Selling a rental with tenants in place: the actual rules.

The tenancy survives the sale

A lease follows the property, not the landlord. When an occupied rental sells, the buyer steps into the lease as-is: same rent, same terms, same deposit obligations. Nothing about a sale, by itself, ends a tenancy or changes its terms.

State law: AB 1482

The Tenant Protection Act (Civil Code §1946.2) covers most California rentals older than 15 years: after 12 months’ occupancy, terminating requires just cause. “I’m selling” is not on the just-cause list. No-fault causes (owner move-in, withdrawal from the rental market, substantial remodel) exist but come with relocation assistance: generally one month’s rent at the state level, and with paperwork that has to be right.

Local layers

Cities can and do add stricter rules. The city of San Diego’s 2023 Tenant Protections Ordinance, for example, tightens no-fault terminations and generally doubles relocation to two months’ rent. Always check the city’s rules, not just the state’s: the answer changes at municipal boundaries.

Showings and entry

Entry to show the property requires proper notice: generally 24 hours, in writing, at reasonable times (Civil Code §1954). Tenants don’t have to make the place pretty, accommodate open houses, or tolerate a parade. This is a real friction of listing an occupied property on the open market, and essentially a non-issue in a direct sale with one scheduled walkthrough.

Deposits, rent and paperwork at closing

Security deposits transfer to the buyer through escrow (Civil Code §1950.5), rent prorates to the closing date, and the tenancy’s terms get documented: typically with an estoppel certificate the tenant confirms. Section 8 tenancies add the housing-authority contract, which transfers with ownership; the tenant’s voucher is unaffected by a sale.

The two honest paths

List it vacant: lawful where a no-fault ground genuinely applies, but slow and expensive once relocation, vacancy, turnover work and commissions stack up, and hard on a tenant who did nothing wrong. Sell it occupied: tenancy transfers intact, nobody is displaced, and the price reflects the building and the actual rent. Investors buy occupied buildings every day; the trick is finding one who’ll show you the math.

Sources: Civil Code §§1946.2 (just cause), 1954 (entry), 1950.5 (deposits) at leginfo.legislature.ca.gov; City of San Diego Tenant Protections Ordinance (2023). Checked August 2026. General information, not legal advice. Landlord-tenant law is fact-specific and locally variable.