certainty. \n\nThere are bigger fish to fry in buying a strip mall so you better have your frying pan ready. ", "replies": [], "depth": 1}, {"id": "dzpg9p1", "text": "The answer is in the leases.  ", "replies": [], "depth": 1}, {"id": "dzpguyh", "text": "Appreciate all the advice. It\u2019s just in the general discussion area right now.  Thought this thread would be a good sounding board. Thanks, All", "replies": [{"id": "dzpjsog", "text": "As part of the due diligence before closing, you're allowed to file tenant estoppels to ensure that the lease you have is correct and the most recent amendments are visible to you", "replies": [], "depth": 2}], "depth": 1}, {"id": "dzsi7l5", "text": "Unless stipulated in the Tenant's leases, transfer of property ownership do not terminate their lease.  Some Landlords will have a clause addressing this.  However, most leases do not and thus must be upheld until the natural termination.", "replies": [], "depth": 1}]