Closing Day, Month-to-Month Renewal

[Chase Farley]

Hello BP,

We are closing on our first house today, a triplex in Vermont. One of the tenants was designated to leave in January, but due to her house not being ready she has to stay until it's completed, and they believe that it will be completed in February.

The issue is the previous owner allowed her to use her security deposit for the January rent. We have it in writing that there is no deposit being transferred for the unit. Our broker informed us that it is now our responsibility to work with the tenant, as the month to month lease is officially expired at the end of this month with no security deposit in place.

We have yet to contact the tenant, but we are wanting to reach out to her and the others today upon completion of the closing. We are ok with her staying until the house is completed, but we want to make sure that we receive rent for the months she occupies the units. This is a lower income tenant, so expecting another security deposit probably is an issue.

What next steps should be taken?

Thank you!

[Bjorn Ahlblad]

@Chase Farley this is dirty. Ordinarily the security deposits are your money to cover any damages that may have occurred during tenancy. The owner converted your money to his income. Now it is up to you to accept that or not close. My guess is that the tenant is not paying rent, there may not be a 'house that is not complete yet' and you will be stuck there too.

These days, with moratoriums, you should consider delaying closing while you verify from bank deposits that she has indeed been paying rent and get a price reduction equal to the deposit used to cover the rent. If the tenant has not been paying rent in the past they won't be paying going forward either, and if they do not leave on their own you are screwed if you close. All the best!