When a warehouse owner starts to think about selling, the first worry is often the tenants. Selling a building with tenants in place is common, and the leases are a big part of what the next owner looks at. We buy buildings that are leased to tenants, owner-occupied, or vacant. This post walks through the paperwork that comes up when a leased building is sold: the leases, the rent roll, and the estoppel letter. It also covers what changes when the tenant is a federal agency, and one state rule about property taxes after a sale. It is general information, not legal or tax advice.
What a Lease Gives the Tenant, and What Stays With You
The Wex legal dictionary from Cornell Law School describes a lease as a contract that gives the lessee the right to possess and use property for a specified period of time in exchange for consideration, typically rent. Wex adds that the lessee obtains the right of possession during the lease term, while the lessor retains ownership of the property. Payment terms, maintenance responsibilities and the conditions for termination are governed by the lease agreement and applicable law.
So the next owner looks at a leased building as two things at once: the building itself, and the agreements that come with it. The rent, the time left on each lease, who pays for repairs and taxes, and any options to renew or leave early all shape what the building is worth to someone else. Send the leases and the rent roll early, because they are part of the value.
The Rent Roll: One Table That Sums Up Every Lease
A rent roll is a simple table with one line per tenant. It usually shows the tenant, the space, the monthly rent, the start and end dates, the deposit held, and any renewal options. Keep it in step with the signed leases, because the first thing a careful reader does is check one against the other. If a tenant pays late, is on a month-to-month basis, or has asked for a rent break, write that down plainly. A problem found during review costs more trust than the same problem told up front.
- Every lease and amendment. Also include side letters and any written agreement about rent, space or repairs, even an email.
- The rent roll. One line per tenant, matching the signed leases.
- Every deposit. A list of each security deposit you hold and where it is held.
- The payment history. A simple ledger of what each tenant has paid recently.
- Any open issue. A notice of default, a dispute, a repair request, or an improvement you promised a tenant.
What an Estoppel Letter Is
In legal terms, Wex defines estoppel as a bar that prevents one from asserting a claim or right that contradicts what one has said or done before. An estoppel letter puts that idea to work in a sale: the tenant signs a statement of the lease as it stands today, and the people buying or lending can rely on it.
The U.S. General Services Administration (GSA), which leases space for federal agencies, explains it in its PBS Leasing Desk Guide: a statement of lease, also known as an estoppel letter, provides the status and terms of the lease when the lessor or a financial institution requests it before the sale of a building. The guide, in a chapter whose pages were last revised 11/22/2019, says the letter must contain the terms and conditions of the lease, any issues with the lessor’s performance, and any later Lease Amendments. The federal lease clause behind it, 48 CFR 552.270-24, is current in the eCFR, and it says the Contracting Officer will deliver the letter within 30 days of a joint written request from the Lessor and a prospective lender or purchaser of the building. That clause is written into leases where the federal government is the tenant; a private lease sets its own terms for estoppel letters, if it has any. Under that clause, the letter states three things:
- Whether the lease is in full force and effect.
- The date to which the rent and other charges have been paid in advance, if any.
- Whether any notice of default has been issued.
The same clause says these letters are based solely upon a reasonably diligent review of the Contracting Officer’s lease file as of the date of issuance. With a federal tenant, then, the letter reflects what the government’s lease file shows. If your records and your tenant’s records disagree, the estoppel is where it shows up.
A different federal form shows how much a lender can care about a recent estoppel. In HUD’s Lease Addendum for multifamily ground leases, form HUD-92070M, an estoppel certificate signed by the Landlord, dated within 30 days of the Note endorsement, must be provided to Lender and HUD at closing. The Landlord must also confirm that the Ground Lease is in full force and effect and that there are no defaults or pending defaults. There the borrower is the tenant on leased land, so the landlord is the one who signs. That form is for apartment ground leases, not warehouses, so it is an example of the idea, not a rule for your building.
Start the Estoppels Early
In many sales, the seller is the one asked to collect a signed estoppel from the tenants the purchase agreement names. It often takes longer than owners expect. Some tenants are slow to answer, some send the form to their own attorney, and a tenant who is unhappy about a repair may hold the letter until the repair is done. A missing estoppel can hold up a closing, because the lender on the other side may not close the loan without it.
