I am buying a few apartments and I have closing tomorrow. Because many tenants don't have a lease, we requested certified estoppel letters. In the contract it is stated that "Seller is to provide the buyers with Estoppel Certificates from all tenants prior to closing, and all security deposits being held on behalf of the tenants is to be transferred to the buyers on the day of closing".
The listing agent told me that the Property manager who is managing for the seller is not being cooperative. So, he sent the estoppel letters to the tenants to complete. Tenants completed the letter and returned them to the agent, and he sent them to me. Aren't the letters supposed to come from the property manager who manages the properties and holds the security deposits? I asked the agent if I would get the security deposits at closing as it is stated in the contract. He said, "No, those security deposits are going to be transferred from the seller's property manager to your property manager." I am afraid the seller's agent will not send those security deposit to my property manager and then I am going to be screwed. I called the closing attorney and he said he will not disburse the funds to the seller before everyone complies with the term of the contract. What I am afraid of is that the seller's property manager does not know anything about the estoppel letters and therefore he is not obligated to transfer the security deposits to my property manager. He can simply say that he does not have any security deposit and because he did not send us the estoppel letters. I am going to be attaching a copy of one of the estoppel letter. Please look at it and tell me what's missing. I don't see the property manager's signature, nor the seller's agent who prepared them.
Turn it over to your lawyer and have him deal with it. Don't bother trying to wade through the legalities yourself, if you do and make a mistake you will pay.
The security deposits should not be transferred between managers it should be going from the sellers lawyer to your lawyer.
Have your lawyer request a extension on the closing to straighten out the finances.
The title company can just take the security deposit total from the sellers funds and credit them to you on the HUD1.
The Estopples do not necessarily need to come from the PM, it can be the realtor who collects the information - this isn't odd.
As for the security deposit, that should be transferred through escrow.
Seems like the attorney is on it.
To your success!
I have delayed closing. My real estate Attorney will be reviewing the contract tomorrow. Most estoppel letters were altered. The amount of security deposit tenants stated were crossed out and a smaller or zero was written next to it. I called a few tenants and they confirmed that the amount that was crossed out was the right amount.
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