Selling a House with Renters in New York (2026)
Reviewed by DocDraft Legal Team · New York · Last updated 2026-05-18
New York regulates the tenant-facing side of a home sale separately from the conveyance itself. New York's sale-driven termination rule: Under N.Y. Real Property Law § 226-c, the landlord must provide at least 30 days' notice for occupancy of less than one year, 60 days' notice for one to two years, and 90 days' notice for occupancy of more than two years, before terminating or not renewing a residential tenancy. (N.Y. Real Prop. Law § 226-c). The sections below cover the New York-specific notice, deposit-transfer, and lease-survival rules that shape a sale of a tenant-occupied home.
Key Considerations
Two state-level overlays sometimes attach to a New York sale of a tenant-occupied home. The first is a right of first refusal: New York does not codify a statutory right of first refusal for tenants on a landlord sale; common law or municipal ordinance applies. for the full landlord-tenant code. The second is relocation assistance: None at state level. New York City has Loft Law and SRO-specific relocation rules; no statewide relocation-assistance statute on owner sale. (consult the state code) Neither overlay is universally triggered, but both should be checked at the diligence stage so they are not discovered after the contract is signed.
Two procedural items round out a New York closing on a tenant-occupied home. The security deposit has to be handled correctly: Under N.Y. General Obligations Law § 7-105, when the lessor conveys property the security deposit must be turned over to the grantee/assignee (or to the receiver in a foreclosure action, or to the foreclosure-sale purchaser if no receiver) at the time of delivery of the deed/assignment or within five days. The lessor must notify the tenant by registered or certified mail of the transfer, including the name and address of the transferee. Any failure to comply is a misdemeanor. See N.Y. Gen. Oblig. Law § 7-105. The format of the notices to the tenant matters as well: Security-deposit transfer notice must be by registered or certified mail; tenancy-termination notice under § 226-c must be served in conformance with the statute's terms. See N.Y. Gen. Oblig. Law § 7-105; N.Y. Real Prop. Law § 226-c. Skipping either step exposes the seller to post-closing claims that are otherwise easy to avoid.
Selling a tenant-occupied home in New York does not, by itself, cut off the tenant's possession. Under N.Y. Real Property Law § 226-c, the landlord must provide at least 30 days' notice for occupancy of less than one year, 60 days' notice for one to two years, and 90 days' notice for occupancy of more than two years, before terminating or not renewing a residential tenancy. The thresholds are based on cumulative occupancy or lease length, whichever is longer. Sale of the property does not create an exception; the buyer takes subject to existing tenancy. See N.Y. Real Prop. Law § 226-c. On the lease-continuity question, Lease survives sale: the purchaser takes title subject to any existing lease (long-settled New York property doctrine). (consult the state code) The practical result is that the buyer typically inherits the seller's landlord role and the lease runs to its stated end date.
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Relevant Documents
The New York document stack runs roughly as follows: a tenant-facing notice that the property is being listed, a showing-notice template formatted to the state's entry rule, an assignment of leases and security deposits executed at closing, and a deposit transfer letter giving the tenant the new holder's name and address. In New York, showing notices must conform to N.Y. Gen. Oblig. Law § 7-105; N.Y. Real Prop. Law § 226-c. Deposit transfer in New York is governed by N.Y. Gen. Oblig. Law § 7-105.
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
Issue a written intent-to-sell letter as the first tenant-facing step
Before listing days after startingThe letter should explain that the property is being listed, outline the showing-notice rhythm, and clarify the lease's status at closing so the tenant is not surprised by the change of ownership.
Settle the deposit at the closing table
Before listing days after startingUnder N.Y. General Obligations Law § 7-105, when the lessor conveys property the security deposit must be turned over to the grantee/assignee (or to the receiver in a foreclosure action, or to the foreclosure-sale purchaser if no receiver) at the time of delivery of the deed/assignment or within five days. The lessor must notify the tenant by registered or certified mail of the transfer, including the name and address of the transferee. Any failure to comply is a misdemeanor. (N.Y. Gen. Oblig. Law § 7-105). Issue a deposit-transfer letter to the tenant naming the buyer, the new depositary, and the transferred amount, and keep the executed copy in the file.
Determine whether termination is even available on a sale-driven theory
During listing days after startingUnder N.Y. Real Property Law § 226-c, the landlord must provide at least 30 days' notice for occupancy of less than one year, 60 days' notice for one to two years, and 90 days' notice for occupancy of more than two years, before terminating or not renewing a residential tenancy. The thresholds are based on cumulative occupancy or lease length, whichever is longer. Sale of the property does not create an exception; the buyer takes subject to existing tenancy. (N.Y. Real Prop. Law § 226-c). If not, plan the transaction around tenant continuity rather than vacancy.
Send a properly formatted showing notice before every entry
At closing days after startingSecurity-deposit transfer notice must be by registered or certified mail; tenancy-termination notice under § 226-c must be served in conformance with the statute's terms. (N.Y. Gen. Oblig. Law § 7-105; N.Y. Real Prop. Law § 226-c). Keep a contemporaneous record of each notice sent and the date and time of entry.
Build a paper record on the deposit
Before closing days after startingThe HUD or closing statement showing the deposit credit, the seller-to-buyer transfer letter, and a copy of the tenant notice should all live in the closing file so the deposit's path is reconstructable if challenged.
