I'm selling one of my multis. It's a 6 unit building and I have last month rent deposit for 4 of the units. The other 2 tenants I inherited from the prior owner and do not have a last month's rent from them. How do I go about transferring the deposits I do have to the buyer? Should it be part of the closing documents? Do I just write a separate check at the closing table? How do I notify the tenants that I've transferred their deposit to someone else?

Unless Buyer and Seller negotiate otherwise, a credit for the deposit will appear on the HUD settlement statement as a credit toward the Buyer's share of the settlement costs. To be clear, though, the OBLIGATION of the deposit always transfers, even if the Buyer elects not to receive a credit on the settlement costs.

A wise Buyer will contact tenants PRIOR to closing and make sure they understand what the changes are and what is staying the same. Basically, nothing changes except the name on the rent payment and the location where payments/deposits are held. The estoppel letter is a wise, but not required, step of laying out the ground rules and expectations.

At first I thought that was a typo, but I Googled it to look less stupid lol. Never heard of it. Interesting.

most lenders will not allow these to be transferred through the closing.... it's a separate transaction between buyer and seller. you write the buyer a check outside of the closing. when I've bought occupied units, the seller always took me around and introduced me. I always prepare a letter that says good bye from old landlord and hello from me, new landlord.

I just sold a multi in MA

I handled it at the closing table as a separate check and a spreadsheet as to how much goes to each tenant. It did not show up on the settlement sheet.

I then followed it up with a letter to each tenant telling them their LMR of $$$ was transferred to the new owner on xx/xx/xx.