Security Deposits
When buying an investment property, how are security deposits transferred to the new owner? Does the seller have to pay an amount equal to all the security deposits stated on the rental agreements or do they simply transfer over whatever funds they actually have?
For example, if one rental agreement states that $400 was collected, but nobody actually knows where that money is, is the seller still required to furnish this amount at closing?
You will recieve all written lease deposits at closing. Your HUD statement will transfer that money to you at closing.
If you forget or overlook the lease deposits, you will still be responsible for returning the tenants deposit if its in a signed lease.
Not really a big deal unless you think there will be lots of turnover after you take control. Just be professional and place those deposits in the proper account so its not a problem when the tenant moves.
In some states it is illegal to have comingled accounts. If you are a buyer, and your state requires a SD be in a trust account, make sure the account is funded and transferred on closing. If you are the seller, make sure you are complying with state laws. ([i]If you are a RE broker and the seller... and are asking this question, seek a new profession
Jnzy111, as the Boston guy says... of course it depends on the contract you signed. Lenders seem to be constantly changing their rules. Somewhat arbitrarily, IMO. Four loans in most of CA is (dollar-wise) much more significant than 4 in central NC. Why not 10 in NC and 4 in CA? and 15 in Syracuse and 20 in Cleveland? Why not just $500K? Makes no sense.
I think the problem you will have is it appears you signed off on your financing contingency. Once you did that I think your case went downhill. Did you have a signoff from the lender before you signed off on the contract guaranteeing the financing (pre-approval)? If you did, I think your dispute is with your lender not the seller.
Get something in witting from the bank before signing off the contingency.[ Edited by cjmazur on Date 05/15/2009 ]
If the seller really has better offers in hand, then the seller should be falling all over himself to refund your earnest money deposit and get you to agree to declare your contract null and void.
If you can find out who these buyers are, maybe you can assign your contract to one of them for a $1500 assignment fee.
Do you have financing lined up so you can take title? You really should
You own the property. Selling to a cash buyer is not your only exit strategy. You could turn it into a rental, sell on lease option, sell on contract for deed, sell to a rehabber at a wholesale price.
If you have not sold and your holding period is at least a year and a day, you can donate the property to a qualified charity and take a charitable contribution tax deduciton for the full appraised value at the time of the donation. The holding period is important. Donate too soon, and your charitable contribution is limited to your cost basis.
Thanks for the advise, I am willing to let go for much less to move on to another deal, I still cant seem to find a buyer
Quote:
On 2009-05-16 23:52, NewKidInTown3 wrote:
You own the property. Selling to a cash buyer is not your only exit strategy. You could turn it into a rental, sell on lease option, sell on contract for deed, sell to a rehabber at a wholesale price.
If you have not sold and your holding period is at least a year and a day, you can donate the property to a qualified charity and take a charitable contribution tax deduciton for the full appraised value at the time of the donation. The holding period is important. Donate too soon, and your charitable contribution is limited to your cost basis.