I am a first time landlord, here in Colorado. I just closed on my first duplex and I am moving into one side.
The opposite side has tenants with a one year lease. During closing, the previous property manager mentioned that he would transfer the security deposit to me within a week but he never mentioned anything about the rent for August and I didn't think to ask about it either.
I closed and took possession on August 3rd and my question is this; assuming the tenants paid their rent on the first, shouldn't that go to me or does it go back to the previous owner?
I haven't asked the property manager or my new tenants yet about the rent for August because I first wanted to ask the question here, to all the experienced investors, landlords and property managers that may have dealt with this situation before, and save myself the humiliation of looking like a dufus.
Thanks in advance,
Rent should get prorated 6.5% (2/31) to him and 93.5% (29/31) to you or otherwise agreed upon.
I would think at most you would owe the previous owners three days rent for the 1st through the 3rd. The rest should be yours. I would definitely look through the purchase agreement though because it truthfully should have been addressed there.
At the closing you should have received any security deposit money and any rent money that was received for the month of August prorated to the 3rd.
If you didn't and/or if it wasn't even mentioned throughout the closing process ask your lawyer/title company why this is.
@Ben Cochran The correct way to do it would be to have rents for the month of August and the security deposit credited to you at closing on a prorated basis like the others have said above. This would be done on the settlement statement. The standard Colorado REC contract addresses rents in section 16.2 at the bottom of page 11. It could be the case that the previous owner did not collect rent for Aug and therefore no rent was due if the "rents actually received" check box was checked. It is then your job to collect. If the "accrued" box was checked (which it should have been) you can call your title company if they did not credit you at closing and they will get you the funds (they messed up). If it was blank call your agent's managing broker and let him know is going on (your agent messed up).
If the property was managed by a property manager, it is likely that the old property manager has the tenants SD. If you continued with the PM then there is nothing to be done with those funds. If the PM contract was terminated with the sale, then the funds should have been credited to you at closing.
You should provide your tenant a notice that states you are the new LL and that rent is to be paid to you in the future and that you now have their security deposit. Provide your contact info and hopefully you can collect theirs as well.
Also if you are ever in Denver drop by our Landlord Meetup. We normally meet the 2nd Monday of the Month. I post the meeting here on BP.
You'll have to go by your contract to buy and sell. You should really lean on your buyer's agent if you had one. Was the security deposit and rent in your closing paperwork?
As these folks have stated you need to review the purchase agreement etc. If its not a mentioned/agreed to item then your SOL. And yes you are responsible for the security deposit regardless if you dont get it :(.
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