Selling a House with Renters in New York: What Landlords Need to Know
Selling a property with existing tenants in New York presents unique challenges due to the state's strong tenant protection laws. Landlords must navigate specific notice requirements, lease obligations, and potential restrictions that can significantly impact the sales process and timeline.
New York has some of the strongest tenant protection laws in the country, particularly in NYC where rent stabilization and rent control regulations may severely restrict a landlord's ability to vacate a property for sale. Failure to follow proper procedures can result in significant legal penalties and delayed transactions.
Key Considerations
Scenarios
Decisions
Scenarios
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Scenarios
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Relevant Documents
Assignment of Leases
A legal document that transfers the landlord's rights and obligations under existing lease agreements to the new property owner, ensuring continuity of the tenancy terms.
Cash for Keys Agreement
A document that formalizes an arrangement where the property owner offers financial incentive to tenants to vacate the property voluntarily before the sale or closing date.
Early Lease Termination Agreement
If the seller and tenants mutually agree to end the lease early before the sale, this document outlines the terms of that agreement, including any compensation or notice periods.
Estoppel Certificate
A document signed by tenants confirming the terms of their lease, current rent amount, security deposit held, and that the landlord is not in default. This provides assurance to potential buyers about the status of existing tenancies.
Notice to Tenants of Intent to Sell
A formal written notice informing tenants of the property owner's intention to sell the property. This document helps establish clear communication and may be required by law in many jurisdictions.
Property Disclosure Statement
A document where the seller discloses known material defects and other important information about the property, including the presence of tenants and the terms of their occupancy.
Real Estate Purchase Agreement
The contract between seller and buyer that should specifically address the existence of tenants, the status of their leases, and how those leases will be handled during and after the sale.
Rent Roll
A document that lists all rental units, current tenants, lease terms, monthly rent amounts, security deposits, and payment histories. This provides potential buyers with a clear picture of the property's rental income.
Security Deposit Transfer Agreement
A document that formalizes the transfer of tenant security deposits from the seller to the buyer, including accounting for all deposits and accrued interest where applicable.
Relevant Laws
New York Real Property Law § 226-c - Notice of Rent Increase or Non-Renewal of Residential Tenancy
This law requires landlords to provide written notice to tenants before terminating a tenancy or substantially increasing rent. For tenants who have occupied a unit for less than one year, 30 days' notice is required. For tenants who have occupied for one to two years, 60 days' notice is required. For tenants who have occupied for more than two years, 90 days' notice is required. This is relevant when selling a property with tenants because the new owner must honor these notice requirements if they wish to terminate existing tenancies.
New York Real Property Law § 223-b - Retaliation by Landlord Against Tenant
This law prohibits landlords from retaliating against tenants who exercise their legal rights. When selling a property with tenants, both the current owner and potential buyers need to be aware that evicting tenants solely because of the sale could be considered retaliatory if tenants have recently complained about conditions or exercised other rights.
New York Housing Stability and Tenant Protection Act of 2019
This comprehensive law significantly strengthened tenant protections in New York. It limits security deposits to one month's rent, provides stronger eviction protections, and makes it harder to convert rent-stabilized apartments to market-rate. When selling a property with tenants, sellers must disclose to buyers which units are subject to rent stabilization, and buyers must understand they will be bound by these regulations.
New York City Rent Stabilization Law (for NYC properties)
This law regulates rent increases and provides tenants with the right to lease renewals in buildings with six or more units built before 1974 (with some exceptions). When selling a rent-stabilized building, the new owner must continue to offer lease renewals and is limited in how much they can increase rent. This significantly impacts property valuation and potential returns for investors.
New York Real Property Actions and Proceedings Law § 1305 - Notice to Occupant of Foreclosure
This law requires that tenants be notified of foreclosure proceedings and protects their rights during and after foreclosure. If a property with tenants is being sold due to foreclosure, tenants generally have the right to remain until the end of their lease term or, for month-to-month tenants, receive at least 90 days' notice before eviction.
