Your building was sold or foreclosed: what happens to your lease

If your building is sold, your lease stays in force: the new owner steps into the old landlord’s shoes and must honor your lease, your rent and your security deposit. If the building goes through foreclosure instead, New York law still lets most tenants stay at least until their lease ends or 90 days after a written notice from the new owner, whichever is longer, and rent-stabilized tenants keep all of their regulatory protections.

A change of owner is a common moment for confusion about where to pay rent, who holds your deposit, and whether your renewal will be honored. This guide covers what the law says in each situation and the steps to protect yourself.

When a building is sold

A sale transfers the building, not your apartment. Your lease is a contract that runs with the property, so the buyer takes it on. The rent, the end date, who pays which utilities, and any other terms stay the same until the lease expires.

If you are rent stabilized or rent controlled

Regulation follows the apartment, not the owner. A new owner must offer you renewal leases, can only raise rent by the amounts the Rent Guidelines Board allows, and must follow the same eviction rules as the old owner. If you’re not sure your apartment is regulated, see Is my apartment rent stabilized?

If you are a market-rate tenant

Your lease protects you through its end date. At renewal, the new owner has the same choices the old one had. In many buildings, the state’s Good Cause Eviction law limits how much rent can go up at renewal and when an owner can decline to renew; check whether it covers you in Does Good Cause Eviction cover my apartment?

What happens to your security deposit

New York’s General Obligations Law § 7-105 sets out exactly what the old owner must do with deposits when a building changes hands:

1. 1

   Old owner turns over the deposit

   At the time the deed is delivered, or within five days afterward, the old owner must turn your deposit over to the new owner.
2. 2

   You get written notice

   The old owner must notify you by registered or certified mail of the name and address of the person who now holds your deposit.
3. 3

   Responsibility shifts

   Once the deposit is properly turned over, the old owner is released, and the new owner becomes responsible for returning it to you at the end of your tenancy.

Failing to follow these steps is a misdemeanor under the statute. The same rule applies in a foreclosure: the deposit goes to the court-appointed receiver, or, if there is no receiver, to the buyer at the foreclosure sale.

Extra protection for rent-stabilized tenants

For apartments covered by rent stabilization or the Emergency Tenant Protection Act, GOL § 7-107 adds a second safety net. If the old owner never turned over your deposit, the new owner is still liable to you for it, plus interest, as long as the new owner had “actual knowledge” of it. The law treats the new owner as knowing about a deposit if any of these is true:

• The deposit was in a bank account during the six months before the sale
• Your lease in effect at closing says you paid it
• You provide documentary evidence of it

If the new owner has no record of your deposit, it must ask you in writing within 30 days after the transfer. You then have 30 days to send proof, limited to a canceled check, a receipt, or a lease signed by a prior owner. If the new owner never sends that request, you can produce your proof at any time.

When a building goes into foreclosure

Foreclosure is a court case a lender brings when the owner stops paying the mortgage. It can take a long time, and during it the owner usually still owns the building. You are not responsible for the owner’s mortgage, but you do need to know your rights.

1. Within 10 days of service

   Foreclosing party notifies tenants

   Under RPAPL § 1303, the lender must give tenants a separate notice on colored paper. In buildings with five or more units, it is posted at every entrance and exit. In smaller buildings, it is mailed by certified and first-class mail.

2. During the case

   Keep paying rent

   Pay the landlord under your lease unless a court-appointed receiver or the court tells you otherwise in writing. Keep proof of every payment.

3. After the foreclosure sale

   New owner gives notice under RPAPL § 1305

   The new owner must tell all tenants in writing its name and address and that they may stay for the rest of their lease or 90 days from the notice, whichever is longer, on the same terms.

4. At least 90 days later, or lease end

   Earliest end of a non-regulated tenancy

   After that period, the new owner must still go through Housing Court to evict. Rent-stabilized and rent-controlled tenants keep their protections and can’t be removed this way.

There are conditions. You can’t be the owner yourself, and the rent can’t be substantially below fair market rent unless the unit is subsidized or regulated. The new owner accepting your rent does not waive its right to evict later, and it can start a case sooner if you stop paying rent under the lease.

Steps to take when you hear the building changed hands

1. 1

   Confirm the sale in public records

   Search the address on ACRIS, the city’s property records system, for a new deed. ACRIS covers Manhattan, the Bronx, Brooklyn and Queens from 1966 to today; Staten Island records are not in it. Roofy building pages show the owner of record. Our guide to ACRIS deeds and sale prices walks through the search.
2. 2

   Get the new owner’s details in writing

   Ask for the new owner’s legal name, mailing address and where to pay rent. Be cautious about any request to pay a new party that you can’t confirm against the deed or a letter from the old landlord. Scammers use ownership changes too.
3. 3

   Look for the deposit notice

   You should receive a certified or registered letter saying who now holds your deposit. If it doesn’t arrive, write to both the old and new owners asking who has it, and keep a copy.
4. 4

   Keep paying rent and keep receipts

   Pay by check, money order or bank transfer so there is a record. If you truly don’t know who to pay, set the rent aside every month rather than spending it, and get legal advice.
5. 5

   Check the new owner’s track record

   Look up other buildings the owner holds and their HPD violations and litigation history. A pattern of violations or harassment findings tells you what to watch for.
6. 6

   Talk to your neighbors

   Tenants who organize have more leverage with a new owner. New York law protects your right to form a tenant association; see Starting a tenant association in NY.

Use Roofy’s building lookup to see the recorded owner, registration and open violations for your building, and how to find who owns an LLC building if the buyer is a company. If you start organizing, see tenant association rights.

Retaliation and your rights

New York’s anti-retaliation law (Real Property Law § 223-b) still applies after a sale. A landlord can’t refuse to renew, sue to evict, or impose an unreasonable rent increase because you complained to a government agency, enforced your rights, or joined a tenant organization. If one of those actions happens within a year of your complaint, the law presumes retaliation and the landlord has to prove otherwise. The law does not cover owner-occupied buildings with fewer than four units, and it excludes a tenancy that ends under the lease’s own terms because of a bona fide transfer of ownership, so read your lease for any clause about sale.

Where to get help

• Free lawyer in an eviction case: see Right to Counsel.
• Rent-stabilized questions: New York State Homes and Community Renewal (HCR) handles rent and lease complaints for regulated apartments.
• Foreclosure notices: the RPAPL § 1303 notice directs tenants to the NY Department of Financial Services helpline and website listed on the notice itself.

This is general information, not legal advice. Your rights can depend on your lease, your building’s regulatory status and the stage of any foreclosure case. Get advice before signing anything a new owner gives you.