Selling a House With Tenants in New York: Leases, Notices and the Closing

Selling a house with tenants in New York is common in Queens, where many owners live in one half of a two-family and rent the other, or own a second house they rented out for years. The questions are always the same. Can I sell while someone lives there? Does the lease end when the deed changes hands? Do I have to empty the apartment first? What happens to the security deposit? And what will a buyer, a lender and a buyer’s attorney want to see?

I have worked with buyers and sellers in Queens, Brooklyn and Long Island for 15+ years, in English and Polish, and tenant-occupied houses need more planning than any other listing. The rules are not hard, but the order matters: the decision to sell occupied or vacant drives the notice dates, the price, the buyer pool, the contract language and the closing. This guide walks through each piece, with the New York laws behind it, so you can plan the sale before you talk to the tenant.

Selling a house with tenants in New York: what the law says first

The short version is that ownership and tenancy are two different things. Selling the house changes who owns it. It does not, by itself, change who has the right to live in it.

The lease stays with the house

New York’s Real Property Law section 223 says, in substance, that whoever acquires leased property, or the right to its rent, can enforce the lease the same way the original landlord could, and the tenant keeps the same rights against the new owner. In practice, a buyer steps into the seller’s shoes as landlord. The rent, the end date and the other terms of the lease carry over. The new owner cannot treat the sale itself as a reason to end the tenancy.

You do not need the tenant’s permission to sell

A landlord can sell a house with tenants without asking them. Can a landlord sell a house with tenants still living there? Yes. What the landlord cannot do is skip the tenant’s rights: the lease term, the notice the law requires before a tenancy ends, the security deposit rules and, where it applies, the Good Cause Eviction law. Those rights travel with the apartment to the new owner.

Month-to-month and no written lease

Many Queens rentals run month to month after an old lease expired, or never had a written lease at all. A tenant without a written lease is still a tenant. Ending that tenancy still takes written notice, and if the tenant does not leave, only a court can order them out. A missing lease makes the paperwork for the buyer harder, not the tenant’s position weaker.

Who can help with which part

A licensed real estate broker can price the house, market it, schedule showings and coordinate the deal. Legal questions, such as whether a specific notice is valid or whether an apartment is covered by a particular law, belong to a New York attorney. Our guide to hiring a real estate attorney in NYC explains what the attorney does in a sale and when to bring one in. With tenants involved, the earlier, the better.

Two ways to sell: occupied or delivered vacant

Every tenant-occupied sale starts with one decision: will the buyer take the house with the tenants in place, or will you deliver it empty? Both are legal. They lead to different buyers, different timelines and often different prices.

When selling occupied makes sense

Selling occupied works when the lease is in writing, the rent is paid on time, the apartment is legal and the tenant is willing to allow reasonable access for showings and the inspection. A buyer looking at a two-family in Queens often wants the rent from the second unit to help carry the mortgage. A stable tenancy with clean paperwork is part of what that buyer is paying for. Our guide to buying a multi-family home in Queens shows how those buyers look at a house like yours.

When vacant is worth the wait

Delivering vacant usually widens the buyer pool, because owner-occupants who want the whole house can bid. It also lets you repaint, repair and photograph the unit properly. The trade-off is time and carrying costs, and the legal risk that the tenancy does not end when you planned. If you decide on vacant, the tenancy plan comes before the listing date, not after it. Once the unit is empty, the steps in our guide to selling a vacant house in New York apply, including insurance and upkeep while it sits empty.

A middle path: one unit occupied, one delivered vacant

In an owner-occupied two-family, the owner’s own unit is delivered vacant at closing and the rental unit is sold occupied. That is often the simplest arrangement. The buyer gets a unit to live in and a rent to help with the mortgage, and the tenant’s lease simply continues with a new landlord.

Showings, access and working with the tenant

A sale goes better when the tenant hears about it from you, early and in plain terms, rather than from a sign or a stranger at the door. Tenants worry about two things: whether they will have to move and whether their deposit is safe. Answer both clearly, and in writing when you can.

