I inherited tenants and the landlords shifty ways. question/rant

I inherited tenants and the landlords shifty ways. question/rant

Investor · Northeast, WI · Member since 2017 · 65 posts · 9 votes

We recently bought a 8-plex and the transfer was a mess. This was partially due to our inexperience and a landlord that was way too loose in my opinion.

Before I explain here's my question:

Should I contact the previous landlord because I think we were shorted 1 tenants security deposit. We've owned the property for 2 months or should we eat the cost and learn from our mistakes.

Here's the confusion. Before we purchased the property the security deposit situation was very hazy. We were never given a solid number on how much would be transferred. I later learned the listing agent was not asking the landlord and was just guessing by looking at the messy leases. We later found out that for some move-ins the landlord would allow tenants to not pay security deposits if they cleaned and prepped the units. 

So the day of closing we were still guessing at what was owed. It also didn't help the seller decided to take vacation this week(unbeknown to us they pre-signed). We ended up forcing the seller to meet us the day we signed and we sat in the parking lot adding up what was owed. It was a total **** show! What was so confusing was we closed on the 1st of the month so some rent was paid some wasn't some tenants had security deposits some didn't. I have never been so confused by simple math in my life.

After all this we thought we had everything correctly accounted for. Now it turns out we didn't. A tenant we thought didn't have a security deposit in fact does. They proved it with a receipt.

Again, my question is should we eat the cost or should I go back to the previous owner and ask for the deposit?

Thanks BP!

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Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
8y

Eat the cost and move on.

See this reply in the discussion

9 Replies

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  • Specialist · Riverside, CA · Member since 2015 · 6k+ posts · 3k+ votes
    8y

    If it was in the contract I would go back to the seller, it may be a pain in the butt, however would you rather have a pain in the butt or the wallet.

  • Rental Property Investor · DFW, TX · Member since 2013 · 953 posts · 910 votes
    8y

    The seller was cagey for a reason and just wanted out. He isn't going to respond or be helpful and what are you going to do? Take him to small claims court for that amount? It can't be more than $1500 bucks right? Not worth it. Take it as a lesson in underwriting and due diligence and move on. When the tenant moves out, if they deserve the security deposit back give it to them. We use title companies down here who are responsible for getting all those details straight before closing, not sure if it is the case there but however the deal was done, it shouldn't have closed without that information ironed out. Everyone makes mistakes, learn from it and do better next time. 

  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    8y

    Eat the cost and move on.

  • Investor · Northeast, WI · Member since 2017 · 65 posts · 9 votes
    8y

    Thanks @Aaron K. and @Peter M.! I'm going to eat this one. It's far less than $1,500 and not worth the hassle. I learned a ton from this deal. Not only did I learn how to be a better buyer but if and when I sell a property like this one I will know exactly what to prepare, even before the for sale sign goes up.

    Thanks again!

  • Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
    8y

    @Nick Bleser

    You posted eight months ago on a landlord pulling a fast one with a security deposit. Is this a new instance?

  • Investor · Northeast, WI · Member since 2017 · 65 posts · 9 votes
    8y

    @Jim K. this is a different scenario. That was a foreclosure that I never expected to get a security deposit. The question was more about how to handle the tenant's situation. I ended up telling them they could try to get their money back from the previous owner but I was staying out of it. The owner was someone I knew that is heavily into drugs. The tenants didn't even have a lease.

    I've thought when they move out I might give some money back just to guarantee they remove all belongings.

  • Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
    8y

    @Nick Bleser

    Sorry you're dealing with this security-deposit garbage again. As you see, it's common in the industry. I would clear this up with the tenant quickly if the question is ever raised. Nothing creates bad faith like security-deposit issues between landlords and tenants. Good luck to you and your family.

  • Investor · Northeast, WI · Member since 2017 · 65 posts · 9 votes
    8y

    Thanks @Jim K. ! I learn a little something from every deal. It's how I grow.

  • Rental Property Investor · Ankeny, IA · Member since 2017 · 2k+ posts · 3k+ votes
    8y

    Wait. How much was the security deposit? And how much is your net each month after expenses? I don't see how or why people are saying to just eat the cost. Even $500 is still $500! That could be 1-2 months profit. People are saying all the time to file for eviction if tenant is 3-5 days late, and take out every penny of the damage deposit if place is trashed, but don't go after a security deposit that is owed you? I sure would take them to small claims court if I had the documents to prove it. But first, I would 100% call them and ask where your money is. 

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