Landlords and tenants

32 Replies

@Brandon Washington   As Corey said, you can't ask the tenants for another deposit.  The terms of sale should have specified that all deposits are given to you in full.  If not and you can't get it from the seller, you are out that money.  You could try small claims court though that might involve the tenants as that money is not his to begin with.

Do the rental agreements specifiy the deposit amounts?   are they fully refundable?   If not that probably means the party who collected them keeps them.  (should not be referred to as a "deposit" then either) If they are refundable,   in my experience so far escrow has handled transferring the deposit money from seller to buyer.   But I'm in WA,   I suppose LA may be vastly different around legal process for transferring real estate. 

Note even if you are legally entitled to receive the deposit funds,  if it doesn't happen you still need to return those funds to tenants (less allowable withholdings based on circumstances) at move out from your own pocket. 
 

Ugh, Im sure it was i your purcahse contract to have him transfer those to you.  Time to go to court if he doesn't do it.  Not the tenants fault, they paid.  This is between you and seller.  Seller needs to provide. 

ive bought several buildings with tenants where I was not given the deposits at closing and this was no accident . In pa it is not illegal to do that if everyone agrees .don’t get me wrong I was not happy about it but I agreed knowing I was getting a big discount on the value of the apartment house . It was that or I wasn’t going to get the deal . If your not okay with that arrangement then simply don’t buy it . Don’t just assume it’s illegal though it may be unethical or poor business but not everything fits in the illegal category

Here's the deal. The security deposits belong to the Tenants, not the Landlord. When a property sells, the Security Deposits should remain with the property.

You should have spelled this out in your purchase agreement but the Seller still owes them to you even if the agreement doesn't explicitly say so.

I would tell him to hand them over within 14 days or take him to court.

What happens is you’d sign an addendum that says you are buying understanding you are on the hook for security deposits after the closing this is obviously done by scummy. Landlords who kept the money that wasn’t theirs . However if it means your getting a huge discount it might be best to grudgingly go along with it . Let’s face it many you won’t be giving the deposit back to and others will Atleast not all leave at the same time . Just be sure to factor that in 

Originally posted by @Brandon Washington :

Recently purchase an 8 plex, the old owner seems like he isn’t handing over the tenants deposits. Should I ask for a new deposit from the tenants?

Wow, is that really a serious question?  Good luck in your investing career,  you will need it.  

 

Originally posted by @Brandon Washington :

Recently purchase an 8 plex, the old owner seems like he isn’t handing over the tenants deposits. Should I ask for a new deposit from the tenants?

Brandon what did it say in the contract to purchase the property? 

@Brandon Washington Wow. He still doesn't have the right to withhold deposits of tenants that are living there. How much are we talking about? $6,000? Makes me wonder if he's even got the money.

Is it worth getting a lawyer on the case? Or small claims court? Maybe go visit the court house? Well if there's a positive on this, it's the fact you've learned something valuable. 

Stay positive and focus on the rest of your business. 

Originally posted by @Brandon Washington :

Recently purchase an 8 plex, the old owner seems like he isn’t handing over the tenants deposits. Should I ask for a new deposit from the tenants?

Was this not in the closing documents?

Did you do financing at all?  This would of been hashed out at the closing. 
 

Not sure why you bought something without getting the deposits.  Makes no sense to me

Originally posted by @Brandon Washington :

@Eric C. Bond for deed. It was in closing docs. He didn’t bring the check at closing. I should’ve postpone the closing. I can take him to court for it but it isn’t worth it.

It is totally worth it, holy heck.  I would not let a seller steal 6,000 from me.

 

@Brandon Washington Brandon did anyone ask the seller at closing for the check? The title company? Did you use an agent? I mean, where were the pros when the closing happened? Did they say, hey man just sign the papers, the seller's good for it? 

I would call the title company and any agents or lawyers you used for closing first thing in the morning. This would be an egregious oversight in my opinion.

I'm buying a 4 plex and your post inspired me to revisit the docs (thank you). There is a form called "Rental Property Rider", and a paragraph that goes "Seller shall deliver to buyer at closing all leases....and security deposits." Based on your scenario, I will happily delay closing until I have that hot little check in my grubby mitts. Thanks again mate, you've helped a couple of guys here already.

 

It still amazes me everyday how different real estate is in different parts of the country in ways you would never think. One of the things that makes Biggerpockets a great resource. In CT any security deposits the owner is holding transfer with the sale at closing, the buyer gets a credit for them. It’s a standard part of any closing.

Before you do anything,look at your closing statement. If the closing statement gave you a credit towards your purchase price of the amount of the tenant deposits, then you did, in fact, receive the deposits, just not in the form you were expecting. Don't go off half cocked.

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