New York Real Property Law § 227-a - Termination of Residential Lease by Senior Citizens
This law allows tenants who are 62 years or older (or will turn 62 during the lease term) to terminate their lease early if they are relocating to a senior citizen housing project, adult care facility, or healthcare facility. Sellers and buyers of properties with elderly tenants should be aware of this potential early termination right.
New York Real Property Law § 238-a - Limitation on Fees
This law limits the fees that landlords can charge tenants, including application fees, late fees, and fees for background checks. When selling a property with tenants, the new owner must adhere to these limitations and cannot impose excessive fees that violate this statute.
Regional Variances
New York City
New York City has some of the strongest tenant protections in the state. Under the NYC Rent Stabilization Law and the Emergency Tenant Protection Act, many tenants in rent-stabilized or rent-controlled apartments have enhanced rights. When selling a property with such tenants, the new owner must honor the existing lease and cannot evict tenants simply because of a change in ownership. Additionally, NYC's 'Good Cause Eviction' protections make it difficult to remove tenants even after lease expiration without demonstrating specific grounds for eviction.
Brooklyn follows NYC tenant protection laws but has seen increased enforcement of tenant rights in recent years. The Brooklyn Housing Court is known for being particularly tenant-friendly. Sellers should be aware that prospective buyers may face additional scrutiny when attempting to use owner-occupancy as grounds for eviction, especially in gentrifying neighborhoods where displacement concerns are high.
Long Island
Nassau County follows New York State law regarding tenant protections but lacks the additional layers of rent regulation found in NYC. However, the 2019 Housing Stability and Tenant Protection Act still applies, requiring 30-90 days' notice (depending on length of tenancy) before terminating a month-to-month tenancy or not renewing a lease. Sellers must disclose existing tenancies to potential buyers, who will be bound by these notice requirements.
Suffolk County generally follows state law regarding tenant protections. Unlike NYC, most rental properties in Suffolk County are not subject to rent stabilization. However, the county does have specific disclosure requirements for sellers regarding the status of any existing tenancies. Sellers must provide accurate information about lease terms, security deposits, and any pending tenant disputes to potential buyers.
Upstate New York
Albany has implemented its own Good Cause Eviction law, which provides additional protections to tenants beyond state law. Under this local ordinance, landlords (including new owners after a sale) cannot evict tenants or refuse to renew leases without demonstrating one of several specified 'good causes,' such as non-payment of rent or illegal activity. This significantly impacts the sale of tenant-occupied properties, as buyers cannot simply terminate tenancies upon purchase.
Buffalo has seen increased tenant organizing and advocacy, leading to stronger enforcement of tenant protections. While it follows state law, Buffalo's housing courts have become more attentive to tenant rights claims. Sellers should be aware that the city has specific requirements regarding the transfer of security deposits during property sales, and failure to properly transfer these funds can result in penalties.
Rochester has implemented a Tenant Opportunity to Purchase Act (TOPA), which gives tenants the right of first refusal when their landlord decides to sell the property. This means that before selling to a third party, landlords must offer tenants the opportunity to purchase the property at the same price and terms. This significantly impacts the selling process for tenant-occupied properties and can extend the timeline for completing a sale.
Hudson Valley
Westchester County has adopted the Emergency Tenant Protection Act (ETPA) in several municipalities, including White Plains, New Rochelle, and Yonkers. In these areas, many buildings are subject to rent stabilization, limiting a new owner's ability to increase rent or evict tenants after purchasing a property. Sellers must disclose the rent-regulated status of units to potential buyers, as this significantly affects property valuation and future income potential.
Rockland County generally follows state law regarding tenant protections. However, some municipalities within the county have adopted additional tenant protections. For example, the village of Nyack has implemented its own tenant protection regulations that require longer notice periods for lease terminations. Sellers should research the specific local ordinances in their municipality before listing a tenant-occupied property for sale.
Suggested Compliance Checklist
Review Existing Lease Agreements
1 days after startingCarefully review all current lease agreements to understand tenant rights, lease terms, and expiration dates. In New York, lease terms survive property transfers, and the new owner must honor existing leases. Pay special attention to any lease provisions regarding property sales, right of first refusal, or early termination options.
