How to sell a Los Angeles apartment building with tenants in place

Do the leases survive a sale?

Yes. The building sells with its tenancies in place, and the buyer takes over as landlord on the terms you had. A month-to-month tenant stays month-to-month. A tenant with eight months left on a lease keeps those eight months at the rent the lease sets.

State law is written around that handoff. Civil Code section 1962 gives a new owner 15 days to tell tenants who owns the building, who accepts legal notices for it, and where to pay rent. A new owner that misses the deadline cannot evict a tenant for nonpayment of rent that came due while it was out of compliance. Civil Code section 1950.5 tells you what to do with each tenant's deposit when your interest in the building ends by sale.

Rent control stays with the building too. The City's Rent Stabilization Ordinance, the RSO, covers rental units whose certificate of occupancy was issued on or before October 1, 1978, and a sale does not change that date. The statewide rent cap in Civil Code section 1947.12 and the City's Just Cause Ordinance also keep applying after closing.

One exemption can end at closing. Both of those laws exempt a two-unit property where an owner lives in the other unit, and the exemption depends on the owner living there. If you live in one half of a duplex and sell to a buyer who will not move in, expect the buyer to treat the other unit as covered.

What transfers to the buyer at closing?

More than the keys. Each item below passes to the buyer under its own rule, and each one shows up either in escrow or in the buyer's first weeks as owner.

The deposit rules and the proration arithmetic are laid out step by step on the page about security deposits and leases at closing.

How much notice do you need to show a unit?

Civil Code section 1954 lets you enter a unit to show it to prospective or actual purchasers and to mortgage lenders. You give reasonable written notice, and you enter only during normal business hours. The notice states the date, the approximate time and the purpose of the entry. The statute presumes 24 hours is reasonable notice, and it presumes the same of a notice mailed at least six days ahead.

One part of the statute is written for sales. If you or your agent told the tenant in writing that the property is for sale, and that you may contact them orally to set up showings, a showing notice given within 120 days of that letter can be given in person or by phone. Give the same details when you call. Whoever enters must leave written evidence of the entry inside the unit.

Los Angeles adds limits of its own. The City's Tenant Anti-Harassment Ordinance treats abuse of the right of access as harassment. Its list includes photographing parts of a unit beyond the scope of a lawful entry, giving no approximate time window or an unreasonably long one, and asking for entry too often without a reasonable justification. The page on showing an occupied building turns these rules into a schedule you can run.

What is a tenant estoppel certificate?

It is a short statement a tenant signs to confirm the facts of the tenancy, such as the rent, the deposit, the lease dates, and whether any side agreements or disputes with you exist. Your rent roll is your account of the building. The certificates are the tenants' account, and buyers and their lenders use them to check one against the other.

Whether a tenant has to sign turns on the lease. If the lease requires an estoppel, refusing can be a breach. If it does not, the tenant can generally say no, and in Los Angeles pushing hard for a signature carries its own risk. Plan for a few units to come back unsigned, and agree with the buyer ahead of time on what happens then. The estoppel certificate page covers what goes in the form and the fallbacks when a tenant will not sign.

What should you tell your tenants, and when?

Tell them in writing before the first showing notice arrives, and keep the letter to facts. A tenant who first hears about the sale from a stranger at the door is more likely to assume the worst, and a worried tenant is slower to schedule and slower to return an estoppel.

A useful first letter does four things:

• It says what stays the same, which is the lease, the rent rules that apply to the unit, the deposit, and the tenant's rights under the RSO or state law.
• It explains how showings will work, who will call, how much notice the tenant will get, and roughly how long a visit takes.
• It states that the property is for sale and that you or your agent may contact the tenant in person or by phone to arrange showings. That sentence is what lets later showing notices be oral under section 1954.
• It names one person who answers questions, and answers them in writing.

Leave two things out. Do not predict what the buyer will do with the units, because you do not know and the tenant may rely on what you say. And do not mention paying anyone to move unless you are ready to follow the buyout rules first. In Los Angeles, offering a tenant money to vacate without the written notice of rights the buyout program requires is itself harassment under the City's ordinance.

