So, I am closing on a tenant occupied property sometime next week. I know that I should receive credit for the rent that has been paid for the remainder of the month, along with any held security deposits. My question is, what if the tenant is late this month, and has not paid the PM for February yet? Will I still get the credit, or will I be expected to go get the rent from the tenant?
Does the tenant have a history of paying late? Do you want to keep the tenant? What is the length of the lease?
The full security deposit should transfer with the property. These would be my preferences:
1. closing occurs after the tenant pays - you get credit for the remainder of the month in closing
2. seller gives you the rights to the full February rent
3. seller does not get credit at closing, but gets pro-rated rent when rent is received
I have no idea if this tenant pays late or not. I plan on keeping them at least long enough to finish rehabbing and renting out the other side (duplex). After that I don't care much if they stay or go. They are paying a little below market, but then they have some deferred maintenance going on in their unit that I need to care for before I can realistically hope to raise it to market rent. I assume they want to stay based on a conversation I had with them already.
My question is, if I close on the 4th, would the seller be required to give me credit for rent on my closing, even if they have not yet collected it for the month?
IMHO, the seller is done with the property and the tenants after the closing. Once the closing has occurred, you will need to chase after any unpaid rent from that point on. The seller should turn over the security deposits, the collected February rents, and all current tenant files upon closing.
Marcia Maynard, Fischer Properties | Podcast Guest on Show #83
This happened with a property I bought. One of the tenants was really late on their rent for that month (we closed on the 20th of the month) and the other tenant moved out and told the seller to keep the security deposit for last month's rent which we did not want to do. Our attorney at closing collected for us what was due; both security deposits and prorated rent for that month, no matter if the seller had collected it or not. The attorney said that was the settler's responsibility to now collect those funds.
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