Illinois Leasing Agent Practice Exam

Which of the following best describes the nature of leases upon the sale of a property?

1. Leases are considered void

2. Leases can be renegotiated

3. Leases transfer with the property

4. Leases are subject to new agreement terms

The correct answer is: Leases transfer with the property

Leases transfer with the property because they are considered rights associated with real estate. When a property is sold, any existing leases typically remain in effect and bind the new owner to the terms established in those leases. This principle is grounded in the idea that leases create an interest in the property for the tenant, which is honored even when ownership changes hands. As such, the new owner must respect the lease agreement and allow tenants to continue their tenancy until the lease’s expiration or unless the lease provides a clause that allows for its termination under certain conditions. This continuity is vital in protecting tenant rights and ensuring stability in rental situations, as tenants can rely on their lease being honored. When a property is sold, the obligations and rights of the lease carry over, allowing the tenant the assurance of their living arrangements regardless of changes in ownership.