Attornment

Definition

Attornment refers to the legal acknowledgment by a tenant of a new landlord, often occurring when the property is sold or foreclosed upon. Essentially, it means the tenant recognizes the new owner of the property as their landlord and agrees to continue paying rent and abiding by the terms of the lease under the new ownership.

Examples

Change of Ownership via Sale: Imagine a commercial property being sold to a new investor. The tenants occupy the building under various lease agreements. To formalize the new ownership, the tenants are asked to sign attornment agreements, recognizing the new owner as their landlord.
Foreclosure Scenario: Abel defaulted on the mortgage against his shopping center, leading to a foreclosure by Happy Life Insurance Company, which then became the landlord. Happy Life Insurance asked all tenants to sign an attornment letter acknowledging it as the new landlord.

Frequently Asked Questions

1. Why is an attornment agreement necessary?

An attornment agreement is crucial as it formally establishes the new landlord-tenant relationship and ensures that the tenant agrees to continue with the existing lease. It provides legal clarity and helps avoid future disputes over rental payments and lease terms.

2. Does attornment affect the original lease terms?

No, attornment does not change the original lease terms. It’s merely an acknowledgment of the new landlord. All terms and conditions of the original lease remain in effect unless renegotiated or specified otherwise.

3. What happens if a tenant refuses to sign an attornment agreement?

If a tenant refuses to sign an attornment agreement, it could lead to a legal dispute. The new landlord might take legal action to enforce the lease terms, depending on the jurisdiction and specific situation.

4. Is attornment common in residential leasing?

Attornment is more prevalent in commercial property transactions, foreclosure situations, or any context where properties change hands while existing leases are in effect. It is less common in typical residential leasing.

5. Can a lease specify automatic attornment?

Yes, many leases include a clause that stipulates automatic attornment upon the transfer of property ownership. This clause ensures a seamless transition without requiring new agreements each time the property changes hands.

Lease Assignment: The transfer of rights and obligations of an existing lease by a tenant to another party, known as the assignee.
Sublease: An arrangement in which a tenant leases part or all of their rental property to another party, retaining overall lease responsibilities.
Foreclosure: The legal process by which a lender takes possession of a property due to the borrower’s failure to meet the mortgage obligations.
Estoppel Certificate: A document used in property transactions to verify the current status of lease agreements and ensure all parties acknowledge the existing lease terms.

Online Resources

Nolo Legal Encyclopedia>- Nolo provides detailed articles and legal resources about tenancy, leases, and real estate law.
FindLaw Real Estate Law - FindLaw offers articles, guides, and information regarding real estate transactions and tenant-landlord issues.
American Bar Association – Real Property Trust and Estate Law - The ABA offers insights and guidelines on complex real estate transactions, including matters related to attornment.

References

Black’s Law Dictionary - A leading legal dictionary providing definitions and explanations of legal terms, including those related to real estate.
The Essential Guide to Real Estate Contracts - An insightful guide covering various contractual elements in real estate, including attornment agreements.
Property Management Legal Handbook - This book provides comprehensive information on legal matters in property management, including tenant and landlord relations.

Suggested Books for Further Studies

“The Complete Guide to Real Estate Finance for Investment Properties” by Steve Berges
“Property Management for Dummies” by Robert S. Griswold
“Real Estate Law” by Marianne M. Jennings
“Landlord’s Legal Kit For Dummies” by Robert S. Griswold
“Commercial Real Estate Investing: A Creative Guide to Success” by David M. Geltner

Real Estate Basics: Attornment Fundamentals Quiz

### What is attornment in the context of real estate? - [x] A tenant's formal agreement to recognize a new landlord. - [ ] A legal document required to market a property. - [ ] A method for calculating property taxes. - [ ] A contract for selling the property. > **Explanation:** Attornment is a tenant's formal acknowledgment of a change in ownership and their agreement to recognize the new property owner as the landlord. ### When might an attornment agreement typically be used? - [x] During the foreclosure or sale of the property. - [ ] When negotiating new lease terms. - [ ] For routine rent adjustments. - [ ] To renovate a leased space. > **Explanation:** Attornment agreements are typically used during foreclosure or property sales to establish that tenants will recognize and adhere to their lease under the new landlord. ### Does attornment affect original lease terms? - [x] No, it’s just an acknowledgment of the new landlord. - [ ] Yes, it nullifies the lease terms. - [ ] Only if both parties agree in writing. - [ ] Depending on state law. > **Explanation:** Attornment does not change the original lease terms but formalizes the tenant transferring their duties to the new landlord. ### What is the main reason landlords require attornment agreements? - [ ] To increase rent. - [ ] To make new lease terms. - [x] To legally formalize the new landlord-tenant relationship. - [ ] To evict current tenants. > **Explanation:** Landlords require attornment agreements to legally formalize the new landlord-tenant relationship, ensuring tenants acknowledge the new ownership. ### What could an automatic attornment clause in a lease accomplish? - [x] Make the attornment process seamless without new agreements. - [ ] Allow tenants to sublease freely. - [ ] Change the lease terms automatically. - [ ] Force tenants to sign a new lease. > **Explanation:** An automatic attornment clause would make the process seamless, automatically recognizing new ownership without requiring additional agreements from tenants. ### How often does attornment happen in typical residential leasing? - [ ] Frequently - [ ] Never - [ ] Occasionally - [x] Rarely > **Explanation:** Attornment often happens in commercial property transactions and is less common in typical residential leasing. ### What other legal document provides a similar function in verifying lease status during property transactions? - [x] Estoppel Certificate - [ ] Deed - [ ] Mortgage Agreement - [ ] Lease Assignment > **Explanation:** An estoppel certificate is used to verify the status and terms of lease agreements, similar to attornment in validating tenant relationships. ### What is a tenant agreeing to by signing an attornment agreement? - [x] To continue their lease under the new landlord. - [ ] To renegotiate the lease terms every month. - [ ] To pay less rent. - [ ] To buy the property. > **Explanation:** By signing an attornment agreement, a tenant agrees to continue their lease under the new landlord as stipulated in the original lease terms. ### What happens when a tenant signs an attornment agreement in a foreclosure situation? - [ ] The lease is automatically terminated. - [ ] The lease terms change drastically. - [x] The tenant acknowledges the new landlord resulting from the foreclosure. - [ ] The tenant assumes ownership of the property. > **Explanation:** In a foreclosure situation, a tenant signing an attornment agreement acknowledges the entity that gained ownership through foreclosure as their new landlord. ### What might be included in a lease to ensure tenants must attorn? - [ ] A rental increase clause. - [x] An automatic attornment clause. - [ ] A security deposit statement. - [ ] A property maintenance schedule. > **Explanation:** A lease might include an automatic attornment clause to ensure tenants will automatically recognize the new property owner as their landlord without requiring further agreements.