Determine Tenant Rights Based on Lease Type
3 days after startingIdentify whether your tenants have fixed-term leases or are month-to-month. For fixed-term leases, the new owner must honor the full term. For month-to-month tenancies, proper notice must be given according to New York law (30 days for tenancies less than one year, 60 days for 1-2 years, and 90 days for tenancies over two years).
Check for Rent Control or Rent Stabilization
5 days after startingDetermine if your property is subject to rent control or rent stabilization laws in New York. These regulations provide tenants with additional protections, including the right to lease renewal. Rent-controlled or rent-stabilized tenants have stronger occupancy rights that will affect your sale options.
Prepare Notice to Tenants of Intent to Sell
7 days after startingWhile not legally required in all cases in New York, it's good practice to formally notify tenants of your intent to sell. This document should include information about showing procedures, expected timeline, and reassurance about their rights. For rent-controlled or rent-stabilized units, specific notification requirements may apply.
Create Property Disclosure Statement
10 days after startingPrepare a comprehensive property disclosure statement as required by New York law. This document must disclose known defects and material facts about the property's condition. When tenants occupy the property, note any tenant-reported issues or maintenance requests that potential buyers should know about.
Request Estoppel Certificate from Tenants
14 days after startingAsk tenants to complete an estoppel certificate that verifies the terms of their tenancy, current rent amount, security deposit held, and confirms they have no claims against the landlord. This document protects both the seller and buyer by establishing the facts of the tenancy at the time of sale.
Prepare Rent Roll
16 days after startingCreate a detailed rent roll document that lists all units, current tenants, lease terms, monthly rent amounts, security deposits held, and payment history. This document is essential for the buyer to understand the rental income and tenant situation they will inherit.
Establish Property Showing Protocol
18 days after startingUnder New York law, landlords must provide reasonable notice (usually 24 hours) before showing an occupied unit to potential buyers. Create a showing schedule that respects tenant privacy and complies with notice requirements. Document this protocol and share it with tenants and your real estate agent.
Consider Cash for Keys Agreement (Optional)
21 days after startingIf you prefer to sell the property vacant, you may offer tenants financial incentives to vacate early through a Cash for Keys agreement. This is entirely voluntary for tenants with valid leases. The agreement should specify the move-out date, amount offered, condition requirements for the unit, and release of claims. Be aware that tenants are not obligated to accept such offers.
Draft Early Lease Termination Agreement (If Applicable)
24 days after startingIf tenants are willing to terminate their lease early, create a formal agreement that outlines the terms, including any financial compensation, return of security deposits, and release of future obligations. This document must be signed by both parties to be legally binding.
Prepare Real Estate Purchase Agreement with Tenant Provisions
28 days after startingWork with your attorney to draft a purchase agreement that specifically addresses the presence of tenants. Include provisions about lease assignments, security deposit transfers, and representations about tenant status. In New York, the agreement should acknowledge the buyer's obligation to honor existing leases.
Create Security Deposit Transfer Agreement
30 days after startingPrepare a document that formally transfers tenant security deposits to the new owner. New York law requires security deposits to be transferred to the new owner at closing. This agreement should itemize each deposit, confirm compliance with New York's security deposit laws (including proper bank accounts and interest payments), and release you from future liability.
Draft Assignment of Leases
32 days after startingCreate a formal assignment document that transfers all lease agreements to the new owner. This document should list all current leases, affirm they are in good standing, and legally transfer your rights and obligations as landlord to the buyer. In New York, this document is typically executed at closing.
Notify Tenants of New Ownership
35 days after startingAfter closing, provide written notice to all tenants informing them of the change in ownership, including the new owner's name, contact information, and instructions for future rent payments. In New York, this notice should be sent promptly after the sale is complete.
