What happens to the security deposit when a rental property is sold?

I’m thinking about buying a multi-family dwelling that has two apartments, currently rented.

Assuming that they paid the current owner a security deposit (plus first & last month’s rent), when the sale goes thru, does the seller have to give me the security deposit & last month’s rent, or what?

If not, what do I do when their lease is up, and they want their security deposit back??? Do I owe it?


You need to determine that when you’re negotiating the sales price with the seller. If you’re responsible for the deposits to the renters, get it spelled out and negotiated in your contract. If the seller’s responsible, same thing.
Just be certain it’s in the agreement because if it’s not and the time comes to pay your renters back in 6 months, it will be coming out of your pocket.


You need copies of the leases.

In many states, that money is supposed to be in escrow. That escrow should be transferred to you.

This should all be part of your agreement.


You have to remember that the deposit is the property of the tenant until the tenant forfeits it by violating the terms of the lease. In most states it interest must be paid when giving it back to the tenant at the end of the lease.