How Tenant Leases Affect Multi-Unit Property Sales in Illinois

 Posted on May 27, 2026 in Residential Real Estate

Under Illinois law, when a multi-unit property is sold, existing lease agreements stay in place. The new owner steps into the seller's shoes as the landlord. That means the new owner is bound by every term in every lease, whether they have read them or not.

Whether you are the one selling or the one buying, understanding how tenant leases affect the transaction can help you avoid serious problems down the road. If you are involved in a multi-unit property sale in 2026, a Homewood, IL residential real estate lawyer can help you navigate every part of the process.

What Does the Seller of a Multi-Unit Rental Property Need To Know in Illinois?

If you are selling a multi-unit property with tenants in place, you have obligations that start well before closing day.

You Cannot Force Tenants Out To Sell

This is one of the most common misconceptions sellers have. You cannot end an active lease simply because you want to sell the property. If a tenant has a fixed-term lease, such as a one-year agreement, they have the right to stay until that lease ends. You can sell the property with the tenants in place, but you cannot remove them just to make the sale easier.

If your tenants are on month-to-month agreements, you have more flexibility. You can give proper written notice to end a month-to-month tenancy before listing, as long as you follow the required notice periods under Illinois law. However, even that process has rules, and you need to make sure you are following them correctly.

You Must Disclose the Leases to Buyers

Under the Illinois Residential Real Property Disclosure Act, sellers generally must provide the Residential Real Property Disclosure Report before the buyer signs the contract. For multi-unit properties, this means disclosing known material facts about the property, which includes the existence of active leases, rental amounts, and any known issues with tenants.

Beyond the disclosure form, you should also provide copies of all current leases, any existing lease addenda, and documentation of security deposits held to any serious buyer. Surprises at closing, or after closing, are a fast way to end up in a dispute.

Security Deposits Transfer With the Property

When you sell a multi-unit property, the security deposits you are holding do not belong to you. They are held for the benefit of the tenants. Under 765 ILCS 710/1, Illinois law requires that security deposits be transferred to the buyer at closing or returned to the tenants. The new owner becomes responsible for those deposits and must follow Illinois law regarding how they are held and returned when tenancies end. 

What Does the Buyer of a Multi-Unit Rental Property Need To Know in Illinois?

If you are buying a multi-unit property with tenants already living there, you are not just buying a building. You are taking on an active landlord role from the day you close.

You Are Bound by Every Existing Lease

Every lease that was in place when you bought the property is now your responsibility. You won’t be able to change the rent, add new rules, or require tenants to sign a new lease until their current agreement expires. Whatever the prior owner agreed to, you inherited it. This makes it extremely important to read and understand every lease before you close.

Before you make an offer, ask for copies of all current leases and review them carefully with your attorney. Pay attention to lease end dates, rent amounts, any special provisions the prior owner agreed to, and whether any tenants are on month-to-month terms. All of this affects your rights as the new landlord and your ability to manage the property the way you intend to.

Check the Rent Rolls and Verify Actual Rent Payments

A rent roll is a document that shows who is renting each unit, what rent they owe, and whether they are current on payments. Sellers are expected to provide this, but it is important to verify that the numbers are accurate. An overdue tenant, a tenant paying below-market rent under a long-term lease, or a tenant with a dispute in progress can all affect the value and performance of the property you are buying.

Ask for rent payment history for at least the past 12 months. If tenants are behind on rent, understand what the process looks like for addressing that after you take ownership.

What Happens to Month-to-Month Tenants When Someone Buys a Rental Property in IL?

If some or all of the tenants are on month-to-month agreements, you have more flexibility to make changes after you close. Under Illinois law, a landlord can end a month-to-month tenancy by giving at least 30 days' written notice. Some local municipalities may have additional notice requirements that go beyond the state minimum. It is worth confirming what applies in the specific location of the property you are buying.

If you plan to renovate units or change the use of the property, month-to-month tenants give you a clearer path to doing so than tenants with long fixed-term leases still in effect.

Schedule a Free Consultation With Our Country Club Hills, IL Real Estate Lawyer for Multi-Unit Buildings

Whether you are selling a multi-unit property and want to make sure you are handling tenant obligations correctly, or you are buying one and want to fully understand what you are taking on, getting legal help before you sign anything is one of the best decisions you can make. At The Sherrod Law Firm, Ltd., we work with many repeat clients and have a strong focus on working with seniors. We take time to guide people through each stage of the process with care and clarity.

Call 312-321-6910 today to schedule a free consultation with our Homewood, IL residential real estate attorney.