New home owner trying to get existing tenant last month deposit

[Stephen Tsan]

Hello, 

I am Stephen, I am new investor living in Toronto Area, Looking to Learn as much as possible to be able 

[Roy N.]

@Stephen Tsan

First, you should familiarize yourself with the Residential Tenancies Act for Ontario and, perhaps more importantly, how  the Landlord and Tenant Board (LTB) interprets and applies it.

In Ontario, a landlord may not collect a security deposit, but may request "Last Months Rent" at the time the lease is executed.   As the name indicates, Last Month's Rent may only be used for that purpose and not to cover damages, utilities, etc.

As for the transfer of deposits at Close, that is a customary adjustment that should appear on the Statement of Adjustments prepared by your attorneys and reviewed and agreed by both the Vendor and Purchaser.   BTW: This is precisely what your lawyer is getting paid to do.

You also should have prepared estoppels and reviewed them with the existing tenants - making adjustments as necessary - and had the tenants attest them.  You would then resolve any variances from the information provided by the vendor prior to waving the conditions of your diligence.

In your current predicament, I would instruct your attorney to holdback the amount of the Last Month Rent deposits from any advances to the Vendor (attorney can hold them in escrow until matter is resolved).