File Required Documents with Local Housing Agencies
40 days after startingFor properties subject to rent control or rent stabilization in New York, file any required ownership change documents with the Division of Housing and Community Renewal (DHCR) or other relevant housing agencies. Failure to properly register ownership changes can result in penalties.
| Task | Description | Document | Days after starting |
|---|---|---|---|
| Review Existing Lease Agreements | Carefully review all current lease agreements to understand tenant rights, lease terms, and expiration dates. In New York, lease terms survive property transfers, and the new owner must honor existing leases. Pay special attention to any lease provisions regarding property sales, right of first refusal, or early termination options. | - | 1 |
| Determine Tenant Rights Based on Lease Type | Identify whether your tenants have fixed-term leases or are month-to-month. For fixed-term leases, the new owner must honor the full term. For month-to-month tenancies, proper notice must be given according to New York law (30 days for tenancies less than one year, 60 days for 1-2 years, and 90 days for tenancies over two years). | - | 3 |
| Check for Rent Control or Rent Stabilization | Determine if your property is subject to rent control or rent stabilization laws in New York. These regulations provide tenants with additional protections, including the right to lease renewal. Rent-controlled or rent-stabilized tenants have stronger occupancy rights that will affect your sale options. | - | 5 |
| Prepare Notice to Tenants of Intent to Sell | While not legally required in all cases in New York, it's good practice to formally notify tenants of your intent to sell. This document should include information about showing procedures, expected timeline, and reassurance about their rights. For rent-controlled or rent-stabilized units, specific notification requirements may apply. | Notice to Tenants of Intent to Sell | 7 |
| Create Property Disclosure Statement | Prepare a comprehensive property disclosure statement as required by New York law. This document must disclose known defects and material facts about the property's condition. When tenants occupy the property, note any tenant-reported issues or maintenance requests that potential buyers should know about. | Property Disclosure Statement | 10 |
| Request Estoppel Certificate from Tenants | Ask tenants to complete an estoppel certificate that verifies the terms of their tenancy, current rent amount, security deposit held, and confirms they have no claims against the landlord. This document protects both the seller and buyer by establishing the facts of the tenancy at the time of sale. | Estoppel Certificate | 14 |
| Prepare Rent Roll | Create a detailed rent roll document that lists all units, current tenants, lease terms, monthly rent amounts, security deposits held, and payment history. This document is essential for the buyer to understand the rental income and tenant situation they will inherit. | Rent Roll | 16 |
| Establish Property Showing Protocol | Under New York law, landlords must provide reasonable notice (usually 24 hours) before showing an occupied unit to potential buyers. Create a showing schedule that respects tenant privacy and complies with notice requirements. Document this protocol and share it with tenants and your real estate agent. | - | 18 |
| Consider Cash for Keys Agreement (Optional) | If you prefer to sell the property vacant, you may offer tenants financial incentives to vacate early through a Cash for Keys agreement. This is entirely voluntary for tenants with valid leases. The agreement should specify the move-out date, amount offered, condition requirements for the unit, and release of claims. Be aware that tenants are not obligated to accept such offers. | Cash for Keys Agreement | 21 |
| Draft Early Lease Termination Agreement (If Applicable) | If tenants are willing to terminate their lease early, create a formal agreement that outlines the terms, including any financial compensation, return of security deposits, and release of future obligations. This document must be signed by both parties to be legally binding. | Early Lease Termination Agreement | 24 |
| Prepare Real Estate Purchase Agreement with Tenant Provisions | Work with your attorney to draft a purchase agreement that specifically addresses the presence of tenants. Include provisions about lease assignments, security deposit transfers, and representations about tenant status. In New York, the agreement should acknowledge the buyer's obligation to honor existing leases. | Real Estate Purchase Agreement | 28 |
| Create Security Deposit Transfer Agreement | Prepare a document that formally transfers tenant security deposits to the new owner. New York law requires security deposits to be transferred to the new owner at closing. This agreement should itemize each deposit, confirm compliance with New York's security deposit laws (including proper bank accounts and interest payments), and release you from future liability. | Security Deposit Transfer Agreement | 30 |
| Draft Assignment of Leases | Create a formal assignment document that transfers all lease agreements to the new owner. This document should list all current leases, affirm they are in good standing, and legally transfer your rights and obligations as landlord to the buyer. In New York, this document is typically executed at closing. | Assignment of Leases | 32 |
| Notify Tenants of New Ownership | After closing, provide written notice to all tenants informing them of the change in ownership, including the new owner's name, contact information, and instructions for future rent payments. In New York, this notice should be sent promptly after the sale is complete. | - | 35 |
| File Required Documents with Local Housing Agencies | For properties subject to rent control or rent stabilization in New York, file any required ownership change documents with the Division of Housing and Community Renewal (DHCR) or other relevant housing agencies. Failure to properly register ownership changes can result in penalties. | - | 40 |
Frequently Asked Questions
Yes, you can sell your house in New York even if you have tenants living in it. However, the sale is generally subject to the existing lease agreements, meaning the new owner must honor the terms of current leases. The tenants' rights remain protected during and after the sale process.
