What happens with collected rent and security deposit?

I obtained rental property duplex through sheriff sale in September of 2018.
The deed was transferred in my name in November 2018. During this period both
units were occupied by tenants and previous owner was collecting rent including
month of November although the property was transferred at the beginning of
month. Is previous landlord suppose to do this? Is there a specific date when he
should stop collecting rent? What happens to security deposit that previous owner
collected from tenants? What are my legal rights as new owner?

Best regards,

Pete K.

Asked on December 7, 2018 under Real Estate Law, Ohio


M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 1 year ago | Contributor

The previos owner had no right to collect any more rent once the title to the property was trnsferred over to you. You can sue them in small claims court if you think that it is worth it and you will be able to collect, although if their property was foreclosed on you may get a judgment that you cannot collect on. As for the security deposit, that is between the former owner and the tenants; the tenants will have to collect ot directly from them. As for the tenants themselves, under federal law a tenant has some rights and protection in the event that their rental unit is foreclosed upon. The “Protecting Tenants at Foreclosure Act” requires that when a rental premises goes into foreclosure, tenants who have a written lease can continue to occupy the home until the end of the lease period, or 90 days, whichever is longer. The one exception would be if the new owner intends to move in and occupy the home as their primary residence. In such a case, a 90 day notice to move applies. Those tenants with a month-to-month lease, or no lease at all, have to be given at least 90 days notice to move.

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 1 year ago | Contributor

1) The prior owner should have stopped collecting rent when the property is transferred and he is no longer the owner and hence landlord.
2) They are not your tenants unless you choose to make them such (e.g. offer them a lease): when you acquire a property through foreclosure, unlike a traditional sale, the lease and tenancy are terminated and do not carry over to you.
3) You can remove the former tenants if you want, through a legal action traditionally called an action "for ejectment" rather than through an eviction, since, as stated, they are not tenants of yours unless you choose to enter into a landlord-tenant relationship. Ejectment is how you remove non-tenants who formerly had the right to occupy space but no longer do. It can be a technical, challenging proceeding for a nonlawyer--you are advised to retain an attorney to help.
3) The former owner will have to return the security deposit; it is not your concern or responsibility.

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