A buyer purchases a 300-acre ranch using the TREC Farm and Ranch Contract. The seller has existing grazing leases with neighboring ranchers that run for another 2 years. The buyer wants to terminate these leases immediately after closing. Can the buyer do this?
Correct Answer
B) No, the buyer must honor existing lease terms, though the contract may address lease obligations
Existing leases generally survive the transfer of property ownership under Texas law. The buyer must honor the lease terms. However, the purchase contract can address how existing leases will be handled and whether the seller will attempt to terminate them before closing.
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Related Concepts
Contract termination occurs when a contract is ended or discharged, releasing both parties from their obligations. A contract can be terminated through performance, mutual agreement, operation of law, or breach.
A counteroffer is a response to an original offer that changes one or more terms of the offer, effectively rejecting the original offer and creating a new offer. The party who makes the counteroffer becomes the new offeror.
Earnest money is a deposit made by the buyer at the time of the offer or shortly after to demonstrate good faith and serious intent to purchase the property. It is also called a good faith deposit.
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