Can you empty the building before you sell?

Not by eviction, if the units are covered. LAHD's guidance says a landlord cannot evict a tenant to sell the property, and the only exception it mentions is property owned by the federal government.

The RSO allows an eviction only for a reason listed in LAMC section 151.09. Some reasons are the tenant's fault, such as unpaid rent or a breach of the lease. LAHD counts seven that are not, and its list of no-fault reasons has no place for a sale. Outside the RSO, the City's Just Cause Ordinance and Civil Code section 1946.2 also require a just cause. The state's no-fault causes include an owner or a listed family member moving in for at least 12 continuous months, withdrawing the property from the rental market, complying with a government or court order that requires vacating, and a real demolition or substantial remodel. A sale is not among them either.

For an RSO building, these are the lawful routes a seller is likely to consider:

No-fault evictions under the RSO carry relocation assistance. The amount depends on whether the tenant is an eligible or a qualified tenant, how long they have lived in the unit, and their income. LAHD posts the current figures on its relocation assistance page, and the payment has to be made available within 15 days of serving the termination notice.

Every route in that table has its own notices, filings and deadlines, and a mistake can cost you the vacancy and expose you to a tenant's claim. Talk to a Los Angeles landlord-tenant attorney before you serve a notice or put an offer in writing. Shaya is a real estate agent, not an attorney, and this is the point in a sale where you need one.

How do buyouts work before a sale?

A buyout is a written agreement in which you pay a tenant money, or give something else of value, to move out voluntarily. LAHD calls these cash for keys agreements. For RSO units, LAMC section 151.31 sets the order of steps:

1. Before you make any offer, give the tenant LAHD's disclosure notice of RSO rights, dated and signed by both of you.
2. Write the agreement in the tenant's primary language, with the 30-day cancellation statement in at least 12-point bold type above the tenant's signature line.
3. File the signed notice and the agreement with LAHD within 60 days of signing. LAHD takes them online through an Angeleno Account.

The tenant can cancel for any reason during the 30 days after everyone signs, and at any time if the agreement fell short of the ordinance. That window matters in a sale. A buyout signed three weeks before closing can still be cancelled after the buyer owns the building, so tell the buyer which agreements are still open and treat them as open when you set the price. The tenant buyouts page walks through each step and what happens when one is missed.

Is a vacant building worth more than an occupied one?

There is no general answer, and a percentage offered without reading your rent roll is a guess. What can be said is how a buyer reasons about it.

A buyer of an occupied RSO building is buying the rents in place and the right to raise them by the allowable annual increase, which LAHD set at 3 percent for July 1, 2026 through June 30, 2027. The rent resets only when a unit turns over in a way the law treats as a vacancy, such as a voluntary move-out. So the number a buyer studies is the gap between each unit's rent and what that unit would rent for now. A unit rented close to that figure gains little from a vacancy. A unit held for many years by a tenant paying far less is priced on the income the buyer can collect, not on the rent it could charge.

Vacancy has costs a buyer can see as well: relocation assistance, buyout payments, rent lost while units sit empty, and the chance that a buyout is cancelled inside its 30 days. A buyer who wants income from the first month may prefer the tenants you have. Buildings outside the RSO follow the same logic under different limits, because the state cap governs increases for a sitting tenant while state law lets an owner set the first rent for a new tenancy, with some exceptions.

What to gather before you list

1. Confirm each unit's status with LAHD's RSO property search, and note which units fall under the state cap or the Just Cause Ordinance instead.
2. Pull every lease, amendment, notice and rent ledger, and reconcile them into one rent roll.
3. List each deposit, and note any part already applied or in dispute.
4. For tenancies that began on or after July 1, 2025, find the move-in photos AB 2801 requires, since the buyer will need them at move-out.
5. Collect your LAHD registration records, your rent registry filings, and copies of any buyout filings.
6. Draft the letter that tells tenants the property is for sale and sets up phone notice for showings.
7. Decide with your agent which units to show and when, and draft the estoppel form you will send once you are in escrow.

If you want a second read of the rent roll before any of this goes to a buyer, that is a good first conversation to have with Shaya.