What the lease says about access

Start with the lease. Many leases have a clause that lets the landlord enter with reasonable notice to show the apartment to buyers or lenders. If the lease has that clause, follow it exactly: the notice it requires, the hours it allows, and no entry beyond it. If the lease is silent, or there is no written lease, access for showings depends on the tenant’s cooperation, and that is where a written schedule agreed in advance helps the most.

Practical ways to make showings work

• Agree on a fixed window, for example two afternoons a week, instead of calling every time a buyer asks.
• Group showings so the tenant is disturbed fewer times.
• Give written notice of each showing, even when the lease does not require a specific number of days.
• Never photograph the tenant’s belongings or personal papers; shoot the rental unit after move-out or use photos of the layout only with the tenant’s agreement.
• Keep the inspection and the appraisal in the same plan, because both require access too.

Disclosure still applies

Tenants do not change your disclosure duties to a buyer. Leases, any unpaid rent, any dispute and the legal status of each unit all belong in the conversation with the buyer’s attorney. The seller-side steps are in our guide on how to sell your home in Queens.

Ending a tenancy before the sale: notice periods and court

If you plan to deliver the house vacant, the first legal question is when the tenancy can end and how much notice the tenant must receive. New York sets minimum notice periods for a landlord who does not intend to renew a tenancy or who plans a rent increase of 5% or more.

The notice periods in Real Property Law 226-c

Under Real Property Law section 226-c, the landlord’s notice depends on how long the tenant has lived in the unit or how long the lease term is, whichever is longer:

These are minimums. A lease can require more, and other laws can add steps. A tenant who has been in a Queens apartment for many years falls in the 90-day bracket, which means the notice has to go out well before your planned listing date if you want the house empty for showings.

Notice ends the tenancy on paper, not in practice

Proper notice brings a tenancy to an end on a date. If the tenant is still there after that date, the next step is a court case. Only a court order and a warrant carried out by a city marshal or sheriff can remove a tenant who does not leave voluntarily. That process takes time, which is why a vacant-delivery contract with a fixed closing date is risky until the unit is actually empty.

Never use self-help

New York treats self-help eviction seriously. RPAPL section 768 makes it unlawful to remove or exclude an occupant who has lived in a unit for 30 consecutive days or more, or who signed a lease, other than through a court process or a government vacate order. The section lists conduct that crosses the line: using or threatening force, cutting off essential services, removing belongings, taking off the door, or changing the lock without giving the occupant a key. Violations can be a class A misdemeanor and carry civil penalties of $1,000 to $10,000 per violation. None of that is worth a faster closing.

Good Cause Eviction and a Queens two-family

New York’s Good Cause Eviction law took effect on April 20, 2024, and applies in New York City and in other localities that opt in. For covered apartments, a landlord needs one of the reasons the law lists to evict a tenant or refuse to renew, and rent increases above a reasonableness standard can be challenged. The New York Attorney General’s Good Cause Eviction page summarizes who is covered and who is not.

Many small houses are exempt

Two exemptions matter most for the houses I see in Queens:

• Owner-occupied buildings with 10 or fewer residential units. If you live in one unit of your two-family or three-family, the rental unit is generally exempt while you live there.
• Small landlords. In New York City, a landlord who owns 10 or fewer housing units in New York State in total is exempt. For a company owner, the count looks at the individual people behind it.

The Attorney General also lists exemptions for rent-regulated units, condo and co-op units, buildings with a certificate of occupancy issued on or after January 1, 2009, and several other categories.

Coverage can change with the owner

Because the two main exemptions depend on the owner, a sale can change the picture. An apartment that is exempt because the seller lives upstairs may be covered after a sale to a buyer who does not live in the building and owns more than 10 units. The reverse can happen too. A buyer’s attorney should look at coverage based on the buyer, not the seller.

The personal-use ground

Where the law applies, one listed ground lets a landlord recover an apartment to use as their own principal residence or for a close family member’s. The Attorney General’s summary sets conditions: the intent must be genuine, no other suitable vacant apartment can be available in the building, and the ground cannot be used against a tenant who is 65 or older or who has a disability. Buyers who plan to move into a covered unit should have their attorney review this before signing a contract, not after.

