Tenant owes rent but property is scheduled to close

3 Replies

If I am buying a tenant occupied property, I know that I'm due prorated rent and the security deposit. However, if a tenant owes rent and is scheduled to pay after the property closes, how would the prorated rent be handled at closing?
Originally posted by @Mike H. :
If I am buying a tenant occupied property, I know that I'm due prorated rent and the security deposit. However, if a tenant owes rent and is scheduled to pay after the property closes, how would the prorated rent be handled at closing?

You would collect rent and give a prorated amount to the seller at closing 

Brie Schmidt, Real Estate Agent in Illinois (#471.018287) and Wisconsin (#57846-90)
Originally posted by @Mike H. :
If I am buying a tenant occupied property, I know that I'm due prorated rent and the security deposit. However, if a tenant owes rent and is scheduled to pay after the property closes, how would the prorated rent be handled at closing?

 Mike:

In these situations, we typically negotiate the outcome with the Vendor.

We use to do what Brie suggests above, but more times than not we are left with an eviction process and disproportional upfront costs.

Now our opening position - particularly if Notice to Vacate has not been served / the eviction process not commenced -  would be that the failure to collect rent is the Vendor's issue and make an appropriate adjustment to the Closing amount as if the rent were paid.  Typically, the Vendor will not want transfer a pro-rated amount for the outstanding rent - leaving us with the risk and effort to remedy the situation.  Knowing that inheriting a late tenant is statistically not bound to end well, we always - particularly with a smaller building - insist on the former.

1(506) 471-4126

If rent was due prior to closing and not paid that is the sellers problem. Your lawyer should still insure you receive prorated rent and full security deposit. It is the sellers responsible for perusing payment for December.

The tenants rent for December is not your concern, you still receive what is owning at closing regardless.

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