Does the existing lease survive when I buy the property?

Yes. In virtually all US states, a valid residential lease survives a property sale. The new owner takes title subject to the existing lease and must honor its terms until it expires. You cannot simply tell a tenant the lease is cancelled because the property changed hands.

Am I responsible for the security deposit the old owner collected?

Yes. When you buy a property with tenants, the obligation to return the security deposit transfers to you at closing. Whether you actually receive the deposit funds from the seller is a matter of the purchase agreement, but the tenant's right to the deposit follows the property. Make sure the purchase contract clearly addresses how deposit funds are handled at closing.

What if the seller did not give me the tenant's lease before closing?

This is a due diligence gap. Before closing, you should obtain copies of all existing leases, any addendums or amendments, and documentation of security deposits (amounts, account locations). Buying without reviewing the leases means accepting unknown obligations. If you are already past closing without this information, reach out to the tenants directly to introduce yourself and request copies of their documents.

Can I raise the rent right away after buying?

No, if the existing lease is a fixed-term agreement. The lease controls the rent for its entire term. You can only adjust rent at renewal, and you must follow your state's notice requirements. If the tenants are on a month-to-month arrangement, you can raise rent with proper notice, but you still must follow state law on notice periods.

What if I want to move into the property myself?

You still have to wait for the existing lease to expire. Owner-occupancy is not a guaranteed basis for eviction in most states. Some jurisdictions (California, for example) require specific "owner move-in" procedures with significant notice periods and relocation assistance in certain cases. Check local law before assuming you can occupy the unit when you want.

What happens at the lease renewal?

At renewal you can offer a new lease at updated terms, including a higher rent (subject to any applicable rent control). This is your first clean opportunity to establish a direct landlord-tenant relationship under terms you set. Make sure the renewal is in writing and signed.

Do I have to notify the tenant that the property was sold?

Yes. Most states require you to notify tenants of the new ownership in writing within a specific timeframe after the sale. The notice typically includes your name, address for receiving rent and notices, and contact information. Failure to notify can create problems if you ever need to serve a legal notice to the tenant.

Inheriting Tenants When Buying a Property

When you buy a property that already has tenants, you buy the property with all its obligations. The lease survives the sale, and so does the security deposit responsibility. Here is what to know before closing and after.

The lease follows the property, not the owner

This surprises many first-time investors. Regardless of what you and the seller agreed between yourselves, the tenant has a valid contract (the lease) that you must honor as the new owner. The tenants did nothing wrong by signing a lease with the previous owner, and the law protects their right to stay through the lease term.

You step into the seller's shoes as the landlord. All the rights and obligations that came with being the landlord now belong to you: collecting rent, maintaining the property, handling the deposit, giving proper notice for entry, and so on.

Due diligence: what to request before closing

Before you sign anything, obtain and review:

Copies of all active leases, including any addendums, amendments, pet agreements, and parking agreements.
Rent roll: a list of all tenants, their unit, current rent, lease start and end dates, and payment history.
Security deposit documentation: the amount held for each tenant, which account it is held in, and whether state law requires it to be in a separate account.
Any existing notices: has the seller served any pay-or-quit or notice-to-vacate notices? Are there any ongoing disputes or complaints?
Maintenance history: outstanding repair requests, recurring issues, any habitability concerns.
Evidence of tenant payment history: are there any tenants who are currently behind on rent?

Handling the security deposit at closing

The security deposit is the tenant's money, held in trust. At closing, the seller should either transfer the deposit funds to you directly, or the purchase price should be adjusted to reflect the deposit balance you are taking on. Get this in writing in the purchase agreement before closing.

The moment title transfers, you are responsible for returning the deposit (or providing an itemized statement) at the end of the tenancy, under your state's rules. It does not matter whether the seller actually handed you the money. The tenant's right to the deposit follows the property.

After closing, use our Security Deposit Limit Checker to verify that the existing deposit amounts comply with your state's rules.

Notifying tenants of the ownership change

Send each tenant a written notice as soon as possible after closing. The notice should include:

Your name (or the name of your LLC or management company).
The mailing address where rent should be sent.
Contact information for maintenance requests and emergencies.
Confirmation of the deposit amount you received and are holding.
Any change in payment method (if you prefer checks, online payment, etc.).

Many states require this notice within a specific number of days after the sale. Failure to notify can create problems later if you need to serve a legal notice to the tenant, since proper service often requires using the landlord's correct name and address.

What you can and cannot change right away

You cannot change the rent, lease terms, or deposit during the existing lease term. What you can do:

Introduce yourself and establish the new rent payment process.
Walk the property (with proper entry notice) to assess condition.
Address any outstanding maintenance requests.
Begin planning for what happens at renewal: same terms, updated rent, or offering to sell.

At renewal: start fresh with a proper lease

When the existing lease expires, you have your first real opportunity to establish the tenancy on your terms. Offer a new lease at the rent you want, with the terms you need. The tenant can accept, negotiate, or choose to leave.

A new lease signed with you as landlord is cleaner than continuing under the old lease. It confirms the current terms, incorporates any updated state-required disclosures, and gives you a proper paper trail going forward.

Create a New Residential Lease at Renewal

Bottom line

Buying a tenanted property is not complicated, but it requires preparation. Know what you are taking on before you close: review the leases, confirm the deposit amounts, understand the tenant history. After closing, notify tenants immediately and honor the existing lease. When it expires, draft a new one under your terms.