With all the investors who have bought up property in Las Vegas, more and more transactions are involving tenants occupying the property. There may or may not be a property manager involved, but most often there are rents and security deposits that must be handled.
In sales with a tenant, two possible scenarios exist - one without a property manager and one with a property manager. The transaction is simplified when the owner is managing his or her own property. The rent is prorated between the buyer and seller in the contract. When it comes to the security deposit, the Seller may either transfer the security deposit to the new owner or return it to the tenant.
The scenario completely changes when a property manager is involved and is a bit more complicated. The property manager is a third party who is NOT involved in the transaction and should not be named in the transaction, counters, or addendums. In this case, the property manager has fiduciary responsibilities to both the Seller/Landlord and the Tenant. The purchase contract can still address the proration of rent based upon the closing date, but will not generally address the security deposit. The disposition of the security deposit is left to property manager, who again will either transfer it to the new owner or return it to the tenant. Moreover, many property managers will only transfer security deposits with the consent of the tenant. However, on rare occasions contracts will request the seller to place an amount equal to the security deposit in escrow to be released to the buyer.