Lease language since August 2024

The Attorney General’s page also notes that since August 18, 2024, covered landlords must state in leases, renewals and certain notices whether the apartment is covered and, if not, why. Ask your attorney whether your current lease and any notice you send need that language.

Rent-stabilized and rent-controlled apartments

Most Queens one-family and two-family houses are not rent-stabilized. Rent stabilization in New York City generally covers buildings with six or more apartments built before 1974, along with some newer buildings that took certain tax benefits, as the city’s Public Advocate explains in its tenant materials. There are exceptions in both directions, and a building’s history matters.

Why it still matters in a sale

If you own a larger building, or a building that once had six or more units, rent regulation is a central question in any sale. A regulated tenancy does not end because the building is sold. The rent rules, renewal rights and registration history continue with the new owner, and a buyer will price the building around them. The State’s housing agency keeps the rent registration records, and a buyer’s attorney will usually ask for them.

Units counted on paper

A house that has more apartments in practice than on its certificate of occupancy raises two separate problems: the legal use of the building and the status of the people living in the extra units. Our guide to the certificate of occupancy in NYC explains how to check how many units a house is legally approved for. A basement apartment that is not legal is still somebody’s home. Removing an occupant still runs through a court process, and the right path is a conversation with your attorney before you list, not during the contract.

Security deposits when the house is sold

The tenant’s security deposit belongs to the tenant, and New York law says exactly what happens to it when the property changes hands. Getting this wrong is one of the few mistakes in a tenant-occupied sale that can be a misdemeanor.

Turn the deposit over and tell the tenant

Under General Obligations Law section 7-105, a landlord who sells must turn the tenant’s deposit over to the new owner at the time the deed is delivered or within five days after. The landlord must also notify the tenant by registered or certified mail that the deposit was turned over, with the name and address of the new owner. Once the deposit is properly transferred, the seller is released from liability for returning it, and the buyer becomes responsible. Failing to comply is a misdemeanor.

How it shows up at closing

In most sales the deposit is handled as a credit to the buyer on the closing statement, and the attorneys confirm the amount against the lease and the deposit records. Bring proof of the deposit amount, and any interest record if the deposit was held in an interest-bearing account. Then send the tenant the certified or registered letter right after closing. Keep the receipt with your closing file.

The rules the buyer inherits

General Obligations Law section 7-108 sets other deposit rules for most residential tenancies. A deposit generally cannot be more than one month’s rent. The tenant has a right to request an inspection before moving out. When the tenant leaves, the landlord has 14 days to give an itemized statement of any deductions and return the rest, or loses the right to keep any of it. A buyer of an occupied house inherits those duties along with the deposit, which is another reason clean deposit records matter.

Documents a buyer will ask for in a tenant-occupied sale

A buyer, the buyer’s attorney and the buyer’s lender will all want proof of what they are buying. Having the file ready before the listing goes live saves weeks between the accepted offer and the signed contract.

The estoppel letter

An estoppel letter is a short statement signed by the tenant confirming the rent, the deposit, the lease dates and that there are no other agreements with the landlord. It protects the buyer from surprises such as a promised rent reduction that is not in the lease. A tenant may not be obliged to sign one unless the lease requires it, so ask early and keep the form short and factual.

Side deals are the classic problem

Verbal promises, a month of free rent, permission for a pet, a parking space in the driveway, a rent paid partly in repairs: anything that is not in the lease but the tenant believes was agreed will surface eventually. Put every one of them in writing for the buyer’s attorney. A known side deal is a negotiation point. An unknown one is a dispute after closing.

Pricing a house with tenants in place

A tenant-occupied house is priced the same way as any other house, with a few extra questions. The comparable sales still matter most, but buyers will also look at the rent, the lease term and the condition of the rented unit.

What buyers weigh

• The rent compared with the local market. A rent well below what the unit could get is not a bonus for most buyers if the lease runs for a long time.
• The lease end date. A lease that ends soon gives the buyer options. A long lease locks in the current rent and the current tenant.
• Coverage under Good Cause Eviction for that buyer, which affects future increases and renewals.
• The condition of the rented unit, which the buyer may only see once before the contract.
• Legal use. Rent from a unit that is not on the certificate of occupancy usually cannot be counted the same way.

