Letter of Attornment is a legal document that establishes recognition of a landlord by a tenant when the property ownership changes hands. Essentially, the tenant agrees to pay rent to the new property owner and adheres to the terms of the existing lease agreement. This letter is often used during property sales, foreclosures, or when the property is transferred as part of a larger transaction.
Examples
- Property Sale: When a commercial building is sold, the tenants receive a Letter of Attornment, indicating that they should now direct their rent payments to the building’s new owner.
- Foreclosure: If a property is foreclosed, a Letter of Attornment may be issued to acknowledge the new entity that has taken control of the property and to establish continuity in tenancy.
- Inheritance: In cases of inherited property, heirs may use a Letter of Attornment to formalize that existing tenants should recognize them as the new landlords.
Frequently Asked Questions (FAQs)
Q1: Is a Letter of Attornment mandatory in all property transfers?
A1: While not always mandatory, it is a common practice to ensure legal clarity and uninterrupted tenancy, especially in commercial real estate transactions.
Q2: Does a Letter of Attornment modify the original lease terms?
A2: No, it does not modify lease terms but merely acknowledges the change in the property owner. The original lease terms remain intact.
Q3: How is a Letter of Attornment typically delivered?
A3: It is generally delivered formally, often via certified mail or other verifiable delivery methods, to ensure that the tenant has properly received and acknowledged it.
Q4: Can a tenant refuse to sign a Letter of Attornment?
A4: Tenants usually cannot refuse without violating their lease agreements. Refusal might lead to legal complications and potential eviction, depending on the terms of their lease contract.
- Attornment: The act of a tenant formally recognizing a new landlord or property owner.
- Lease Agreement: A contract between a landlord and tenant outlining the terms and conditions of the tenancy.
- Rent Assignment: The transfer of the right to receive rental income from a property from the owner to another party.
- Foreclosure: The legal proceedings initiated by a lender to repossess the property when the borrower defaults on the mortgage loan.
Online Resources
References
- Investopedia. (2022). Letter of Attornment. Retrieved from Investopedia.com
- Nolo. (2022). Commercial Lease Terms. Retrieved from Nolo.com
- Rocket Lawyer. (2022). How to Write a Letter of Attornment. Retrieved from RocketLawyer.com
Suggested Books for Further Studies
- The Complete Guide to Real Estate Finance for Investment Properties – Steve Berges
- Real Estate Law (Real Estate Law (Seidel, George)) – Marianne M. Jennings
- Real Estate Principles: A Value Approach – David C. Ling and Wayne R. Archer
- Commercial Real Estate Investing: A Creative Guide to Succesfully Making Money – David Hampshire
Real Estate Basics: Letter of Attornment Fundamentals Quiz
### What does a Letter of Attornment indicate?
- [ ] It transfers property ownership.
- [ ] It modifies the original lease terms.
- [x] It acknowledges a new landlord or property owner.
- [ ] It terminates a lease agreement.
> **Explanation:** A Letter of Attornment indicates that the tenant recognizes a new property owner or landlord and continues tenancy under the existing lease terms.
### When is a Letter of Attornment most commonly used?
- [ ] During tenant disputes.
- [ ] At the start of a new lease.
- [x] During property ownership transfer.
- [ ] For property renovations.
> **Explanation:** A Letter of Attornment is most commonly used during property ownership transfer events, ensuring tenants are aware and acknowledge the new landlord.
### Does a Letter of Attornment alter the lease's original terms?
- [ ] Yes, it changes the rental amount.
- [ ] Yes, it adds new lease clauses.
- [ ] Yes, it shortens the lease duration.
- [x] No, it does not modify the lease terms.
> **Explanation:** The Letter of Attornment does not alter the original lease terms, it simply acknowledges the new landlord.
### How is a Letter of Attornment typically delivered?
- [ ] Verbally.
- [ ] Via a phone call.
- [ ] Through social media.
- [x] Formal, verifiable delivery methods.
> **Explanation:** Letters of Attornment are typically delivered formally, often via certified mail, to ensure the tenant has received and acknowledged it.
### Can a tenant refuse to sign a Letter of Attornment?
- [ ] Yes, without any consequence.
- [ ] Yes, and can demand new lease terms.
- [x] No, it could violate lease agreements.
- [ ] Yes, if they don’t like the new owner.
> **Explanation:** Tenants usually can't refuse to sign a Letter of Attornment without violating lease agreements, leading to potential legal complications.
### What is the main purpose of a Letter of Attornment?
- [ ] To terminate a lease.
- [ ] To increase rent.
- [ ] To issue eviction notices.
- [x] To recognize a new property owner.
> **Explanation:** The main purpose of a Letter of Attornment is to formally recognize a new property owner and maintain the tenancy.
### Who issues a Letter of Attornment?
- [x] The new property owner.
- [ ] The tenant.
- [ ] Property maintenance companies.
- [ ] Mortgage lenders.
> **Explanation:** The new property owner issues a Letter of Attornment to inform the tenant about the change in property ownership.
### What legal process might necessitate a Letter of Attornment?
- [ ] Property development.
- [ ] Lease renewal.
- [x] Foreclosure.
- [ ] Tenant request.
> **Explanation:** A foreclosure or sale of the property may necessitate a Letter of Attornment to recognize the new owner.
### Is a Letter of Attornment a complex agreement?
- [ ] Highly complex with many clauses.
- [ ] A simple modification to increase rent.
- [ ] Always requiring court approval.
- [x] Generally straightforward, acknowledging new ownership.
> **Explanation:** It's generally a straightforward document, simply acknowledging the new ownership without altering the lease’s terms.
### What happens if a tenant doesn't comply with the Letter of Attornment?
- [ ] Immediate eviction.
- [x] Potential for lease violation.
- [ ] Higher rent.
- [ ] Physical property inspection.
> **Explanation:** Non-compliance could potentially lead to lease violations and legal actions, depending on the lease terms in place.
