Purchasing Our First Multifamily - Security Deposit Question

[Drew Hitchcock]

We are closing on our first property this coming week. It has been quite a process, but I wont get into that here.

It is a 3 Unit. We will be renovating, and moving into one unit, for the time being. The other 2 are currently rented.

My first question is how to handle the security deposit? I see 2 different options here:

1. Current landlord passes the security deposit onto me. This could cause an issue depending on what he had collected originally.

2. Current landlord refunds the deposit to the tenant (minus any immediate repairs) and then I collect my deposit directly from the tenant.

Just typing this all out has me leaning towards #2, but if there are other options, or a standard practice, I'd like to hear it.

All this is assuming the current landlord collected a deposit when they moved in (IMO it's not very well managed so it wouldn't surprise me) I am going to reach out to the current landlord this week with this, and other, questions.

[David Lilley]

Your attorney/agent should have had that written into the contract. All deposits should transfer to new owner and all rents should be prorated day of close.