Tenant already in place and moving out a week after closing, security deposit

14 Replies

Hello,

I plan to close on a 2-flat in a month (week of June 22) with one unit vacant and the tenants in the other unit moving out the end of June.  We will be receiving their security deposit.  There is an issue with the tub in the occupied unit - the faucet of the tub leaks when the water is on and the leak hits right where the tub and wall tile meet, and of course there is no grout / sealant between the tub and wall tile so the leak goes directly below the tub.  The bathroom is on a slab foundation so there shouldn't be much of a problem with anything below the tub. 

So my question is, can I use the security deposit to off set the cost of fixing this issue?  Or as this issue is known when I bought the place, I can't use it for that and only for any damage done between closing date and the move out?

The lease is month to month and I do not know if the tenants even told the current owners of the problem.

Thanks.

The security deposit can only be used to repair damages that were caused by the tenants, and not for normal wear and tear. If you can prove that, then go for it. But it doesn't sound like it's going to work in this situation. Maybe if they failed to notify management in a timely fashion. Good luck!

Let them go.  It's not worth the headache if they want to fight it in my opinion.  Even if they reported it, they can deny it, then blame the seller, then the seller blames them, then someone blames you, then you and your wife can't sleep at night because it's so stressful with all the finger pointing and potential lawyer junk fees to sort it out over a couple hundred dollars....

Once the place is vacant go in and fix everything to your standards and start new.  

I agree with the other posts. Just return the deposit. I am in a similar situation with my first and only buy and hold property. I just acquired the property and long term tenants are moving out at the end of July. There are some issues that I believe would warrant keeping some if not all of their deposit. However, the previous owners told me (right in front of the tenants) that the property looked the same as when they began their lease (3 years ago) and that they would refund the full deposit! Thanks! Lesson learned on my part... I just plan on going in, revamping the place to my standards and starting fresh!! Good luck!!

I think what I would do is deduct it from their security deposit, and be sure to send the itemization with any refund to their forwarding address within the time required by law.

Then, see what they do.

If you get a demand letter saying they will sue you, then you could just pay them the deposit.  

This way, if they know they did the damage, they may just accept the deduction.  

It would be worth a shot, to me.  

But, as far as your rights go, you step into the shoes of the owner of the contract you bought.  You will have the exact same rights as if you had the contract all along.

Better check your Landlord/Tenant laws for your state before you do something you may regret. What applies in one state will most certainly not apply in another, so verify because you stand firm in a decision. 

Not addressing the deposit question, but the leak itself. Be prepared to see that the framing may be damaged. Who knows how long water squirted in between the tub and wall?

Originally posted by @Annie Bliss :

Not addressing the deposit question, but the leak itself. Be prepared to see that the framing may be damaged. Who knows how long water squirted in between the tub and wall?

This is the problem with trying to fulfill your due diligence while a tenant is in place...

@Todd Michaels

To me this is normal wear and tear / maintenance of the property. One post here mentioned there could be water damage to the framing of the tub/shower and bath walls, this is very likely to be the case. I don't see this as being just a simple fix such as a new light or faucet swap. You should...... Make sure you do not have mold issues behind or underneath the tub/shower area. I would plan on exploring this from either Sheetrock wall on opposite side of opening up the wall from the tiled surface in the bathroom.

You probably will not be able to keep the deposit in this case, and as you mentioned it was a 2 "flat" I am assuming you're in the greater Chicago metro and your L & T laws are very strict there.

I would do as another post suggested and either have it repaired by current owner prior to closing to your satisfaction - meaning you are physically on the job site to witness extent of damage or lack there of due to water, or, renegotiate and ask for a concession for the issue - and this could be a moderately expensive problem depending on the length of time it has been leaking and given the possible location of the shower/bath to supporting wall etc should lumber need to be replaced. I would ask for 2500$ concession to be added to the contract for costs involved in bathroom repair. The reason for the $ amount is that if you had to gut a bathroom you could figure minimum of 5,000$ to rebuild, seeing as this is only the bath/shower but will share a bedroom or hallway wall, you may have work to perform in more than one room which essentially could amount to half a bathroom remodel.

Trust me, I've been there done that enough times already.......

If seller won't concede funds, suck it up and consider it on the job training you just paid for.

Hope this helps - good luck!!

Not giving legal advice but what you're suggesting would get you in trouble here in Texas. Security deposits can only be dinged for actual damage caused by the tenant. You cannot deduct normal wear and tear from the deposit. 

Damage caused by shoddy workmanship on the seller's watch is not the tenant's responsibility. 

This is something that should have been uncovered in the inspection during the option period. At that time, you could have asked the seller to repair the damage, or walked from the deal if he/she refused to do so.

Is this in Chicago?  If so, please review the RLTO on security deposits.  Worse case scenario, you deduct from the security deposit what the court will determine is normal wear and tear and not damage, and the tenant hires an attorney (who will happily take the case for free), and files suit for violation of one of the many requirements for handling security deposits in Chicago.  Chances are you violated it at some point during the property transfer, which sets you up for a 2X penalty plus return of the original deposit plus reasonable attorneys fees, plus paying your own attorney.  

DO NOT DO IT!  Make sure you read the RLTO cover to cover before you close.  I would recommend that you have the seller return the security deposits directly to the tenants before closing because handling them is such a pain and legal liability that most smart landlords just charge move in fees and no longer collect deposits.  

Thanks for all the responses!  I will just proceed by returning the complete security deposit back assuming no new damage is present after close.

We did talk with the sellers about getting a credit for the issue but that didn't work out, and the house is a good enough deal that I am not going to let that stop me from moving forward.

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