All Forum Posts by: Sean O'Gorman

@Nick L. I think your right, I was just hoping it wouldn't come to that.

@Daniel Watrous that would assume I get the deposits to make the deductions from. Otherwise, it is still a loss.

Hi All,

I am set to close on a duplex in Milwaukee and I am running into an issue with securing a credit at closing for the security deposits and prorated rent on the property. The real estate contract says that the security deposits are to be assigned and rents are to be prorated to the buyer at closing. Seller's agent is claiming that in a short sale transaction, getting a credit for the security deposits is "unheard of" and that since the rent is not due until the 5th (even though the rent grace period ends the 3rd - the day of closing) they will not prorate the rent. While I understand that they cannot prorate rent they have not received, I am a little concerned that I will be stuck in the middle with the tenant claiming they paid the property management company and the property management company claiming they haven't received it. It puts me in a difficult position, especially if I close without some type of protection here. 

I am crazy to think that security deposits should be assigned to the buyer at closing? When the tenants move out they are going to expect their security deposit back. 

Welcome Shane.

I agree with @Account Closed if the tenant has had a solid record of paying on time up until this point I would give a one time exception.

Great information here.

Look at your state statutes and administrative code for the definition of landlord. I can't say for sure but that might be able to provide you with some help. Also, find your PM contract and examine it for what happens for loses. Worst case you may have to pay tenant and then sue PM company. PMs negligence in charging for pre-existing damage won't get you off the hook from tenant but should allow you to recover from PM. You should probably make this claim in the current suit to prevent a claim preclusion type situation later. 

All that said it might be worth hiring an attorney who can walk through some potential problems.

Please note this is not legal advice nor should it be construed as such. You should consult and retain the services of a local attorney if you would like to obtain specific advice regarding your specific situation. Nothing in this should be perceived as creating an attorney-client relationship.

Don't comminge funds, that is grounds for piercing the corporate veil should something go wrong. 

@Kyle Mack- Thank you and yes I have a few stories :)

@Mehran K. - what part of Milwaukee do you invest in?

@Brandon Turner  - Thank you and I have been working my way through the podcasts :)

Cercil,

I agree with Nate, but I would also keep the water issue in the back of your mind when your picking your new tenants. There will be a big difference in your bill based on the number of individuals using the water (single individual vs a couple, or vs a couple with kids). 

Sean

Thank you Jon.