I’m getting ready to close on a house that has a current tenant that’s renting at a month-to-month. When I take possession of the house should I require the tenant to provide a security deposit even though they’ve already been living in the house for many years? Or just take over the month-to-month rent?￼
I would say yes, you should require a security deposit and them sign a new lease for your protection. You could keep it as a month-to-month lease if you and they prefer. You won't be able to take from the security deposit damages beyond the condition of when you take possession as you can't prove they caused the damage since you just became the owner. Having the security deposit would help if they stopped paying rent and it could be used as a bargaining chip later on if you have issues with them later on.
Does the tenant already have a security deposit with the current owner? If so you will owe this back to them when they move out. You need this deposit money transferred to you along with an estoppel from the tenant on the amount of the deposit they paid.
If the tenants living there do not have a security deposit I would definitely require this to be paid along with a new written lease - following the notifications/lease change terms in the existing lease with the tenants
I would also add that you need to receive any move in conditions forms and pictures from the current owner for the tenant's movein. Hopefully they have this documentation of the condition of the house.
The previous owner has their deposit and you need to get it from the seller. It should have been part of the contact along with prorated rent. If the seller won't give it to you, tell the tenant to demand it back from them and then give it to you.
If they have a deposit with the previous owner, that person needs to pay you that $$. Its not theirs, it belongs to the tenant and they will want it back when/if they move out and YOU will have to pay that $$.
PRIOR TO CLOSING either get the security deposit from the owner or - if there is no security deposit - require the owner to get a security deposit from the current tenant and have it transferred to you at closing. Don't want until after the closing to do this.
Got the deposit at closing.
Require copies of the existing leases, even if they are month to month. It should indicate on those how much the tenant deposits are. Let the escrow office know the amounts so they calculate it into the final settlement statement and the deposits are transferred to you asn the new owner. It's also a good idea to require the owner provide estoppel certificates for each unit. It will indicate the rent amounts and deposits with tenants signing that they agree it is true and correct. This protects you in the future so tenants can't say they had a $5000 deposit when it was really $500.