A market analysis is an opinion of value

Before listing, I prepare a comparative market analysis (CMA), which is an opinion of value based on recent sales, not an appraisal. For a tenant-occupied house, I run it twice: once as if delivered vacant and once with the tenancy in place, so you can see what the occupied route may cost or save before you decide.

Lenders and rental income

Buyers financing a two-family often want the lender to count part of the rent from the second unit toward their income. Lenders follow their own guidelines and usually want a signed lease, proof of the rent and an appraisal that supports the rental value. That makes your leases and rent records part of the buyer’s financing, not just paperwork for the attorneys. A buyer’s down payment and loan plan matter too; our guide to the down payment for a house in NYC explains the options buyers bring to two-family purchases.

Inspection access

The buyer’s inspector needs to see the rented unit, the boiler, the electrical panel and any shared spaces. Plan that visit with the tenant as carefully as a showing. A blocked inspection can delay the contract. Our guide to the home inspection in NYC lists what inspectors look at.

Buying a house with tenants: what the buyer takes on

Sellers price and plan better when they understand the buyer’s side. A buyer of an occupied house is buying a house and a landlord role at the same time.

The buyer becomes the landlord on closing day

From the closing, the buyer collects the rent, holds the deposit, makes the repairs the lease and the law require, and gives any future notices. A buyer who wants to live in the rented unit has to wait for the tenancy to end lawfully. Buying a house with tenants with no lease does not change that. Ending the tenancy still takes the required notice and, if the tenant stays, a court case.

Owner-occupant financing

Loans for owner-occupants, including FHA loans for two-family to four-family houses, require the buyer to move into one of the units within a set period after closing. A buyer who plans to live in the unit that is currently rented needs a realistic plan for when it will be free. That is why owner-occupant buyers often prefer the arrangement where the seller’s own unit is delivered vacant and the rental unit stays occupied.

Questions a buyer should ask before signing

• Is the rented apartment a legal unit on the certificate of occupancy?
• Is the apartment covered by Good Cause Eviction with me as owner?
• Is any rent unpaid, and does the contract say who keeps arrears collected after closing?
• Is the deposit amount confirmed, and will it be credited at closing?
• Has any notice been sent to the tenant, and when does it run out?

Title and closing protections

Existing leases are typically listed in the contract as tenancies the buyer accepts. The buyer’s title insurance policy will usually take exception to the rights of tenants in possession, which is another reason the leases must be accurate. Our guide to title insurance in NYC explains what an owner’s policy covers.

Buyouts, voluntary move-outs and what to avoid

Sometimes a seller and a tenant agree that the tenant will move out early in exchange for money or other help. This is often called a buyout or cash for keys. It can be a fair, legal solution when the tenant genuinely wants it. It can also turn into harassment if it is pushed on a tenant who does not.

How a voluntary agreement should look

• Make the offer in writing, in plain language, and tell the tenant they can say no and stay.
• Suggest the tenant have their own attorney review it, and give them time to do that.
• Put the move-out date, the payment, the condition of the unit, the deposit return and the key handover in a written agreement your attorney prepares.
• Pay on the agreed terms, usually at or after move-out, and keep a record.

New York City’s rules on buyout offers

New York City’s Housing Maintenance Code regulates how owners make buyout offers to tenants. Among other things, it requires written disclosures to the tenant, bars threats and intimidation, and generally prohibits a new offer for 180 days after a tenant has refused one in writing, unless the tenant asks for one. Whether and how those rules apply to your house is a question for your attorney before any offer is made.

Things that are never acceptable

Reducing heat or hot water, delaying repairs, entering without notice, removing belongings, changing the locks, repeated calls or visits, or threatening to report the tenant to anyone: these are not negotiating tactics. Some of them are misdemeanors under the self-help eviction law, and all of them hurt the sale. They lead to complaints, violations and court cases that a buyer’s attorney will find.

