Dilemna with Credits at closing on MHP - Posted by Eddie-MI

Posted by Tony-VA/NC on August 20, 2003 at 19:52:52:


You need to remind the seller that those security deposits belong to the tenants, not him. In fact, I suspect your state, like mine, requires them to be held in a separate account.

The back lot rents due are the seller’s problem, not yours. If he wishes to pursue those debts, he needs to do so in court, not take them out of closing.

If he takes them, chances are your tenants are going to come looking to you, the new owner, for their deposit when they move. What will you do then?

I would go a step further and obtain letters of estoppel from the tenants themselves to be certain you receive all of the deposits. Chances are the seller will not even be able to provide you a record of each tenants deposits and as such will need to concede that your amounts are what is due the tenants. Additionally, this written record from the tenant ensures you that they cannot later come back (after you buy the park) and say that they gave the previous owner more money.

The security deposits should be a wash. No one should profit or lose by them. Again, they legally belong to the tenants.


Dilemna with Credits at closing on MHP - Posted by Eddie-MI

Posted by Eddie-MI on August 20, 2003 at 18:56:38:

I am in process of doing a deal of a less than desirable trailer park. There are quite a few people who owe back rent. There are currently about 7,000 in security deposits that are being held by seller.

This is the problem, the seller says this “the security deposits and the back rent are a wash. - Dont give me any of the back rents and I wont give you any of the security deposits.” I am getting in for low down and generous terms. Should I just forget about it or insist that I get security deposits.