He has no legal rights to the property or the deposit because it belongs to the legal occupants of the rental.

Deposited money goes directly to loan principal.

In full disclosure to both parties I let them know I am compensated at the end when the final product is realized and brought to market.If the deal comes together I always make sure the sellers have their own attorney in the mix to hold deposits and represent them on the sale.What I am finding is sellers are hiring their own brokers and paying them commissions for doing next to nothing. 

.)✅ Return all keys, garage remotes, and access cards✅ Provide a forwarding address for the security deposit refundLandlord/Property Manager Responsibilities✅ Conduct a pre-move-out inspection (optional)✅ Take photos/videos of the property’s condition✅ Verify all keys, garage remotes, and access cards are returned✅ Check for unpaid rent, utilities, or damages beyond normal wear and tear✅ Hire a cleaning service (if needed)✅ Complete repairs and maintenance (paint, flooring, appliances, HVAC, plumbing)✅ Change locks if required by state law or property policy✅ Test smoke detectors and carbon monoxide alarms✅ Review lease terms for security deposit deductions✅ Send tenant security deposit refund (minus any deductions) within the legal timeframe

Section 8 doesn’t cover damages, but you can require a security deposit, just like with any other tenant.Charge for repairs – If the tenant causes damage beyond normal wear and tear, you can bill them or deduct from the deposit.Lease enforcement – If damages occur repeatedly, you can evict under Texas law.🔍 How to Check Section 8 Payment Rates in San Antonio👉 Go to the San Antonio Housing Authority (SAHA) website – They publish a Payment Standard Chart with the maximum allowed rents by bedroom size.📌 Here’s the official link to check rates: SAHA Payment Standards (or search "San Antonio Housing Authority Payment Standards” on Google).🔑 How to Select the Best Section 8 TenantsEven though you can’t discriminate based on Section 8 status, you CAN still screen tenants carefully:✅ Check rental history – Look for evictions, past landlord references, and late payments.✅ Look at their portion of rent – If a tenant pays only $50/month, they may have less financial responsibility than someone paying $500.✅ Require a security deposit – Helps protect against damage.✅ Meet the tenant in person – See how they present themselves.🚀 Final ThoughtsRenting to Section 8 tenants in San Antonio can be a great strategy if you screen properly and understand the rules.

I believe I am limited on the deposit here in Philadelphia.

We're currently using it as a replacement to security deposits but I'm considering bringing back deposits since there are certain costs that Waivo doesn't cover.

Homeowner should have an adequate policy and you can use additional damage protection from services like Safely and Waivo.Yes, security deposits are normal for MTRs and highly recommended. 

We are putting a huge deposit down on the house ( around 50%.)My question is what is the best way to finance the 175,000 for the rehab.

WOW.. 40k plus deposits on a home to be built.. ???