Just curious. Who is responsible for returning the security deposit on a short sale? guessing the owner but these owners usually have no money.
The owner is renting it to a tenant but the owner is short selling the property. I am in illinois. Is the new owner responsible for the deposit if the previous owner isn't paying? Can the tenant sue the old owner or the new owner?
I can't speak for that state, but in CA the new owner is responsible for returning the security deposit to the tenant, and if the new owner didn't get it from the old owner then he's SOL. I don't see how a short sale would matter, and the new owner should probably consider the liability of the security deposit as a part of the overall purchase price.
Senior Member - 1K
posted: Feb. 14, 2013 @ 9:33p
i'm wondering whose responsibility the earnest money is legally. I understand asking new owner for cash for keys. Is the new owner legally responsible for it; IANAL so reading through the contract can't see anything that says new owner is responsible for security. it says i must allow tenant to finish lease but that's about it
Senior Member - 10K
posted: Feb. 14, 2013 @ 10:08p
sharpie130 said: i'm wondering whose responsibility the earnest money is legally. I understand asking new owner for cash for keys. Is the new owner legally responsible for it; IANAL so reading through the contract can't see anything that says new owner is responsible for security. it says i must allow tenant to finish lease but that's about it You bought the house? Shouldnt you have factored in the security deposit in your offer?
The security deposit is part of the lease. When you bought the house you "bought" the lease, which means you also bought the obligations under the lease. If you didnt get the money from the previous owner, that's your own fault.
"Illinois Security Deposit Return Act" said: In the event of a sale . . . of residential real property . . . by a lessor who has received a security deposit or prepaid rent from a lessee, the transferee of such property shall be liable to that lessee for any security deposit, including statutory interest, or prepaid rent which the lessee has paid to the transferor.
In other words, new owner is on the hook. Just as the lease terms (rental amount, dates, etc) are transferred to the new owner, so is the obligation to return the deposit. If the new owner didn't collect the deposit from the old owner as a part of the sale, that sucks for the new owner. But the new owner is still obligated to the tenant.
Senior Member - 1K
posted: Feb. 15, 2013 @ 12:01p
thanks for the clarification.. Thought that was the case but wanted to make sure.
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