Refund dep at closing? (by Roy [AL]) Jun 27, 2022 11:25 AM|
Refund dep at closing? (by Jim in O C [CA]) Jun 27, 2022 12:05 PM
Refund dep at closing? (by Jason [VA]) Jun 27, 2022 12:15 PM
Refund dep at closing? (by S i d [MO]) Jun 27, 2022 12:23 PM
Refund dep at closing? (by Ken [NY]) Jun 27, 2022 12:24 PM
Refund dep at closing? (by Roy [AL]) Jun 27, 2022 12:50 PM
Refund dep at closing? (by Ken [NY]) Jun 27, 2022 12:58 PM
Refund dep at closing? (by Roy [AL]) Jun 27, 2022 3:38 PM
Refund dep at closing? (by Mike45 [NV]) Jun 27, 2022 5:18 PM
Refund dep at closing? (by Robert J [CA]) Jun 27, 2022 5:25 PM
Refund dep at closing? (by FloridaNative [FL]) Jun 27, 2022 5:38 PM
Refund dep at closing? (by jonny [NY]) Jun 27, 2022 5:54 PM
Refund dep at closing? (by Roy [AL]) Jun 27, 2022 6:25 PM
Refund dep at closing? (by Ken [NY]) Jun 27, 2022 7:25 PM
Refund dep at closing? (by Ray-N-Pa [PA]) Jun 28, 2022 9:47 AM
Refund dep at closing? (by LisaFL [FL]) Jun 30, 2022 11:34 PM
Click here to reply to this discussion.
Click Here to send this discussion to a friend
Refund dep at closing? (by Roy [AL]) Posted on: Jun 27, 2022 11:25 AM
I have tenants who have applied for an FHA mortgage to purchase the house they rent from me. I am holding their $600.00 deposit from when they moved in 2 years ago. Now, assuming we make it to the closing table, will I be required to refund their deposit to them at the closing table? My lease does not cover this situation. --71.207.xxx.x
Refund dep at closing? (by Jim in O C [CA]) Posted on: Jun 27, 2022 12:05 PM
Was the deposit applied to rent or a security deposit? Security deposits are refunded less costs for normal wear and tear not something that wore out because of age. --198.54.xxx.xx
Refund dep at closing? (by Jason [VA]) Posted on: Jun 27, 2022 12:15 PM
Are any repairs being done as a condition of the sale? If so, were those items that would have came out of their deposit? Thatís the only way youíd be entitled to any of it. Itís their money and it should be transferred to them upon closing. No different than transferring a deposit to new owners of an investment property. --172.58.xxx.xxx
Refund dep at closing? (by S i d [MO]) Posted on: Jun 27, 2022 12:23 PM
Security Deposits are not the land lord's money: they are the tenant's money held in trust for them as a full or partial remedy for any costs of lease violation, such as unpaid rent, legal fees, and damages.
Therefore, the question answers itself: it's not your money. Return it to them within the time frame your state law requires. If you do not anticipate any losses, it would be "clean and courteous" to just return it at closing. --184.4.xx.xx
Refund dep at closing? (by Ken [NY]) Posted on: Jun 27, 2022 12:24 PM
Yes you will give them back that at closing,that will help with with there closing costs --74.77.xx.xx
Refund dep at closing? (by Roy [AL]) Posted on: Jun 27, 2022 12:50 PM
Because their credit rating was 'below par', that are required by FHA to have 2 months of mortgage payments in the bank at closing. I offered to exchange one of those mortgage payments for the deposit I am holding and the mortgage broker said,..'No, you can't do that' but did not give a reason for it.
This tenant called last week and wanted to know if they could not pay July rent ($750.00) so that amount could be applied towards their 3% down payment. Again, the mortgage broker again said,.."No, you can't do that either'.
According to the mortgage broker, if my tenants need money for a down payment or closing costs, they need to get that from family members and not from me. If any money comes from me prior to closing, FHA 'could' cancel the entire transaction.
Refund dep at closing? (by Ken [NY]) Posted on: Jun 27, 2022 12:58 PM
Roy,they need to pay July rent in a manner that can be proven if the bank checks.FHA allows 6% seller concessions,it should have been put on the contract if you were willing to do that,do not do anything without approval from the mortgage broker who is getting them the loan.Sounds like they dont have any money --74.77.xx.xx
Refund dep at closing? (by Roy [AL]) Posted on: Jun 27, 2022 3:38 PM
The husband here makes a ton of money ($32.00/hour + OT) working as a commercial plumber, however, like a lot of my tenants, they own too many cars and can't save money for anything.
