What Rights Do Tenants Have if the Building is Sold to a New Owner?

When a rental property is sold to a new owner, tenants are generally protected by tenant rights laws that ensure continuity in their tenancy, meaning that the sale of the building does not automatically alter or terminate their rental agreements. However, tenants should be aware of their rights and the steps they need to take to safeguard themselves during this transition. Here’s what tenants should know about their rights if their building is sold:

1. Lease Continuity

In most cases, the sale of a building does not void existing lease agreements. The new owner inherits the terms of the lease, including the rent amount, duration, and other conditions that were agreed upon with the previous landlord.

• What this means for tenants: If you have a valid lease, it will remain in effect until the lease expires, unless both parties agree to change its terms. The new landlord is legally obligated to honor the terms and conditions of the existing lease.
• Red flag: A new owner cannot suddenly change the terms of the lease (e.g., raise rent or impose new rules) without following proper legal procedures.

2. Rent Payments

After the sale, tenants should be informed where to send their rent payments. The new owner must provide clear instructions on how and where to pay rent going forward.

• What to do: Ensure that you are given the correct details (e.g., new landlord’s name, address, or payment portal). Always keep a record of your payments, especially during the transition period.
• Red flag: If the new owner does not provide clear instructions or tries to claim you owe back rent from the previous owner, this could be a cause for concern.

3. Notice Requirements for Changes

If the new owner intends to make any changes to the rental agreement or conditions (such as rent increases or changes to the rules of the property), they generally must follow state and local laws regarding notice periods.

• Rent increases: In many places, rent increases are only permitted after proper notice is given, usually 30 to 60 days before the change takes effect. Some jurisdictions may have rent control laws that limit how much the new owner can raise the rent.
• Changes to lease terms: Any changes to the lease terms require tenant consent. If the new owner wants to modify the lease (e.g., changing the pet policy or adding fees), tenants must agree to these modifications.

4. Security Deposit

The new owner is responsible for the security deposit that was paid to the previous owner at the start of the tenancy. The previous landlord must transfer the security deposit to the new owner or provide the tenant with documentation confirming that it has been transferred.

• What to do: After the sale, confirm with the new landlord that your security deposit has been transferred. If you don’t receive confirmation, you may want to request a receipt or letter stating that the deposit has been transferred to the new owner’s name.
• Red flag: If the new owner denies receiving the deposit or refuses to acknowledge its existence, tenants should seek legal advice or contact the relevant tenant protection agency.

5. Eviction Protections

In most cases, tenants cannot be evicted solely because the building was sold. The new owner must follow the proper legal procedures for eviction, and tenants cannot be evicted without cause or proper notice, unless the lease has expired and no new agreement is made.

• Eviction process: If the new owner wants to evict a tenant, they must have a legal reason (such as non-payment of rent or violation of the lease terms) and must provide proper notice, which can vary by jurisdiction (usually 30 to 60 days).
• Red flag: If the new owner attempts to evict you without cause, or tries to end the lease prematurely without valid reason, this could be considered illegal eviction.

6. Notice of Sale

In many jurisdictions, tenants have the right to be notified when a property is being sold. However, in some areas, this is not required. Regardless, it is common for the previous owner or the agent involved in the sale to provide tenants with information about the new ownership and where to direct future communications.

• What to do: If you have not received a formal notice from the previous landlord or the new owner about the sale, you can ask for written confirmation of the new owner’s details.

7. Tenant Protections in Rent Control Areas

In rent-controlled areas, tenants are provided with additional protections. These may include limitations on how much the rent can increase after a change in ownership, as well as extended notice periods before any changes are made.

• What this means: If you live in a rent-controlled unit, the new owner must comply with the rules governing rent increases and cannot raise rent beyond the prescribed limits.
• Red flag: If the new owner attempts to raise rent above the allowed limits or bypass rent control laws, the tenant can challenge the increase in court.

8. Lease Expiry and Renewal

If a tenant’s lease is set to expire soon after the building is sold, the new owner must still follow the terms of the lease and may need to offer a lease renewal if the tenant requests one (depending on local laws).

• What to do: If your lease is expiring, make sure to discuss renewal options with the new owner in a timely manner. If the new owner is not willing to renew the lease or proposes unfavorable terms, consult with a legal expert to understand your options.
• Red flag: If the new owner is unwilling to negotiate or renew a lease without just cause, tenants may be at risk of unlawful eviction.

9. Example Scenario

Suppose you are renting an apartment in a building that has just been sold. The new owner reaches out and informs you that they will be handling the property going forward. You notice that the rent is higher than you expected when you receive the next month’s rent bill. Upon checking, you realize the new owner has increased the rent by 15%, which is higher than your local rent control law allows.

In this case, you have the right to dispute the rent increase by referencing rent control laws and requesting a proper breakdown of any legal increases. If necessary, you can file a complaint with the local housing authority.

10. Conclusion

Tenants have strong protections when a building is sold to a new owner. The sale does not affect the existing lease, and the new owner must adhere to the lease terms and applicable tenant protection laws. Tenants should ensure that they receive notice of where to send rent payments, verify that their security deposit has been transferred, and be aware of their rights regarding rent increases, lease renewal, and eviction protections. If any issues arise, tenants can seek assistance from local tenant advocacy groups or legal professionals to ensure their rights are upheld.