I'm not sure how legal that is.

A bit of a pain when it come to timeline but considered almost legally required in some markets.John Corey

Operating expenses include taxes, insurance, management, maintenance, utillities paid by the owner (including during vacancies), advertising, entity maintenance, legal fees, evictions, court costs, capital expenses (not technically an operating expense), damage done by tenants above the deposit, lawsuits, office supplies, etc, etc, etc.Mike

And can he legally withhold it for reasons other than pet damage?

Not completely required but normally assumed.To put both properties in the same business entity is slightly messy given the cross boarder aspects.

I am an inactive RE agent and i have been in the legal field for about 3 years.

I would get the legal advice first so you know what you are facing.

You might have to pay for the conversation but you will get a true legal opinion.John Corey

Hence a number of deals could be good just because most other buyers are not even going to compete.Frankly many other agents are not that dedicated to chasing the details or will get confused by the legal process.

One obvious one is if you partner with someone and they are on title they have no legal right to work on the place other than as an employee.