3 months ago, I told them I was planning on selling their house once their lease came up for renewal in August. I then offered them the opportunity to buy the house themselves at a discount ($75,000). They wanted me to do 'rent to own' with them and I said no. I then referred them to a good mortgage broker who I know and who also deals with first time homebuyers. That broker told me she thinks this deal will work out (she has massaged all the numbers with those 6% seller concessions you mentioned) but the buyers here have to do their part in making it happen. The ball is in their court now.
So, that is where I stand at the moment. If they bail on me, I will ask them to vacate the house in August and then I will list the house on the MLS at $84,500. This is a 3/2 house located on the edge of a crummy neighborhood.
Refund dep at closing? (by Mike45 [NV]) Posted on: Jun 27, 2022 5:18 PM
When you sell a rental house, it is normal for the SD to be transferred to the Buyer, who then becomes responsible to the Tenants for the SD. I would treat this the same way -- I would pay the SD to the Buyer/Tenants. --76.4.xxx.xxx
Refund dep at closing? (by Robert J [CA]) Posted on: Jun 27, 2022 5:25 PM
I would have escrow instructions that at closing, where they funded the purchase, I'd have the deposit money get credited to them. I would not hand them a check. By doing this thru escrow, they closed and accepted their deposit this way. --47.156.xx.xx
Refund dep at closing? (by FloridaNative [FL]) Posted on: Jun 27, 2022 5:38 PM
Robert J is right. The security deposit credit needs to be shown on the CD.
Roy you can't exchange the Sec Dep for any of their rent money as it is against FHA guidelins. I think it has to do with the seller inducing the buyer to buy. But in any event, it's considered fraud. There is a document you sign at closing that you haven't made any payments to the buyer outside of closing.
You're right, the tenant needs to do their part in order to get approved for the FHA mortgage. If they are short funds they have to get a gift from a relative. However, there is an exception: that max 6% seller contribution toward buyers closing costs and pre-paid expenses if it in the P&S agreement. --73.205.xxx.xx
Refund dep at closing? (by jonny [NY]) Posted on: Jun 27, 2022 5:54 PM
Roy ... I'm assuming that the $75k you said they could purchase it at is now written up as $79,500 (that's 6% on top of the $75k. YOU NET the $75k and you are "contributing" the $4,500 towards the buyers closing costs, pre-paids, etc. Otherwise, you will be netting somewhere in the $70k range... I'm sure that's not what you are intending.
The others are right though. It is their money so when they close you would end up giving their money back (and Jason makes a good point ... if there are any repairs that are bank/FHA required and it's due to the buyers cause (because they were tenants) then that may be something to consider. Outside of that it's just a normal transaction... so yes, it's their money at closing as the buyer.
Make sure that mortgage officer lets you know what the bank/FHA is going to look for (chipping paint, pealing paint, rotted or bare wood, down spouts on water heaters, no leaks, no broken or cracked windows, railings where needed, etc). FHA is tough and if the appraiser comes out and sees any of that (and more) then there will be an additional cost for the appraiser to come back out. Might as well get ahead of it if you can. I just don't know if you know all of that...
Good luck! --69.201.xx.xxx
Refund dep at closing? (by Roy [AL]) Posted on: Jun 27, 2022 6:25 PM
You are correct,...6% was added to the $75K. And I will do my own inspection to see if there any issues that would alert FHA's attention. I have no problem giving them their deposit back.
2 years ago, I sold a rental house to another investor and at the closing table, I wrote them a check after closing was completed. --71.207.xxx.x
Refund dep at closing? (by Ken [NY]) Posted on: Jun 27, 2022 7:25 PM
$64000 a year income and they still have a poor mentality evidenced by the fact they asked you to do a rent to own --74.77.xx.xx
Refund dep at closing? (by Ray-N-Pa [PA]) Posted on: Jun 28, 2022 9:47 AM
Negative Ghost rider!
You can't co-mingle title on the closing disclosure. So if this is a SFH, you need to refund the security deposit to the tenant. Your CD is dealing with a buyer. I understand that the buyer and the tenant are the same person, but they have different labels.
In the case of a MFH situation, you can transfer the deposits on the CD, but there isn't a line item specifically for taht --24.101.xxx.xxx
Refund dep at closing? (by LisaFL [FL]) Posted on: Jun 30, 2022 11:34 PM
Every time a tenant has bought one of my houses (6 of them) I bring a check to the closing to give them (to return their security deposit). We just keep everything simple and separate. --75.89.xxx.xxx
Click Here to send this discussion to a friend
Report discussion to Webmaster