I usually collect the security deposit plus first months rent at signing of the lease but she is saying her company will only pay the deposit now and half the months rent until a couple days before moving in since it’s in the middle of the month.

Do they transfer the security deposit and other documents to me? 

Some examples being - a) almost lost a 25K deposit for a purchase because the private lender pulled out on the last day, b) almost ran out of money for interest payments, c) missed a property insurance renewal, d) really struggled to find financing for certain commitments - but, in the end we always found a solution.

I had 3 dogs and paid a 1300 non refundable deposit towards damages they may have done as well as a 1500 security deposit October 15 2021 we move out and bought out first house in southern CA, the property manager told us to clear the house and let her know when we left. 

And I appreciate the insight - I’m seeing if our HML would be willing to outsource fund control to the city via the escrow deposit since both parties essentially have the same incentives in terms of making sure the work is done properly? 

If his suggestion is not a possibility for you, then have your tenants send you a picture of the deposit slip after they deposit their rent, each and every time. 

I know this is a flip, so rental considerations may not matter here but I find a lot of people actually prefer "all electric" because it means one less account setup/bill/deposit to worry about.  

In the even of he buyers default the deposit shall be the sole remedy

Derogatorycredit (past due accounts, collections, charge off accounts, tax liens,judgements in excess of $1000 and/or bankruptcy) may result in additionalsecurity deposit or denial.

If the value of the option is not sufficient, a security deposit(which would be refundable if the option is exercised or declined) can be added to it.It isn't a good situation to have a renter in your property without any incentive to return it to you in a good condition.