A region cannot be bought so long as the region lord still holds office. So in order for them to have bought the region, they must have first kicked out the duke somehow. The former duke may still have had the court rank of duke, but he wasn't the duke of the city. As Telrunya says, the former duke would be a "noble" of the region. No oath and no estate, but still aligned to the region, just as the knights. The fact that he used to the duke is of no consequence when the region switches realms.
