Done with being a landlord? You can sell with the tenants still there.
Maybe it was the third no-heat call this winter, a tenant who stopped paying in the spring, or the realization that a two-family you bought as an investment now feels like a second job. Selling a rental is different from selling a home you live in, mostly because of the people living there and the rules that protect them. Here is how those rules play out in New York and New Jersey, and why we buy with tenants in place.
Why emptying the building is harder than it sounds
A lot of owners assume they will clear out the tenants and then list the property. In much of our market, that plan collides with tenant protection law, and even where it doesn’t, it costs months of lost rent. A buyer who takes the building occupied removes that whole problem. The leases continue, the tenants keep their homes, and you hand over the keys and the paperwork.
New York: Good Cause Eviction in many Hudson Valley cities
New York’s Good Cause Eviction Law took effect on April 20, 2024. It covers New York City automatically, and other municipalities can opt in. According to the state Attorney General, the opted-in places include several in our area: Kingston, Poughkeepsie, Beacon, Newburgh, Nyack, New Paltz, Fishkill and Croton-on-Hudson. Where it applies and a unit is covered, a landlord generally needs a reason the law recognizes to remove a tenant or decline to renew a lease, and rent increases above a set threshold can be challenged. The law has exemptions, including for some small owner-occupied buildings, so whether your units are covered is a question for a landlord-tenant attorney.
Outside those places, other New York rules still apply. Security deposits are capped at one month’s rent for most apartments, and the landlord gets 14 days after move-out to return the deposit with an itemized statement of any deductions, or lose the right to keep any of it.
New Jersey: the Anti-Eviction Act
New Jersey has protected tenants statewide for decades. Under the Anti-Eviction Act, as the state’s Truth in Renting guide explains, a residential landlord can’t evict or refuse to renew without good cause from the list in the statute, and a lease simply running out is not one of those reasons. Owner-occupied buildings with two or three units and no more than two rentals may be outside the law.
One provision matters to sellers. When the owner of a building with three or fewer units has contracted to sell to a buyer who intends to live in a unit, and the contract requires it to be vacant at closing, the landlord may seek possession with at least two months’ notice, and not before the lease expires. We are not that kind of buyer, so with us the tenants simply stay. Deposits in New Jersey are capped at one and a half months’ rent and must be returned within 30 days after a tenancy ends.
What happens to the security deposits when you sell
New York: General Obligations Law section 7-105 requires the selling landlord to turn tenants’ deposits over to the new owner when the deed is delivered, or within five days after, and to tell each tenant, by registered or certified mail, about the transfer and the new owner’s name and address.
New Jersey: the Truth in Renting guide puts the burden on the buyer. The new owner must obtain the deposits plus accrued interest from the former owner, and is responsible for returning them whether or not they were actually transferred.
In practice, the deposits are credited or transferred at closing and the attorneys prepare the tenant notices. Bring your deposit records to the table, including which bank holds them, and this part takes care of itself.
Tenants who aren’t paying, and units you can’t show
We buy buildings with tenants who are current, behind, or in the middle of an eviction case. A tenant who refuses access for showings makes a traditional listing nearly impossible, but our visit is one walk-through, scheduled with proper notice. If a unit can’t be entered, we can work from what we see in the others and from your description, and price the unknowns honestly.
Arrears and pending court cases don’t scare us off, but they do affect value, so tell us about them up front. If you have already won a judgment for back rent, ask your attorney whether that claim stays with you after the sale, and make sure the contract says so either way.
What to gather before we talk
- A rent roll: each unit, the rent, the lease end date, and who is behind.
- Copies of the current leases, plus any month-to-month arrangements in writing.
- Security deposit amounts and where they are held.
- Recent utility bills, and which utilities the tenants pay themselves.
- Any notices from the city or town, open permits or violations.
Older rental buildings across the Hudson Valley and North Jersey often predate 1978, which brings lead paint disclosure rules into both leasing and selling. Many also carry an illegal basement unit or an open building department violation; our code violations page goes into that. If the building needs serious work, see houses that need repairs, and if the last tenant has already left, selling a vacant house covers the empty-building risks.
Talk it through. Phone (845) 367-4898, or type the property address into our contact page. We will ask about the units and the tenants, then set up a visit that respects their notice rights. The rest of the process is on how it works.
Landlord-tenant law changes often and local rules differ by city and village. Before you serve any notice or sign a sale contract, talk to an attorney who practices landlord-tenant law where the building is.
Selling a rental: questions from landlords
Will you take a building where tenants owe back rent?
Yes. We purchase occupied buildings whether the tenants are paying or not. Tell us about arrears and any eviction case on the first call, because they affect the price and the closing paperwork.
Do the leases end when you buy the building?
No. Existing leases stay in force after a sale, and the tenants become our tenants. In New Jersey the Anti-Eviction Act also means a lease ending is not, by itself, grounds to remove someone.
Does Good Cause Eviction apply to my building?
It depends on where the building is and on the law’s exemptions. It covers New York City and municipalities that opt in, which the Attorney General lists as including Kingston, Poughkeepsie, Beacon, Newburgh, Nyack, New Paltz, Fishkill and Croton-on-Hudson. An attorney can check your units.
What happens to the tenants’ security deposits?
They go to the new owner. In New York the seller turns them over when the deed is delivered or within five days and must send each tenant notice by certified or registered mail. In New Jersey the new owner must obtain them and becomes responsible for returning them.
Do you need to see inside every unit?
We prefer to, with proper notice to the tenants. If a tenant won’t allow access, we can usually still make an offer based on the other units and what you tell us, and we price that uncertainty openly.