As a different example altogether, when I rehab a property, I deposit the budgeted money into a separate bank account and all expenses for that rehab are paid out of that account.

I also know that doing a 1031 exchange will enable us to carry all of the proceeds from the sale as a deposit on a new property.   

Did you have a deposit when u bought the property?

Are you a mom and pop landlord whose most likely risk is a premises liability claim likely covered by insurance or a small claims suit for return of a security deposit?

I made it abundantly clear verbally and in writing that I need receipts and invoices for work completed, because it was to be applied against a tenant security deposit. 

Thanks for your response.If current owner has no security deposits in escrow am I allowed to require deposits or renters insurance upon closing the sale?

They will not issue a security deposit check they will only give you a voucher letter to submit a claim.

The items you'll need to track are:Date of ExpenditureVendor Name/Tenant NameAmountCategory of Expense (look at a Schedule E to get this)/ or Revenue Type (Rent, Deposit, Utility Reimb, etc)Property (for when you have multiple properties.Put it in a nice column format like this:Date                     Vendor/Tenant                Amount                      Category                  Property1/1/18                   Joe Smith                         $1500.00                     Rent                           123 Main Street1/5/18                  Home Depot                   - $20.00                        Repairs                       567 Oak StreetSo that when you share your spreadsheet, they can filter for what they want. 

  ( like the guy above is mentioning cant find money) put up their deposit and now have 5 days to close etc.

And since i have a very specific niche and pricing structure I am always the last one they call and the clients usually have run out of time and are going to lose the deal and their deposit if they cant close in 3 to 5 days.. :)  So i turn them to yes or no in 24 to 48 hours so i dont hold anyone up.Just had one today  Pacific Palisades land deal  appraised 50mil but guy will take 20 mil if we can close in 10 working days.. needs dough for a deal in Vegas..