How to Sell a House With Tenants in Place in New York
Quick answer: Yes, a New York owner can generally sell a house with tenants in place, and the buyer usually takes the property subject to the existing leases. Before you sell, gather each lease, the rent ledger and the security deposit records, and ask a New York real estate attorney which rules apply to each unit.
What selling a house with tenants in place means
Selling with tenants in place means the people renting from you stay in their homes through the sale. You do not ask anyone to move, you do not wait for a vacancy, and the buyer becomes the new landlord once the deal closes.
Owners reach this point for different reasons. Some are tired of handling repairs and chasing rent. Others inherited a two-family house in the boroughs, a rental on Long Island or a single-family home upstate and never planned to be landlords at all.
This guide covers the statewide basics. For local detail, read our guides on selling a house with tenants in Queens, selling a Bronx rental with tenants still living there, selling a rental property in Westchester and leaving the landlord business in Rockland County.
What happens to the lease when the house sells
In New York, a lease generally survives a sale. The buyer generally takes the property subject to the existing leases, so the sale on its own does not end anyone’s lease. The new owner steps in as landlord.
Your purchase contract should state whether the buyer is taking the property subject to the leases. If a lease was recorded with the county clerk, that record gives later buyers notice of it. Have your attorney check the contract language before you sign anything.
For your tenants, the practical change is simple: the lease they signed stays in force, and the person they pay rent to is different.
Notice rules for non-renewal and large rent increases
New York Real Property Law section 226-c sets notice periods for two situations. One is when a landlord intends not to renew a residential tenancy. The other is when a landlord plans to raise the rent by 5 percent or more. In both cases the tenant must get written notice:
- At least 30 days if the tenant has lived there less than 1 year
- At least 60 days if the tenant has lived there 1 to 2 years
- At least 90 days if the tenant has lived there more than 2 years
Be clear about what this rule covers. It is a notice rule for non-renewal and large rent increases. It is not a rule for ending a tenancy because of a sale, and it does not let anyone end a lease early.
Some apartments carry extra protections, rent-stabilized units being one example. Before you decide anything about renewals ahead of a sale, ask your attorney which rules apply to each unit.
Handing over security deposits at closing
Deposits are one of the details most worth getting right. Under General Obligations Law section 7-105, a landlord who sells must turn over the tenants’ security deposits to the buyer at the time the deed is delivered or within five days after.
The law also requires you to notify each tenant by registered or certified mail that the deposit was turned over, and to give the buyer’s name and address. That letter tells the tenant who now holds the money and how to reach the new owner.
A clear record of each security deposit, showing which tenant paid it and when, makes this hand-off much easier. Ask your attorney to put the transfer and the mailed notices on the closing checklist so neither step slips.
Why you should never try to clear a unit yourself
Some owners feel pressure to deliver an empty house. Do not try to make that happen on your own. New York Real Property Actions and Proceedings Law section 768 protects any occupant who has lived in a unit 30 consecutive days or longer, or who has a lease.
For those occupants, it is unlawful to use or threaten force to make them leave, to interrupt essential services, or to remove the door or change or disable the lock. A violation is a class A misdemeanor, and civil penalties also apply.
That is not a risk worth taking. A buyer who takes the house with tenants in place does not need the unit to be empty before closing. And if a tenant would like to move, there is a lawful way to handle it, covered below.
Paperwork a buyer will ask for
Anyone buying a rental wants to understand exactly what they are taking on. Pulling your records together early keeps the sale organized and avoids last-minute scrambling. Start with:
- Each lease, plus any renewals
- A rent ledger showing what each tenant pays and when
- A record of each security deposit
- A list of any side agreements, such as parking, storage or who pays which utilities
Buyers and lenders often ask for a tenant estoppel certificate too. It is a signed statement from a tenant that confirms the rent, the lease term, the security deposit and any side agreements. Once signed, a tenant is held to what it says, so make sure the details match your own records before one goes out.
Keep tenants informed in writing as the sale moves along. A short, respectful letter explaining that the property is being sold, and who to contact with questions, goes a long way.
A voluntary move-out agreement, if the tenant agrees
Sometimes a tenant is already thinking about moving. In that case, the two of you may agree on a voluntary move-out, often called “cash for keys.” It is possible only if the tenant agrees. It is never something an owner can impose.
If you go this route, put it in a written agreement drafted by an attorney, so both sides know exactly what was agreed.
Treat it as an option rather than a requirement. A buyer who is taking the tenancy as it stands has no need for the unit to be vacated.
How a Fair Offer NY offer works for a tenant-occupied house
We can buy a house with tenants in place. Fair Offer NY buys houses and condos for cash, as-is, so there is no need to make repairs or clean before you sell. Your tenants can stay right where they are.
Share the property details with us, including the number of units and the basic lease information, and you will get a written, no-obligation cash offer within 24 hours. If the offer works for you, you choose the closing date, whenever you are ready. There are no agent commissions, and we charge no fees.
Review the offer and the purchase contract with your own attorney, including how the leases and security deposits will be handled at closing. If your rental is in Brooklyn, see how we buy houses in Brooklyn, or read about cash offers for houses across New York City.
Selling a rented house in New York comes down to good records, honest communication with your tenants and a few clear rules. Gather the leases, account for every deposit, bring in an attorney early, and the sale can move forward without asking anyone to leave their home. When you are ready, contact Fair Offer NY to request your written offer.
Frequently asked questions
Does selling my house end my tenant’s lease in New York?
Generally, no. In New York a buyer generally takes the property subject to the existing leases, so the new owner steps in as landlord. The purchase contract should state this.
What happens to my tenants’ security deposits when I sell?
Under General Obligations Law section 7-105, you must turn the deposits over to the buyer when the deed is delivered or within five days after. You must also notify each tenant by registered or certified mail and give the buyer’s name and address.
Can I use the section 226-c notice periods to end a lease because I am selling?
No. Section 226-c sets written notice periods of 30, 60 or 90 days, depending on how long the tenant has lived there, for not renewing a tenancy or raising the rent by 5 percent or more. It does not let anyone end a lease early.
Does the house need to be empty before I sell?
Not if the buyer is taking it with tenants in place. Never try to clear a unit yourself, because New York’s unlawful eviction law, RPAPL section 768, makes that a class A misdemeanor with civil penalties.
Will Fair Offer NY buy a house with tenants living in it?
Yes, we can buy a house with tenants in place, for cash and as-is. You get a written, no-obligation cash offer within 24 hours and choose the closing date, and you should review the offer with your own attorney.
This article is general information, not legal advice. Talk to a New York real estate attorney about your specific situation.