What happens to rent that has been escrowed

[Curt Bixel]

I closed on a property on Thursday.  It is a duplex and comes with tenants.  I purchased the property under the understanding that one of the tenants was currently living in a hotel and escrowing their rent due to the property failing inspections by the city.  This had happened when the tenant called the city after the owner refused to address issues.  

I have contacted the tenant and learned the following:

• Their are 4 months of rent in escrow for a total of $3200
• The tenant is actually still occupying the property
• They had just cause for calling the city

I am curios what the legal aspects are pertaining to the escrowed rent.  This is new territory for me.  Right now, the different possibilities I see are:

• The previous owner may actually have claim to 100% of this money, as they owned the property during the time this rent was escrowed.  
• I may have claim to 100% of this money, once I have remedied all code violations.
• The tenant may have claim to 100% of the money for each month the property had significant code violations.

My real estate investor self would say that I should take 100% of the escrowed rent if it is my legal right to do so.  My "teacher and nice guy" side would want to give 100% of the escrowed rent to the tenant, as they need it more than me, and I didn't even own the property at that time.

My teacher and nice guy side wins out most of the time in these situations, but I certainly don't want to give $3200 to the tenant and then find out later that have to send and additional $3200 to the previous owner.