Resolve the ROFR question at diligence
Before closing days after startingNew York does not codify a statutory right of first refusal for tenants on a landlord sale; common law or municipal ordinance applies. for the full landlord-tenant code. If a purchase preference exists in the lease itself or under a local condominium-conversion or mobile-home-park ordinance, the tenant has to be served the third-party offer and given the contractual or statutory election window.
Confirm whether a relocation payment is owed
Before closing days after startingNone at state level. New York City has Loft Law and SRO-specific relocation rules; no statewide relocation-assistance statute on owner sale. (consult the state code) The exposure here is jurisdiction-specific; a New York sale in a rent-regulated city often carries a relocation-assistance line that an unregulated-jurisdiction sale does not.
Wrap the closing on a single day
Final step days after startingRecording the deed, executing the assignment of leases and deposits, sending the tenant-notice letter, and crediting the deposit to the buyer at settlement should be sequenced together; gaps create avoidable post-closing disputes.
| Task | Description | Document | Days after starting |
|---|---|---|---|
| Issue a written intent-to-sell letter as the first tenant-facing step | The letter should explain that the property is being listed, outline the showing-notice rhythm, and clarify the lease's status at closing so the tenant is not surprised by the change of ownership. | notice-to-tenants-of-intent-to-sell | Before listing |
| Settle the deposit at the closing table | Under N.Y. General Obligations Law § 7-105, when the lessor conveys property the security deposit must be turned over to the grantee/assignee (or to the receiver in a foreclosure action, or to the foreclosure-sale purchaser if no receiver) at the time of delivery of the deed/assignment or within five days. The lessor must notify the tenant by registered or certified mail of the transfer, including the name and address of the transferee. Any failure to comply is a misdemeanor. (N.Y. Gen. Oblig. Law § 7-105). Issue a deposit-transfer letter to the tenant naming the buyer, the new depositary, and the transferred amount, and keep the executed copy in the file. | - | Before listing |
| Determine whether termination is even available on a sale-driven theory | Under N.Y. Real Property Law § 226-c, the landlord must provide at least 30 days' notice for occupancy of less than one year, 60 days' notice for one to two years, and 90 days' notice for occupancy of more than two years, before terminating or not renewing a residential tenancy. The thresholds are based on cumulative occupancy or lease length, whichever is longer. Sale of the property does not create an exception; the buyer takes subject to existing tenancy. (N.Y. Real Prop. Law § 226-c). If not, plan the transaction around tenant continuity rather than vacancy. | - | During listing |
| Send a properly formatted showing notice before every entry | Security-deposit transfer notice must be by registered or certified mail; tenancy-termination notice under § 226-c must be served in conformance with the statute's terms. (N.Y. Gen. Oblig. Law § 7-105; N.Y. Real Prop. Law § 226-c). Keep a contemporaneous record of each notice sent and the date and time of entry. | - | At closing |
| Build a paper record on the deposit | The HUD or closing statement showing the deposit credit, the seller-to-buyer transfer letter, and a copy of the tenant notice should all live in the closing file so the deposit's path is reconstructable if challenged. | - | Before closing |
| Resolve the ROFR question at diligence | New York does not codify a statutory right of first refusal for tenants on a landlord sale; common law or municipal ordinance applies. for the full landlord-tenant code. If a purchase preference exists in the lease itself or under a local condominium-conversion or mobile-home-park ordinance, the tenant has to be served the third-party offer and given the contractual or statutory election window. | - | Before closing |
| Confirm whether a relocation payment is owed | None at state level. New York City has Loft Law and SRO-specific relocation rules; no statewide relocation-assistance statute on owner sale. (consult the state code) The exposure here is jurisdiction-specific; a New York sale in a rent-regulated city often carries a relocation-assistance line that an unregulated-jurisdiction sale does not. | - | Before closing |
| Wrap the closing on a single day | Recording the deed, executing the assignment of leases and deposits, sending the tenant-notice letter, and crediting the deposit to the buyer at settlement should be sequenced together; gaps create avoidable post-closing disputes. | - | Final step |
Frequently Asked Questions
The security deposit follows the property to the buyer or is returned to the tenant at closing. Under N.Y. General Obligations Law § 7-105, when the lessor conveys property the security deposit must be turned over to the grantee/assignee (or to the receiver in a foreclosure action, or to the foreclosure-sale purchaser if no receiver) at the time of delivery of the deed/assignment or within five days. The lessor must notify the tenant by registered or certified mail of the transfer, including the name and address of the transferee. Any failure to comply is a misdemeanor. See N.Y. Gen. Oblig. Law § 7-105. New York sellers should document the handover with a written deposit transfer letter to the tenant identifying the new holder, the new depositary, and the dollar amount transferred.
Yes, you can sell. New York law accommodates a sale with a tenant in possession. Under N.Y. Real Property Law § 226-c, the landlord must provide at least 30 days' notice for occupancy of less than one year, 60 days' notice for one to two years, and 90 days' notice for occupancy of more than two years, before terminating or not renewing a residential tenancy. The thresholds are based on cumulative occupancy or lease length, whichever is longer. Sale of the property does not create an exception; the buyer takes subject to existing tenancy. See N.Y. Real Prop. Law § 226-c. The tenant has continuing occupancy rights under the lease, and the buyer steps into the seller's landlord role at closing.
The lease does not terminate at the sale. Lease survives sale: the purchaser takes title subject to any existing lease (long-settled New York property doctrine). (consult the state code) In New York the buyer steps into the seller's landlord role and the lease runs to its stated end date as if no sale had occurred.
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