Seller is a good friend looking to retire that never took a deposit from them nor did he take care of the units.

Do i need to get the the money made out to my company as a nonrefundable deposit?

. - I train my the tenant to deposit directly in my bank account or via PayPal by the first of every month.

In PA, I put all security deposits in a bank separate sub-account linked to the tenants SSN, and the interest paid accrues to the tenant and is reported to the IRS under their SSN. 

Normally that's not a big concern, IF you've got ALL your deposit back (which you won't have)!

First, make sure you get the deposit transferred to you at closing.  

If you have literally no money you may have to do some property based work to get some cash for fees, costs, deposits and a contingency fund.

Combined husband and wife income is about $1,700/month and they asked if they could make payments to cover the deposit.  

@Rusty Whitney There is the Illinois Forcible Entry and Detainer Act, and the Security Deposit Return Act.

@Ryan Ahlgrim - I know this is an old post, but in case anyone else reads it, this is a scam; people copy legit for rent listings, and post them "for sale" with a much lower rent price, and with different contact info, hoping for people to contact them and send them a deposit.