What Happens to Apartment Owners When the Building Is Demolished?

With the passage of the Housing Stability and Tenant Protection Act (HSTPA), apartment owners are scrambling to protect their property’s profitability in light of current rent regulation practices.

Substantial renovations are one way they can do this. But, many owners are turning to demolitions. A property can also be demolished if it is deemed unfit by local building authorities. 

Before a building is demolished, the owner has a duty of care to ensure tenants don’t suffer because of their decision. 

What Happens If an Apartment Is Condemned 

If an apartment is unfit for residence, it is usually condemned by local building authorities. It could be dilapidated or gutted because of a fire or earthquake.

The apartment cannot be inhabited until the owner fixes its structural integrity and provides proof when the issues are fixed. 

If they cannot do that within a specific period, or the property isn’t repaired, it is demolished. That can be the case if rehabilitation is unjustified. 

The state or federal authorities can also take the property and demolish it to make way for public facilities. This can include parks, roads, etc. 

Some of the other ways that an apartment building can be condemned include the following:

  • It has been boarded up or vacant for more than six years.
  • It has repeat code violations. 
  • It suffered significant damage, which impacted its structural integrity, or that of the surrounding areas. 

When an apartment owner receives a condemnation order, they have to evict their tenants and not take on more. They can also appeal the order within a specific period. 

The owner can also negotiate a rehab agreement with the appropriate authorities. But they cannot continue renting out rooms until the matter is resolved.

If the property is not restored or repaired by the deadline, it is demolished. Depending on the state and jurisdiction, the owner may be entirely or partially responsible for demolition expenses. 

In such cases, the property owner may demolish it themselves or negotiate the expenses from the party demolishing it. But this may reduce property values in the area.

To increase those values, the local authority may bear the demolition cost. This is different from government seizure. 

The government can seize property if it is to be used to promote a public purpose. This can include the construction of an airport, highway, or any other facility. 

In this case, the owner is duly compensated for the loss. But if their building is demolished, they have to pay for it in some form. 

Evicting Tenants or Removing an Apartment as a Residence

If an apartment has to be demolished, the owner has to evict tenants in good faith and without an ulterior motive. Or they can remove the property’s status as a dwelling unit.

Notice Requirements for Tenant Evictions

  • To evict tenants, the owner has to acquire specific permits, including permits to remove illegal inhabiting units.
  • They also have to give tenants prior notice before applying for the demolition. 
  • The notice also has to mention the legal rent of the area.
  • The notice must advise tenants on their relocation payments. This includes information on any extra expenses they are qualified for if they are disabled, senior citizens, or have children. 
  • A tenant has 30 days of the eviction notice to declare a protected status in writing. If they fail to do so, the landlord automatically assumes they are not protected. 

The notice must be filed with appropriate state authorities. This includes proof of service on the tenant within 10 days of the eviction notice. 


Depending on the state, tenants evicted because of a planned demolition can get moving coverage via a stipend.

Each tenant being evicted is entitled to receive a stipend or eviction expense from the landlord, which can cover reasonable moving expenses.  

Calculating those estimates falls on the landlord. They must research moving company expenses based on room count for a move within the state. This is in addition to stipends.

Owners can reduce those stipends based on tenant conduct. Landlords have a few options in the stipending system:

  • They can relocate the tenants to a new apartment where the rent is the same or regulated. The apartment can be near the one being demolished. In this case, the stipend can amount to $5,000.
  • They can relocate tenants to a more expensive apartment with the landlord paying the difference in rent for six years. The landlord has to find this apartment.

Applying for Demolition 

The application process is simple, but a landlord’s or owner’s application can be denied if the authority concludes that:

  • They don’t have sufficient finances to cover demolition expenses.
  • Authorized agencies haven’t approved undertaking plans.
  • The applicant failed to relocate tenants into rent-stabilized units, reimburse them for their moving expenses, or pay their stipends.

Demolition will be approved only if all of these issues are resolved, and tenants are given copies of the application. The owner doesn’t have to attach building permits to it unless applicable.

Copies of past eviction notices should also be attached to the application to ensure tenants are completely apprised of the situation. 

Once the application is filed successfully, the owner can cease lease renewals and inform tenants about it via a notice. The rents can be frozen till the offer is accepted. 

The stipends are paid when the tenants move out. Get in touch with your state’s local housing authorities for more in-depth and accurate information. 

Final Words

So to answer the question, the apartment owner loses a lot more than tenants if their property is demolished. Moving out into a rental unit they are paying for is not a bad deal unless you can secure other accommodations. 

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