How To Sell a Rental Property With Tenants Fast For Cash in New York

Selling a rental property with tenants can be more complex than selling a vacant property, but it’s not impossible. In this blog, Tristate Holdings 167 Inc discusses tenant laws, how you can sell, and whether or not you should sell your house fast for cash in New York. If you have any questions about your property, please get in touch.

What Are New York’s Laws About Selling a Building with Tenants?

Generally, Lease Terms Must Be Honored

The sale of a property does not automatically terminate a tenant’s lease, so any existing lease agreements will remain in effect after the sale. According to New York Real Property Law §226-b, the new owner must honor the lease terms unless there are specific clauses that allow the landlord to terminate it early, such as a month-to-month lease arrangement.

Fixed-Term Leases

For tenants with a fixed-term lease, the new buyer will step into the role of the landlord and assume all the obligations and rights of the original landlord. This means that if a tenant has a lease that lasts another six months, for example, the buyer will need to honor that lease. This also applies to rent-controlled or rent-stabilized units, which are governed by stricter regulations. In these cases, tenants have greater protections against eviction and significant rent increases.

Month-To-Month Leases

If tenants are on a month-to-month lease, New York law allows the landlord to terminate the tenancy with proper notice. According to New York Real Property Law §232-a, landlords must provide at least 30 days’ notice to tenants before ending a month-to-month lease, depending on how long the tenant has been in place. It’s important to follow these legal guidelines to avoid disputes or complications during the sale.

Protections For Rent-Controlled Buildings

In New York City, additional tenant protections apply, particularly in rent-stabilized or rent-controlled buildings. New York City’s Rent Stabilization Law provides tenants with specific protections regarding rent increases, eviction, and lease renewals. Landlords looking to sell a property with rent-stabilized units need to be aware of these laws and how they impact the sale.

Do You Have to Write a Letter to Tenants?

While New York law does not explicitly require landlords to notify tenants in writing before selling a rental property, providing a letter to your tenants is a good practice. Tenants are entitled to know about changes that could affect their living situation, and keeping them informed helps build trust and prevent misunderstandings. A well-written letter can help explain the sale process, assure tenants that their leases will be honored, and clarify how the transition to a new landlord will work.

In your letter, explain that you are selling the property, provide the anticipated timeline, and reassure tenants that their current lease agreements will remain intact. If you have month-to-month tenants, you might include information about potential changes to their lease or termination of the lease. Open communication can help avoid conflict and make the sale process smoother for both you and your tenants.

Additionally, if the buyer intends to occupy the property, you should discuss what that means for your tenants. If you plan to sell to a cash buyer who can expedite the process, being upfront about these changes will prevent surprises and give tenants time to adjust to the new situation. Good tenant relations can make the entire sale process easier and less stressful.

Does It Take Longer to Sell a Building with Tenants?

Selling a property with tenants can sometimes take longer than selling a vacant property, but it largely depends on the terms of the leases and the condition of the property. Investors often look for tenant-occupied buildings because they provide immediate cash flow, which can make your property more appealing if you have reliable, long-term tenants in place.

However, properties with tenants who are behind on rent, or with rent-stabilized units, may pose challenges to finding the right buyer quickly. Rent-stabilized units in New York come with legal obligations that some investors may shy away from due to the restrictions on rent increases and eviction protections. A rent-stabilized building can take longer to sell because buyers need to understand the long-term investment and regulatory landscape that comes with these units.

Additionally, some buyers prefer properties that are vacant to allow them more flexibility with renovations or redevelopment. If your property is fully occupied, it may take a little longer to find a buyer who is comfortable with taking over existing leases. This is especially true in markets where investors are looking for quick turnover or want to make substantial changes to the property after purchase.

That said, selling to a cash buyer can help speed up the process significantly. Cash buyers are often willing to purchase tenant-occupied properties as-is and without the need for financing, which eliminates many of the traditional delays in the sale process. If your goal is to sell quickly, working with a cash buyer who specializes in purchasing rental properties is often your best bet.

What if You Have To Sell the Property Quickly Because of Tax Issues, Foreclosure, or Something Else?

If you need to sell your rental property quickly due to financial distress—such as tax issues, foreclosure, or other urgent circumstances—time is of the essence. In these cases, a traditional real estate transaction, with all its inspections, financing, and tenant negotiations, may not be fast enough to meet your needs. Fortunately, selling to a cash buyer offers a solution when you’re facing a time-sensitive situation.

When tax issues or foreclosure proceedings loom, selling the property quickly can help you avoid further financial strain. For example, if you’re behind on property taxes, selling the rental property before the government takes legal action allows you to pay off your debts and avoid liens or tax foreclosure. New York Real Property Tax Law §1110 governs the tax lien process, and once a tax lien is in place, it becomes more difficult to sell the property without first addressing the outstanding taxes.

If you’re facing foreclosure, selling your property before the foreclosure sale can help you pay off the mortgage and other related fees. New York Real Property Actions and Proceedings Law §1352 allows homeowners to sell their property at any time before the foreclosure sale, which can provide much-needed financial relief. By selling quickly, you can avoid the negative impact of foreclosure on your credit and financial future.

Additionally, if you are dealing with other financial obligations or simply need to liquidate the property fast, selling to a cash buyer is the most straightforward path. Cash buyers often skip many of the traditional hurdles of a sale, including waiting for mortgage approvals, dealing with extensive tenant negotiations, and managing inspections. In a cash sale, the buyer assumes the responsibility of handling the tenant situation, making it easier for you to walk away from the property quickly.

If you want to sell your house fast for cash in Brooklyn, sell your house fast for cash in Staten Island, or anywhere else in the Northeast, please get in touch. We would be happy to help you.