The contract and the closing in a tenant-occupied sale

The contract of sale is where the tenancy plan becomes a legal promise. Your attorney drafts it, and it should match exactly what you can deliver.

Clauses to expect

Between contract and closing

Do not sign a new lease, renew a lease on new terms, or accept a large prepayment of rent after the contract is signed without the buyer’s written consent. Keep collecting rent normally and keep records. If the tenant reports a repair problem, handle it and tell your attorney, because the buyer is entitled to the house in the condition the contract describes.

Closing day

At closing, the rent for the month is apportioned, the deposit is credited, and the buyer receives the original leases, any keys you hold for the rented unit, and a letter introducing the new owner. Right after closing, send the tenant the deposit transfer notice by registered or certified mail with the buyer’s name and address. Most tenant-occupied closings take a little longer to schedule; our guide on how long it takes to close on a house in NYC shows a typical timeline.

Costs and taxes

Seller costs are the same as in any New York City sale, including the New York State and New York City transfer taxes. Our guide to Queens closing costs lists them. Selling a property that was partly or fully rented can change the income tax picture compared with selling only your home. Talk to your tax adviser early, and read our guide to capital gains tax on the sale of a home in New York before the meeting.

A timeline for selling a two-family house with tenants

This is the order of work I suggest for most tenant-occupied sales in Queens. The dates depend on the lease, the notice period and the route you choose.

Before you tell anyone

1. Gather every lease, renewal and rider, and write down any agreement that is not on paper.
2. Confirm the security deposit amount and where it is held.
3. Check the legal unit count on the certificate of occupancy.
4. Ask your attorney whether each unit is covered by Good Cause Eviction or rent regulation.
5. Get an opinion of value for both routes: occupied and vacant.

Choosing the route

1. Decide on occupied, vacant, or one of each.
2. If vacant: work back from the target listing date using the 30, 60 or 90 days of notice the tenant is owed, plus a buffer.
3. If occupied: ask the tenant about access, an estoppel letter and their plans, and agree on a showing schedule in writing.

Listing to contract

1. Prepare the rent roll and the document file before photos are taken.
2. Give written notice of each showing and keep a log.
3. Share leases and records with the buyer’s attorney as soon as an offer is accepted.
4. Make sure the contract’s vacant or occupied clauses match what you can actually deliver.

Contract to closing

1. Sign no new lease and change no lease terms without the buyer’s written consent.
2. Plan inspection and appraisal access with the tenant.
3. If a unit is being vacated, confirm the move-out date and do the move-out inspection.
4. At closing, apportion rent, credit the deposit and hand over the leases.
5. Send the deposit transfer letter by registered or certified mail.

If the house came to you through an estate, the same tenant rules apply on top of the estate steps in our guide to selling an inherited house in New York. If the house needs work you do not plan to do, our guide on how to sell a house as is in New York covers that route. Owners in specific neighborhoods can also read our local guides, such as selling a two-family house in Woodside and how to sell a house in Corona.

Agatha Lubas

Licensed Associate Real Estate Broker · NY License #10301213345 · Keller Williams Realty Liberty

Agatha Lubas works with buyers and sellers throughout Queens, Brooklyn, Nassau County and Suffolk County, pricing and marketing one-family, two-family and multi-family houses, coordinating attorneys and lenders, and planning sales around existing tenancies. She serves clients in English and Polish.

Work with Agatha

This article is for general informational purposes only. It is not legal, tax or financial advice, and a real estate licensee cannot give legal advice; consult a licensed New York attorney about your own tenancy, notices and contract. Laws, exemptions and procedures can change; confirm current requirements with the New York State Senate’s published laws, the New York State Attorney General and New York City agencies. Sources cited reflect those publications as of October 2026. Real estate brokerage services are offered by Agatha Lubas, Licensed Associate Real Estate Broker, NY License #10301213345, Keller Williams Realty Liberty, 96-10 101st Avenue, Ozone Park, NY 11416. The NYS Disclosure Form for Buyer and Seller, the NYS Housing and Anti-Discrimination Disclosure / Fair Housing Notice, and the brokerage’s Standard Operating Procedures are available on request. Equal Housing Opportunity.