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I'm in California. We're purchasing the house we're renting. We've lived here less than 1 year and the lease expires June 14. Escrow closes May 20. I can't seem to find anything that addresses what happens with rent & deposit until close of escrow and even my realtor doesn't seem certain. Logically, we should pay full May rent, and receive any unused prorated rent back at the close of escrow (in case it doesn't close right on the 20th); all deposits should be returned to us in whole with no deductions because the owners don't have to clean/repair anything for another tenant. Do any of the experts here know if these 2 assumptions are correct?
ETA: sorry for the typos in the title, I'm doing this from my phone.
Last edited by Ultrarunner; 04-11-2016 at 11:43 PM..
You will pay the full month for May and get a prorated refund. That can be handled in escrow. Don't be surprised if escrow runs over a few days; they rarely close on time.
Your full deposit should be returned to you, and that, also, is often handled in escrow. You won't get a check; look on the settlement accounting and you will see it worked into the balance. If it doesn't make any sense to you, ask the escrow agent to explain it to you while you are looking at the documents.
If I were you, I'd call my escrow officer and let her know that you expect to get your deposit back from the seller. That will need a signature from the seller, but if escrow knows about it, it won't be conveniently forgotten.
I would speak to the property owner that I am renting and buying from. I would either pay the extra 8 days and pay any extra that are needed if closing runs late, or I would tell the owner to deduct those extra days from the security deposit that he has to return. I would also get the arrangement written out and signed by both parties. Or email and asked for an acknowledgement reply.
If you were buying a rental that you weren't the tenant for the rent would be handled in the closing deal but the deposit would be separate. The deposit belongs to the tenant not the owner so that should be kept aside and funded to the buyer to ensure the funds remain intact. Since you are buying and the tenant it is up to you how you want to handle the transfer of the deposit so reach out to your escrow agent to set it up. If you wanted to get a check back they can do that or if you want to use it as down payment money they can do that too, would need to go through your loan officer too in that case.
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