Can a New Landlord Make You Pay a Security Deposit Again?
If your landlord chooses to sell your rental property or is forced into foreclosure, the law usually favors you when it comes to the security deposit. Your new landlord is legally barred from demanding a new security deposit. The liability to secure your previously paid security deposit falls to the new landlord or owner of the property.
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Federal Tenant's Rights
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The Protecting Tenants at Foreclosure Act grants you the right to preserve the terms of your lease agreement with your former landlord, even if ownership of the property is taken over by a new landlord. You must be a tenant living under a type of written formal agreement to garner protection under this law. A new landlord is legally barred from requiring a new security deposit, since the terms of your old lease still apply and you've already paid your security deposit under those terms.
Deposits Received by Buyer
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When the property you are renting is purchased, the previous owner is usually required to forward your security deposit to the new landlord in an escrow account. The security deposit is your money, and a sale of a rental property cannot typically finalize until that money is properly transferred to your new landlord. If the transfer of your security deposit is somehow overlooked in the buying process, the new landlord remains liable for your security deposit. The new property owner cannot legally compel you to pay a new security deposit just because he forgot to make sure the money was properly transferred.
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Foreclosure Sale
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If your former landlord's bank takes over the rental property, the financial institution becomes jointly liable, along with your former landlord, for your security deposit. In this case of a foreclosure, it's unlikely your former landlord will have the necessary funds to return your security deposit. The burden then falls to the bank to return your security deposit. If the bank becomes your new landlord, it is bound by federal law to honor the terms of your previous lease agreement. When your lease expires, the bank may choose to renew your lease or hand you an eviction notice.
Making Repairs to the Property
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Even if your new landlord did not properly receive your security deposit from your previous landlord, she is still required to fulfill her obligations under the law by making repairs to the property and performing maintenance. When you move out of the rental property, your new landlord must refund you any portion of your security deposit remaining after repairs to the property which fall outside normal wear and tear. The refund of your security deposit is required even if the refund comes out of the new landlord's own pocket.
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