Seeking advices on dealing with tenants from previous owner

[Nelson Xu]

Hello everyone, first time posting in this forum. My case is a little complicated and I try to sort out the sequence of actions. Appreciated your time in advance on this post.

I have a property in Southern California with tenants from previous owner. The tenants has been living in the unit for quite some time. The rent is below market. They're paying rent mostly on time. However, I just learned today that one of the tenants has health issue and won't able to work. They want to terminate the lease (month-to-month lease) and use security deposit as last month of the rent.

Problem is there's no security deposit in the lease when I got this property from previous owner. There are 5 people living in the unit while only person name is on the lease.

Questions are

How should I deal with this tenant in current situation? 

What would the move out process look like? for any property damages.

Can I still demand full or partial rent paid back in the future?

Thank you!

[Joe Homs]

@Nelson Xu  Here you go:

How should I deal with this tenant in current situation?  When you purchased the home the tenant deposits should have been transferred in escrow if your agent was doing his job.  Check the closing statement to see if this was done.  If not then if they have a valid lease, then you are on the hook for it.  If they want to move then I would just credit that deposit to them after they move out and you take inventory of any damages.  Do NOT let them use that as the last months rent up front as they are not entitled to do so.

What would the move out process look like? for any property damages.  If there are any property damages then just deduct that from the fantom rent deposit you have on hand and send them an accounting.  Find out if there was a MIMO (Move-in Move-out) form that was created when they moved in.  This is what you will use to charge them for any damages that arise, that were not already there.

Can I still demand full or partial rent paid back in the future?  You can demand that they pay you full rent until they move out.

All this being said, please treat people like you wish to be treated and it will go smoothly.  If your goal is to get them out and raise the rent, then this should accomplish your goals.

Good Investing...