[WSBARP] Trustee Sale and Commercial Tenants - Questions

[Robert Ordal]

Roberto

There's an old case, Sands v US, 198 F.Supp. 890 (W.D. Wash. 1960) which held that the lender is bound by what the lender would find out about the property by inquiring of occupants/users.  Essentially, the lender has to give notice to foreclose out the tenant's rights in the property, e.g. any leasehold interests.  I think there are more recent cases, but I don't have them.

Usually the lenders don't give notice because they want the leases to survive because they want the rents.  But if the lender wants to eliminate the leases, the lender has to foreclose on the tenants.

Bob

From: wsbarp-bounces at lists.wsbarppt.com [mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of Roberto Castro
Sent: Wednesday, May 11, 2016 5:39 PM
To: wsbarp at lists.wsbarppt.com
Subject: [WSBARP] Trustee Sale and Commercial Tenants - Questions

Greetings Listserv members

Is there are a case (published or unpublished) that discusses whether prior to a trustee sale, commercial tenants need to be given notice of the sale? My reading of RCW 61.24.040 is that the notice applies in a residential, coop, multiplex setting, and not when space is leased to retail and professional tenants.  (The leases here where entered well after the mortgage and there is no subrogation clause).  Your thoughts and views are welcomed.

As a follow up, it seems that the buyer can terminate the leases since this is not a sale a sale in the ordinary course. As a further follow-up, if a commercial tenant makes improvements a year before the trustee sale, it seems to me that the tenant(s) have limited or no recourses against the buyer, rather the recourse, if any, is against the former lessor (leases are silent on this issue).

I could not find any case law on the above issues, please share with other listserv members or reply confidentially.

Thank you.

Roberto
509-679-3668
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