So ask for the estoppels as soon as the purchase agreement says they are needed, and follow up with each tenant by name. Before you ask, fix what you can. If a tenant has a fair complaint about the roof or the dock doors, a repair already made is easier to explain than a letter that lists it as an open issue. When the numbers on the rent roll, the leases and the estoppels all agree, the review goes more smoothly for everyone.
Security Deposits and Rent Paid Ahead
Wex says the laws of most states limit the size of a deposit, dictate its use, and set specific rules for when and how landlords must return the deposit. Its own example is a rule for the security deposit for residential property, so it does not settle the question for a warehouse. How a commercial tenant’s deposit moves to the next owner at closing depends on your state and your lease. Either way, list every deposit and any rent a tenant paid ahead, so the purchase agreement can account for them at closing. Ask your attorney what that means for your building.
When the Tenant Is a Federal Agency
A building leased to the federal government has its own steps. The GSA guide says the Government cannot prevent the sale of a building, but its recognition of the new owner is discretionary. If a lessor will be transferring the assets used to perform the lease to another entity, the guide says the lessor must immediately inform the LCO, the Lease Contracting Officer. Until the GSA change of ownership paperwork is complete, rent payments continue to be sent to the old owner, and the LCO must not issue payments to the new owner.
The guide lists what that paperwork includes, such as the document describing the transaction, for example the purchase and sale agreement or the deed, and evidence of the new owner’s financial capability to perform. It also says the SAM registration must match the owner of the property and the Lessor in the lease, and the Government pays rent by EFT to the account the lessor designates in SAM. So a sale with a federal tenant adds a second paper trail on top of the usual closing, and it pays to start it early.
The same chapter explains another form lenders ask tenants to sign, the subordination, nondisturbance, and attornment agreement (SNDA). In the GSA version, the lease is subordinated to the loan, and in exchange the lender agrees the lease continues in the event of a foreclosure on the loan. The General Clauses require GSA to execute an SNDA within 20 business days after receiving a written demand letter from the lessor. Many private leases carry a clause about these forms too, so read yours to see what each tenant has agreed to sign.
Property Taxes After a Sale in California
In California, the State Board of Equalization says a transfer can be a sale or purchase, and once the county assessor has determined that a change in ownership has occurred, Proposition 13 requires the county assessor to reassess the property to its current fair market value as of the date ownership changed. The Board adds that a current market value higher than the previously assessed Proposition 13 adjusted base year value will increase the property taxes. If your leases pass property taxes through to the tenants, a higher tax bill after the sale can change what they pay, and the next owner will weigh that. One metro page on this site quotes the same Board of Equalization rule in more detail. Ask a tax professional how it applies to your sale.
Questions Owners Ask
Do my tenants have to agree to the sale?
That depends on the lease. Some leases give a tenant the right to make an offer first, or to match another offer before the building is sold. Read each lease for that kind of clause, and ask your attorney what it requires before you sign a purchase agreement.
Who collects the estoppel letters?
Usually the seller asks the tenants, because the seller is the landlord they already deal with. The purchase agreement often says which letters are needed and by when.
What if the property is occupied, or the lease is a mess?
We look at owner-occupied, tenant-occupied, and vacant buildings. Tell us the situation and we’ll factor it in.
Every property is different. Tell us about your property and we’ll get back to you.
Sources
Facts on this page come from the public sources listed at the bottom, read on the dates shown.
- U.S. General Services Administration (GSA), PBS Leasing Desk Guide, Chapter 17: Lease Administration, PDF, page last revised 11/22/2019 (read 2026-10-14).
- Electronic Code of Federal Regulations (eCFR), 48 CFR 552.270-24, Statement of Lease, web page, up to date as of 10/09/2026 (read 2026-10-14).
- U.S. Department of Housing and Urban Development (HUD), Lease Addendum – Multifamily, form HUD-92070M (PDF) (read 2026-10-14).
- California State Board of Equalization, Change in Ownership – Frequently Asked Questions, web page (read 2026-10-14).
- Cornell Law School, Legal Information Institute (LII), Wex: lease, last reviewed March 2026 (read 2026-10-14).
- Cornell Law School, Legal Information Institute (LII), Wex: estoppel, last reviewed September 2022 (read 2026-10-14).
- Cornell Law School, Legal Information Institute (LII), Wex: security deposit, last reviewed April 2025 (read 2026-10-14).