Illinois Leasing Agent Practice Exam

What happens to existing leases when a 12-unit apartment building is sold to a new owner?

1. All leases are canceled

2. The leases remain in effect

3. Tenants must renew their leases

4. The leases are modified by the new owner

The correct answer is: The leases remain in effect

When a 12-unit apartment building is sold to a new owner, the leases that were in place prior to the sale remain in effect. This principle is rooted in landlord-tenant law, which holds that when a property is sold, the new owner steps into the shoes of the previous owner regarding existing lease agreements. The legal term for this is "real property transfer," where the sale of the property does not affect the rights and obligations under the current leases. Tenants retain their rights, and the terms of the original leases continue to govern the relationship between the landlord (now the new owner) and the tenants. The new owner must honor the lease terms, including rent amounts, duration, and any other specific agreements outlined in the leases. This continuity protects tenant rights and provides stability for both parties amidst changes in property ownership. The options that suggest cancellation or modification of leases do not reflect this legal framework and are not applicable in standard leasing agreements, which is why they do not represent the correct outcome in this scenario.