Security deposit stolen from previous management company.

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    Security deposit stolen from previous management company.

    I took over a property a few months back, original management company stole several months rent and security deposits and disappeared. How should I handle this going forward with my new tenant? We technically don't have his security deposit. Their lease is up and they would like to move out. I'm I liable for paying back the deposit once my tenant moves out or the owners of the property? Thanks,



    #2
    That would depend on how you "took over" the property.

    Generally speaking the landlord is liable to return the deposit to the tenant.
    But if you acquired the management company's business, you may have acquired their liabilities.
    When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
    Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

    Comment


      #3
      Thank you for the response. The owners of the property hired me to take over the management of their house. I have no affiliation with the old management company. I'm not worried about the owners being able to return the tenants deposit, I'm curious if we/I can get into trouble legally by not having the deposit in some kind of escrow account?

      Comment


        #4
        If you are unconnected from the previous management company, there is no deposit for you to hold in escrow.

        The landlord, however, is in breach of their legal requirement to protect the deposit at all times during the tenancy.
        While they don't have it either, they still have that responsibility, regardless.

        An agent running off with the deposit is one of the things that the landlord is meant to protect the tenant from.
        When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
        Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

        Comment


          #5
          Originally posted by jpkeates View Post
          An agent running off with the deposit is one of the things that the landlord is meant to protect the tenant from.
          The problem with that is that person 1 cannot protect person 3 from person 2. It physically isn't possible.

          Comment


            #6
            Hey?

            If the deposit is in a custodial scheme, the agent doesn't have the deposit to run off with it, and it can't be released without the tenant knowing about it.

            If the deposit is insured and the agent runs away with it, the tenant can claim against the insurance.
            When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
            Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

            Comment

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