Security deposit from an inherited tenant

10 Replies

I'm buying my first duplex and we are closing on January 1st.  We are inheriting a long-time tenant (I've read many posts about the ups and downs of inherited tenants).  This tenant moved from side A (where he's lived for the past 10+ years) to side B last month, while we were in the process of purchasing, and is now on a month-to-month lease.

Here's the thing - the tenant TRASHED side A.  The seller kept the tenant's entire security deposit because of the extent of damages, and said he needed to come up with a new security deposit prior to moving into side B.  This has been done and the new deposit will be in my bank account soon.

The seller has NOT used the security deposit from side A to repair side A.  We are buying the duplex as-is, so we're expecting these repairs.  However, wouldn't it be legally and/or morally right for the seller to give us the security deposit for side A to help with repairs, since that's what it was collected for?  Or can he just pocket it?  That just doesn't seem right for the seller to keep it and not use it for repairs.

The security deposit was $800 and the damage includes significant water damage around the tub, two cats who used every vertical surface as their personal scratching posts (pet deposit = $1), and infestation due to extremely poor housekeeping.  All seen prior to purchase.

I am in Washington and this subject has not yet been broached.  I just want to know if I have a leg to stand on in this situation.

Thanks!

Your bigger issue is to immediately upon closing giving the tenant notice that you will be terminating his month to month lease.  The $800 dollars is pocket change compared to the damage he will soon inflict on side B.

Originally posted by @Anthony Hurlburt :

Your bigger issue is to immediately upon closing giving the tenant notice that you will be terminating his month to month lease.  The $800 dollars is pocket change compared to the damage he will soon inflict on side B.

Yes, you are ABSOLUTELY right.  Side B desperately needs updating so we'll be replacing most things, but the potential for water damage and infestation??  NO THANK YOU.

Christina,

I would have the tenants security deposit credited to you in the closing. If he hasn't done any repairs with this money, there is no ungodly reason why he should keep it. In Florida, you cant just keep someones money and do nothing with the funds to make repairs

I too, would give them notice to vacate right when you close, most likely a 30 days notice. You would need to abide by your states landlord tenant laws for terminating an MTM occupancy. Not sure why the current landlord would let them move to the other unit knowing that they kept the property in that condition and they were in the midst of selling the property????

Kim Meredith Hampton, Real Estate Agent in FL (#BK0601196)
407-253-9324

If you are buying "as-is" the old landlord has no requirement to repair the unit.  Typically, security deposits and partial/pro-rated rents are transferred at closing.  This is usually agreed and discussed before closing.  I would address this now, either directly or through your attorney.

What ever in your mind it is in the contract. 

On my first property I had to collect security deposits from the seller after closing because she did not report them properly to the escrow company.

Thankfully she was honest and remedied the situation ASAP.

Hopefully your seller does as well.

If not I don't see how you could not have legal recourse given the plainness of the statute, but of course I'm not an attorney.

@Christina Tkacs If the seller is keeping the deposit "due to repairs", then yes, the deposit should be extinguished towards those repairs or transferred if they are not going to perform work. They might try to hide behind the "as-is" nature of the sale to say that they don't need to do the repairs as you had accepted the condition of the property when submitting the contract, but the deposit and damage issue is separate issues.

Peter MacKercher, Real Estate Agent in MO (#2010004223)
(314) 210-4414

Hi Christina! 

Things can get muddled in your situation, if you have an as is contract in Florida (provided that you didn't waive this) there is a clause for inspections where you can request the issues be repaired or request a credit for those repairs, even though its an as is contract. The flip side is that if they don't agree, you can back out of your contract without losing any of your escrow deposit, unless otherwise noted on the contract. This does give you an out, but you have to decide how important is this security deposit money to you and whether or not you're willing to walk away from the deal because of it.

561-692-3341
Originally posted by @Peter MacKercher :

@Christina Tkacs If the seller is keeping the deposit "due to repairs", then yes, the deposit should be extinguished towards those repairs or transferred if they are not going to perform work. They might try to hide behind the "as-is" nature of the sale to say that they don't need to do the repairs as you had accepted the condition of the property when submitting the contract, but the deposit and damage issue is separate issues.

 This is exactly what I need to know - and addresses my concern that they might hide behind the "as-is" nature.  

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