While New York law doesn't specifically require landlords to notify tenants of a sale, it's considered best practice to inform them. If you're planning to show the property to potential buyers, you must provide reasonable notice before entering the premises (typically 24 hours notice is considered reasonable). For rent-stabilized or rent-controlled units, specific notification requirements may apply.
Generally, no. In New York, you cannot evict tenants simply because you want to sell the property. Tenants with a valid lease have the right to remain until their lease expires. For month-to-month tenants, you must provide proper notice according to New York law (30-90 days depending on how long they've lived there). In NYC, tenants with rent stabilization or rent control have even stronger protections against eviction.
When selling your property, you must either transfer the security deposits to the new owner or return them to the tenants. New York law requires you to notify tenants in writing about the transfer of their security deposits, including the new owner's name and address. The new owner becomes responsible for the security deposits and must maintain them in accordance with New York law.
Rent stabilization and rent control laws significantly impact property sales in New York. These regulations limit rent increases and provide tenants with strong eviction protections. The regulated status of units transfers with the sale, meaning the new owner must continue to comply with these regulations. This may affect the property's market value and the pool of potential buyers, as some investors may be deterred by the restrictions.
Your ability to increase rent before selling depends on the type of tenancy. For tenants with fixed-term leases, you cannot increase rent until the lease expires. For month-to-month tenants in most of New York State, you must provide at least one month's notice for increases. However, in NYC and other localities with rent stabilization, strict rules govern when and by how much rent can be increased. Attempting to dramatically increase rent just before selling could potentially be viewed as harassment.
When selling a tenant-occupied property in New York, you must disclose the existence of all current leases to potential buyers. You should provide copies of all lease agreements, rent payment histories, and security deposit information. You must also disclose any pending legal actions involving tenants, known defects in the property, and whether any units are subject to rent regulation. Failure to make proper disclosures could result in legal liability.
Tenants cannot unreasonably refuse access for showings, but you must provide proper notice (typically 24 hours) and schedule showings at reasonable times. The lease may contain specific provisions about property access. If tenants consistently refuse reasonable access requests, you may have grounds for legal action, but it's advisable to work cooperatively with tenants and possibly offer incentives for their cooperation during the sales process.
Whether to wait depends on your specific circumstances. Selling a vacant property can be easier and potentially command a higher price, especially if targeting owner-occupant buyers. However, waiting means continuing to cover mortgage, taxes, and maintenance while forgoing rental income. Some investors actually prefer purchasing properties with reliable tenants already in place. Consider consulting with a real estate agent experienced in selling tenant-occupied properties to evaluate your specific situation.
Successful strategies include: 1) Maintaining open communication with tenants about the process; 2) Offering incentives for cooperation with showings, such as rent reductions or cleaning services; 3) Considering a cash-for-keys agreement if vacant possession would significantly increase value; 4) Marketing specifically to investors who value properties with existing tenants; 5) Working with real estate professionals experienced with tenant-occupied properties; and 6) Ensuring all lease documents and rental histories are well-organized for potential buyers to review.