Previous “owner” did not tx security deposit

[Eileen Keaveney]

Hi there,

A few years back I had a borrower default on a HML. He stopped paying interest to me and instead rented out the property and pocketed the rent. After threats of litigation, he finally signed a QCD and assignment of lease. Despite our demands, he never transferred the security deposit. The tenant is now moving out and previous borrower (aka original landlord) told him that it doesn't matter that he never transferred it to us and we are responsible for it anyway. I've had a great relationship w this tenant for years and while I understand his situation I am not excited about the prospect of this borrower effectively stealing another $2k from me. Do I have any leg to stand on or am I responsible for returning the security deposit? I never renewed the lease with the tenant; he's been month to month since the original assignment od the lease ended. Property is in Illinois. Thanks for any advise.