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Joel Harris
  • Austin, TX
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Seller did not pay prepaid rents or deposits

Joel Harris
  • Austin, TX
Posted Feb 19 2017, 12:00

I recently purchased a cashflowing 4 plex. Since I am using my VA loan, and since the seller is covering closing costs, as is common in the area, I end up without any cash out of pocket, and also receiving deposits and prepaid rents from the seller (since the seller self-managed and did not use a property manager.)

However, when I arrived at the closing it was just me, my realtor, and the title agent. My realtor told me this was common, and what would happen is a notary would have the seller sign the paperwork remotely, and collect the checks for prepaid rents and deposits. He even went out of his way to include language in the paperwork stated explicitly that the seller was to provide prorated rents and deposits at closing.

A week later I received an amount from the agent for the closing. Enclosed were two personal checks, one with "deposits" in the memo, for an amount roughly half of the contractual deposits, and another with no memo, for $100. 

Since closing was on the 9th, deposits were $400 per unit, total rents for the month were $2200, I should have received $1600 in deposits, and $1561.29 in prorated rents. 

What are my moves? I have an address for the seller, however it is out of state. I have followed up with the selling realtor three times, and plan to file in court, however I'm not sure if I should file at the location of the property or the location of the address on the seller's personal checks. So far I am out $2300 more or less and I'm not sure of the right moves.  

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