What is a Landlord's Right to Mortgage Clause in a Lease?
Full Question:
We recently bought your Texas Residential Lease form. Upon review our tenants are concerned about section 18, 'Landlord's Right to Mortgage'. They do not want to grant us Power of Attorney. Can you tell me what could potentially happen if we took this part out of the lease? Why do we need power of attorney for this specific action?
05/16/2011 |
Category: Landlord Ten... ยป Residential ... |
State: Texas |
#24845
Answer:
This is legal language that is intended to prevent a tenant from objecting to signing a subordination agreement if you take out a new mortgage on the property. The tenant agrees that the lien of its lease will be subordinate to the lien of a mortgage. A landlord generally includes subordination language in its lease in anticipation of the requirement of its lenders. Without such a clause, the tenant could refuse to sign any such subordination agreement, but there really isn't a good reason for such objection unless they expect to sue you and get an interest in your property.
