First deal, inheriting a tenant. What should I be aware of?

Question

My deal (first one): I have a 3/2 SFR in a good neighborhood, it's a short sale. My offer was accepted and is currently going through the banks underwriting. So my question is. There is a tenant in place. If I keep the tenant am I responsible to pay the current tenants deposit if they where to leave down the road. Any advice would be much appreciated. The tenant seems like a good family and the house looked taken care of but the current rent they are paying is about $50 to $100 below current market rents. Is there any other options and what else should I be aware of with inheriting a tenant, or should I try to start with a new tenant if possible?

Denise Evans · Answer

Both the selling and new landlords are responsible for the return of the security deposit, but the tenant can collect from only one of them. This rule avoids each owner pointing the finger at the other one and leaving the tenant in the lurch. I found this information at http://www.dca.ca.gov/publications/landlordbook/se.... You should probably download the entire book from the website.Note: Sometimes the old owner makes the security deposit check payable to the tenant and the new owner. The tenant endorses (indicating receipt of the refund from the old owner) and then the new owner also endorses and deposits the money, so it has the security deposit money. There are other ways to handle this, just make sure the money is accounted for.The specific part of the online book that pertains to sale of property says:Refund of security deposits after sale of buildingWhen a building is sold, the selling landlord must do one of two things with the tenants' security deposits. The selling landlord must either transfer the security deposits to the new landlord, or return the security deposits to the tenants following the sale.251Before transferring the security deposits to the new landlord, the selling landlord may deduct money from the security deposits. Deductions can be made for the same reasons that deductions are made when a tenant moves out (for example, to cover unpaid rent). If the selling landlord makes deductions from the security deposits, he or she must transfer the balance of the security deposits to the new landlord.252253The new landlord becomes legally responsible for the security deposits when the selling landlord transfers the deposits to the new landlord.254If the selling landlord returns the security deposits to the tenants, the selling landlord may first make lawful deductions from the deposits (see Basic Rules Governing Security Deposits, and above). The selling landlord must send each tenant an itemized statement that lists the amounts of and reasons for any deductions from the tenant's security deposit, along with a refund of any amounts not deducted (see above).255If the selling landlord fails to either return the tenants' security deposits to the tenants or transfer them to the new owner, both the new landlord and the selling landlord are legally responsible to the tenants for the security deposits.256 If the selling landlord and the security deposits can't be found, the new landlord must refund all security deposits (after any proper deductions) as tenants move out.257The new landlord can't charge a new security deposit to current tenants simply to make up for security deposits that the new landlord failed to obtain from the selling landlord. But if the security deposits have been returned to the tenants, or if the new landlord has properly accounted to the tenants for proper deductions taken from the security deposits, the new landlord may legally collect new security deposits.258If the selling landlord has returned a greater amount to a tenant than the amount of the tenant's security deposit, the new landlord may recover this excess amount from the tenant.259Rules Rules Governing Security Deposits). The landlord normally cannot require that you pay the security deposit increase in cash. (See "Living in the Rental Unit, Check or Cash".)260261, you can waive (give up) the extra amount and still use the small claims court.) For amounts greater than $10,000, you must file in superior court, and you ordinarily will need a lawyer in order to effectively pursue your case. In such a lawsuit, the landlord has the burden of proving that his or her deductions from your security deposit were reasonable.262263 These additional amounts can also be recovered if a landlord who has purchased your building makes a "bad faith" demand for replacement of security deposits. The landlord has the burden of proving the authority upon which the demand for the security deposits was based.264265 If the lease or rental agreement contains an attorney's fee clause, you can claim attorney's fees as part of the judgment, even if the clause states that only the landlord can collect attorney's fees.266 However, you can only collect attorney's fees if you were represented by an attorney.267

Jordon Haskell · Answer

Thank you Denise, that is very informative. Do you know if by receiving any the deposited money are you binded by any of the terms from the previous landlord/ tenant contract. And if anybody has experience with inheriting tenants what is the best way to handle an existing tenant? Keep them or try to find a new one? Any problems that I might not have considered with inheriting a tenant? Thanks