5 Things to Remember If Your Landlord Suddenly Sells Your Building
It’s still a seller’s market. On top of that, the National Association of Realtors predicts that rent prices will rise faster than home prices in 2022, which makes it an ideal time for landlords to sell their rental properties and make a tidy profit in the process.
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“I have sold a couple of buildings over the last year, as prices are high and it is a good time to sell,” explains Gary Zaremba, broker and owner at PepZee Realty in Dayton, Ohio,
In some cases, renters may have to vacate their unit when the building changes hands. If your landlord sells your building, what rights do you have? And how much time do you have to look for a new place? Ahead, find five things you should know if your landlord suddenly sells your building.
Take a good look at your lease.
The good news is that the new landlord can’t just tell you to pack your stuff and move out by the weekend. “A renter has a contract with a landlord called a lease, and that lease is legally binding with the new owner,” explains Zaremba. So, if this person tries to break the agreement and evict, he says the Housing Court will throw out their claim.
David L. Berkey, a partner at Gallet Dreyer & Berkey in New York City who focuses on real estate law, agrees, and says renters have the same legal rights that existed prior to the sale.
“If the renter had a lease — unless the lease contains language that states that the landlord may terminate the lease upon sale of the building — the old and new owners cannot terminate the lease, and the renter can continue in occupancy through the remainder of the lease term at the rent provided for in the lease,” he says.
In other words, if, for example, there are four months remaining on your lease, then the new landlord can’t make any changes to your lease until it expires.
Your new landlord may be able to increase your rent or refuse to renew your lease.
While nothing can change until your lease is up, afterward, the landlord may be able to increase your rent or decline the option to renew your lease. (Keep in mind that the prior landlord could have done this as well.) You still should receive plenty of advance notice — but this may depend on where you live.
“New York recently adopted Real Property Law, Section 226-C, which requires a landlord who intends to increase rents by five percent or more, or who intends not to renew a lease, to give notice to a renter of such intention,” Berkey explains.
How far in advance you must be notified depends on how long you’ve been living in the rental unit, though it’s usually 30, 60, or 90 days’ notice.
“If the landlord fails to provide the notice, it cannot increase the rent five percent or more, or evict the tenant if the lease was not going to be renewed, until it provides the written notice required by law and the notice period has expired,” he explains.
Some buildings are subject to rent stabilization or other types of rent control. “If so, the new owner may be obligated to offer the renter a renewal lease with limited rent increases, since the new owner is bound by the lease and the laws that govern renewals,” Berkey says.
If you don’t live in a rental building subject to rent controls, the rules are different. Berkey says these rental properties are “market” rate apartments. “If the market permits, a new owner may seek to raise the rent substantially at the expiration of the lease term,” he says.
Without a lease or on a month-to-month lease? You may be in trouble.
You’re dealing with an entirely different scenario if you don’t have a lease. (Side note: You should always rent with a lease!) In this case, you’re at the mercy of the new landlord. A month-to-month lease also puts you in a precarious situation.
“If there is a month-to-month tenancy agreement or simply a verbal agreement between a tenant and a landlord, then the tenant can be evicted more easily and in less time,” Zaremba says.
Berkey agrees. “Where there is no written lease, and the tenant occupies the apartment on a month-to-month basis, a new owner may give the tenant notice that it is ending the month-to-month tenancy relationship and that the tenant must vacate the premises within 30 days.”
As a general rule, landlords don’t really like month-to-month leases. They would prefer to have a tenant willing to make a long-term commitment.
Inquire about your security deposit and outstanding repairs.
When a property changes hands, the security deposit should also be transferred to the new owner. “A security deposit is the property of the tenant and must be transferred when a building is sold, as that is not the seller’s money to keep or the buyer’s money to absorb,” Zaremba says.
But don’t just assume that your security deposit is in a safe place. “Renters should confirm with the new owner that their security deposit has been transferred and ask where the security deposit is now being held,” advises Berkey. Also, if there were any rent concessions given by the former owner, he says renters should make sure that the new owner is aware of them.
“In addition, if there are any repairs that were to be made by the former owner in the renter’s apartment, the renter should advise the new owner of the conditions that need repair and confirm that such repairs will be made,” Berkey says.
As the saying goes, you should expect the best but prepare for the worst. Try to focus on the first half of that phrase. For example, buying a building that is already full of tenants is a great selling point, and most new buyers will want to maintain that status. “Keep in mind that the new owner may not want you to leave — they may want to continue to rent out the property, so don’t take it for granted that you’ll have to leave at the end of your lease,” says Jonas Bordo, the CEO and cofounder of Dwellsy, a rental listing service.
Bordo adds that all rentals and lease arrangements are negotiable. “If you want more time in the place, or you’re willing to leave early in return for a payment, it never hurts to ask for what you want,” he says.